U.S. income gap widest on record

Sept. 11, 2013 at 3:00 AM   |   0 comments

BERKELEY, Calif., Sept. 11 (UPI) -- The income gap between the richest 1 percent of Americans and the rest of the country widened to a record level, a university analysis of tax filings indicates.

The incomes of the top 1 percent increased 19.6 percent in 2012 -- accounting for 19.3 percent of total household income, breaking a 1927 record -- while the bottom 99 percent incomes grew only 1 percent, Emmanuel Saez of the University of California, Berkeley, said in the "Striking it Richer: The Evolution of Top Incomes in the United States" analysis.

"In sum, top 1 percent incomes are close to full recovery while bottom 99 percent incomes have hardly started to recover," Saez said.

His analysis, which he did in conjunction with the Paris School of Economics and Oxford University, is based on Internal Revenue Service data.

His report -- which can be found at tinyurl.com/UPI-Income-Gap -- says top 1 percent incomes were above $394,000 in 2012, top 5 percent were between $161,000 and $394,000, and top 10 percent were between $114,000 and $161,000.

U.S. income inequality has grown significantly since the early 1970s after several decades of stability.

During the 2007-2009 Great Recession, Saez said, the 1-percenters saw their incomes slide 36.3 percent, while incomes of the 99-percenters fell 11.6 percent.

But between 2009 and 2011, the first two years of recovery, the top 1 percent saw their incomes climb an average 31.4 percent -- accounting for 95 percent of the total gain -- while the bottom 99 percent saw growth of 0.4 percent, Saez said.

The richest 10 percent received more than half of all income last year -- 50.4 percent -- the largest share since such record keeping began in 1917.

Post-recession U.S. policy changes, such as tightened financial rules and an increase in the top tax rate, "are not negligible but they are modest relative to the policy changes that took place coming out of the Great Depression," Baez wrote.

"Therefore, it seems unlikely that U.S. income concentration will fall much in the coming years," he said.

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