Economic snapshot | Inequality and Poverty

The Top 1 Percent’s Share of Income from Wealth Has Been Rising for Decades

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A key point in Thomas Piketty’s new book Capital in the Twenty-First Century is that strong forces in the economy could, if unchecked, lead to an ever greater concentration of wealth and the incomes that flow from wealth. The fact that income from wealth (capital gains, interest, dividends and so on) goes disproportionately to those with the highest incomes means that rising income from wealth leads to greater income inequality. One reflection of this process in the United States is that the share of income from wealth going to the top 1 percent has greatly increased in the last few decades, rising from 33.5 percent of all income from wealth in 1979 to 54 percent in 2010.

The figure below shows the share of income derived from owning wealth in the U.S. economy between 1979 and 2010, using data from the Congressional Budget Office (CBO). It adds up rents, dividends, interest payments, capital gains, and business income and calculates what share of this income derived from owning wealth—often short-handed as “capital income”—is claimed by the top 1 percent of households, the bottom 90 percent of households, and the 9 percent of households in between these groups (households between the 91st and 99th percentiles).

In 1979, each of these groups actually claimed roughly similar shares of total capital income: the top 1 percent claimed 33.5 percent, the bottom 90 percent claimed 36.2 percent, and 30.3 percent was claimed by households between the 90th and 99th percentile of the income distribution. By 2010, the top 1 percent’s share had increased enormously, while shares for both other groups fell. In the last year of the data, the top 1 percent claimed 54.0 percent of capital income, the bottom 90 percent claimed 22.9 percent and the intervening group claimed 23.0 percent.

This evidence indicates that Piketty’s worries are justified by historical data, as the top 1 percent has substantially increased the share of overall capital income that they claim. Further, if the trend continues, the top 1 percent will continue to raise its income share as capital income grows in importance and their share of capital income continues to rise.

EPI Snapshot

Increasing share of income from wealth claimed by top 1 percent: Concentration of capital incomes, by income group, 1979–2010

Bottom 90 percent 90–99th percentile Top 1 percent
1979 36.183% 30.272% 33.545%
1980 37.921% 30.347% 31.732%
1981 38.156% 30.816% 31.029%
1982 38.859% 27.887% 33.254%
1983 38.231% 27.717% 34.051%
1984 39.526% 26.848% 33.626%
1985 32.727% 26.975% 40.297%
1986 28.078% 24.899% 47.023%
1987 38.315% 28.073% 33.612%
1988 35.294% 26.657% 38.050%
1989 33.086% 27.368% 39.547%
1990 33.839% 27.740% 38.421%
1991 36.229% 28.265% 35.506%
1992 33.389% 27.988% 38.623%
1993 33.767% 28.081% 38.152%
1994 33.319% 27.091% 39.590%
1995 31.831% 27.899% 40.270%
1996 27.348% 27.453% 45.199%
1997 29.978% 27.052% 42.969%
1998 28.251% 26.539% 45.210%
1999 24.298% 26.607% 49.096%
2000 24.292% 25.791% 49.917%
2001 26.476% 25.755% 47.770%
2002 26.433% 26.174% 47.392%
2003 25.220% 25.314% 49.466%
2004 24.123% 24.425% 51.452%
2005 21.667% 24.447% 53.886%
2006 21.617% 24.474% 53.909%
2007 16.985% 24.329% 58.686%
2008 20.707% 24.379% 54.914%
2009 22.903% 25.185% 51.911%
2010 22.911% 23.047% 54.042%
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