1 percent divides 99 percent, emotionally

Dec. 12, 2011 at 9:23 PM   |   Comments

WASHINGTON, Dec. 12 (UPI) -- The richest of America's rich saw their share of the nation's wealth slip significantly during the recession, federal tax returns show.

Federal tax data show the richest 1 percent of the country in 2007 took in 23 percent of the country's income and by 2009 that had fallen to 17 percent, The New York Times reported Monday.

The average income of the richest 1 percent dropped from $1.4 million to $957,000 during the same two-year period, data shows.

The numbers provoke heated emotional reactions, especially as the Occupy Wall Street movement has declared itself to be representative of the 99 percent at the bottom of the economic spectrum.

"It's very interesting that this has become such a big topic now when the numbers are back to where they were in the 1990s. People didn't seem to be complaining about it then," said economist Steven Kaplan, at the University of Chicago's business school.

"If you want to reduce inequality, all you need to do is put the economy in a recession. If you want the economy to do well, as all of us do, then you'll get more inequality."

Some analysts say the rich are on a rebound, however, as the major reason incomes shifted was because of a downturn in stock markets, which have rebounded much quicker than the unemployment rate.

"We don't want to spend years focused on income inequality, only to learn that the financial crisis fixed it for us," wrote another critic of the Occupy Wall Street movement, Megan McArdle, in an online post for The Atlantic, called "The 1 Percent Ain't What It Used to Be."

On the other hand, economist Harry Holzer at Georgetown University said the influence of vast personal wealth on the economy is damaging because rich are getting richer due to "insider privilege instead of real productivity," the Times said.

"The notion that the really high earners are earning it has become very questionable," Holzer said. "Look at [the] outrageous … damage they imposed on the rest of the economy and the cost being born by middle-income Americans," he said.

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