The top one percent

Source: The Economist

The average household income of the 1% was $1.2m in 2008, according to federal tax data. The ultra-rich skew that average upwards: admission to the 1% began at $380,000 in 2008. The Congressional Budget Office puts the cut-off lower, at $347,000 in 2007, or $252,000 after subtracting federal taxes and adding back transfers. Measured by net worth, rather than income, the top 1% started at $6.9m in 2009, according to the Federal Reserve, down 23% from 2007.

I am tempted to let this data speak for itself, but I will point out that the portion of the total income obtained by the tope 0.1 percent of the tax payers in the United States peaked at the Great Crash in 1929 and at the crash of 2008. The bubbles, represented by the steep uphill climb of the 1920s and 2000s, burst. The graph shows that the share of GDP captured by the top tiny portion was relatively low during the long period of relatively stable economic growth from the end of World War II to the election of Ronald Reagan.

Year-to-Year Increases in US GDP (as Percent GDP) and Debt (as Percent GDP)

Source: Wikimedia Commons