The 1%

While we are debating changes to the Tax Code that will provide 90% of their benefits to the wealthiest 1% and raises the Taxes of everyone else who makes less than $75,000 a year (in addition to taking away critical benefits to pay for it, not that it needs paying for mind you) it is useful to note the inequality that already exists.

The top 1% own more wealth than the bottom 90% combined.

They own 40% of the entire wealth of the United States.

The richest 1 percent now owns more of the country’s wealth than at any time in the past 50 years
By Christopher Ingraham, Washington Post
December 6 2017

The wealthiest 1 percent of American households own 40 percent of the country’s wealth, according to a new paper by economist Edward N. Woolf. That share is higher than it has been at any point since at least 1962, according to Woolf’s data, which comes from the federal Survey of Consumer Finances.

From 2013, the share of wealth owned by the 1 percent shot up by nearly three percentage points. Wealth owned by the bottom 90 percent, meanwhile, fell over the same period. Today, the top 1 percent of households own more wealth than the bottom 90 percent combined. That gap, between the ultrawealthy and everyone else, has only become wider in the past several decades.

Let’s talk a bit about that wealth gap. Wealth, often described as net worth, describes how much stuff you actually have: It’s the value of your assets minus the value of your debts. If you have a $250,000 house but you still owe $200,000 to the bank on it, and you have no other debts or financial assets, that means your net worth is $50,000.

In the United States, the distribution of that wealth is even more skewed toward the top than the distribution of income.

Now he goes on to use a rather trite pie metaphor and for the sake of clarity I’m just going to edit that part out.

The top 20 percent of households actually own a whopping 90 percent of the stuff in America… Their average net worth? $3 million.

That leaves just 10 percent for the remaining 80 percent of the populace. The next 20 percent of households (average net worth: $273,600) help themselves to (8%), while the middle 20 percent ($81,700 net worth, on average) (2%).

The fourth quintile of households gets literally nothing. (T)hey’re still doing better than the bottom 20 percent of households, who are actually in a state of debt: Their net worth is underwater, meaning they owe more than they have. Combined, the average net worth of the bottom 40 percent of households is -$8,900.

Yes, that is a minus sign you see. The bottom 40% owes slightly less than $10,000.

Concentrating on just the top 20% (you know, those people who own 90% of everything)-

  • The top 1% == 40% of wealth
  • Those below 1% to 5% == 27% of wealth
  • Those below 5% to 10% == 12% of wealth
  • Those below 10% to 20% == 11% of wealth

Now that group between 10 and 20% is larger than the others put together so their individual net worth is relatively low but they have an average of $740,800 each.

Ingraham finishes with this-

If you were designing a tax plan to reduce the extreme inequality in the United States, you’d probably try to find ways to redistribute some of the wealth from the richest households to the poorest ones. But the Senate GOP tax plan does precisely the opposite of that, according to the CBO: In the short term the richest households get the biggest tax cuts, while longer term the taxes of the poorest households actually increase.

Estate tax? Cut. Income tax rate for millionaires? Cut (at least in the Senate bill). Corporate tax rate? Biggest rate cut ever.

In the long term that probably means more for the super-rich, and less for everyone else.