September 10, 2013

Top 1 percent in U.S. took biggest share since 1928

Since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices.

The Associated Press

WASHINGTON — The income gap between the richest 1 percent and the rest of America last year reached the widest point since the Roaring Twenties.

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In this 1928 file photo, Actress Joan Crawford is seen dancing the Charleston in "Our Dancing Daughters" in Hollywood, Calif. A report released, September, 10, 2013, shows that the very wealthiest Americans earned more than 19 percent of the country’s household income in 2012, their biggest share since 1928. And the top 10 percent captured a record 48.2 percent of total earnings last year. (AP Photo/File)

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The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share since 1928. And the share held by the top 10 percent of earners last year reached a record 48.2 percent.

U.S. income inequality has been growing for almost three decades. But it grew again last year, according to an analysis of IRS figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

One of them, Emmanuel Saez of the University of California, Berkeley, said the incomes of the richest Americans might have surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January.

Last year, the incomes of the top 1 percent rose nearly 20 percent compared with a 1 percent increase for the remaining 99 percent.

The richest Americans were hit hard by the financial crisis. Their incomes fell more than 36 percent in the Great Recession of 2007 to 2009 as stock prices plummeted. Incomes for the bottom 99 percent fell just 11.6 percent, according to the analysis.

But since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.

That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.

The top 10 percent haven't done badly, either. Last year, they captured 48.2 percent of income, up from the previous record, 46.6 percent, in 2011.

The top 1 percent of American households had income above $394,000 last year. The top 10 percent had income exceeding $114,000.

The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.

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