America’s Top 1% Don’t Make as Much as You Might Think

Can a single self-published paper really refute decades of work by three famous economists? If the paper is the modestly titled “Income Inequality in the United States: Using Tax Data to Measure Long-Term Trends,” then the answer — with qualifications — is yes.

Some background: Economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman have written extensively about wealth and income inequality. From their academic posts at the School for Advanced Studies in the Social Sciences in Paris and the University of California at Berkeley, they (and others) have made a more specific claim : When it comes to income, the top 1% in the US has pulled away from the pack. Their finding became so deeply ingrained in the public consciousness that it was embodied in an Occupy Wall Street slogan , “We are the 99%!”

It now seems this claim is wrong, or at the very least unproven. That is in part due to the work of Gerald Auten and David Splinter, both of whom work for the US government (the Treasury Department and the congressional Joint Committee on Taxation, respectively). Both have stellar reputations for understanding what the numbers mean; their previous papers had significant impact on how tax data is understood.

Now, in their latest study, they arrive at a conclusion that will be startling to a lot of people: “Increasing government transfers and tax progressivity have resulted in rising real incomes for all income groups and little change in after-tax top income shares.”

More concretely, looking at pre-tax income, the share of the top 1% has gone up only 2.6 percentage points since the early 1960s. For after-tax income, top income shares haven’t changed much at all.

Measuring the Income of America's Top 1%