Top of the Top

Wednesday, October 05, 2005 | 12:30 PM

We've been discussing the diminishing Middle Class and the rise of the Ultra-Wealthy (The Disconnect and Economic Classes and Wealth Concentration in America is Rising)

One of the fascinating aspects of this has been how finely the strata of the seriously Rich gets sliced:

click for larger graphic

Nyt_taxgraphic

courtesy of NYT


Here's the money shot:

After falling for two years, the share of income going to the richest slice of Americans - the top tenth of 1 percent - grew significantly in 2003 while the share going to 99 percent of Americans fell, tax data released yesterday showed.

At the same time, the effective income tax rates paid by the top tenth of 1 percent fell sharply, declining at more than 10 times the rate reduction for middle-class taxpayers, the new report, by the Internal Revenue Service, showed.

Overall incomes rose by 2.7 percent in 2003, compared with the previous year, the I.R.S. said. A quarter of this increase went to the top tenth of 1 percent, the 129,000 taxpayers with reported incomes of $1.3 million or more, an analysis of the data showed. (emphasis added).

To review: The Middle class is getting squeezed by outsourcing, decreasing inbdustrial sector, increasing energy prices, weak personal income gains, non-commodity inflation, the worst savings rate ever, all the while accumulating massive debt, both personal and governmental. The good news is their tax burden has fallen, albeit at  1/10 the rate of the wealthiest Americans.

Here's the Ubiq-cerpt:™

The top 10th of 1 percent paid almost 23.6 percent of their reported income in income taxes in 2003, down from just under 27 percent in 2002. That is a decline of 3.4 percentage points. For taxpayers in the bottom 80 percent, the effective tax rates fall by three-tenths of a percentage point or less.

Only for those Americans in the top 1 percent, the nearly 1.3 million taxpayers who made at least $327,000, did incomes increase significantly more in 2003 than the rate of inflation. And this increase was concentrated within the top tenth of 1 percent. The income of that group grew by 9.5 percent in 2003 over the previous year while the rest of the top 1 percent had a gain of 3.7 percent.

For the bottom 99 percent of taxpayers, income rose by slightly less than 2 percent, which was below the inflation rate of 2.3 percent.

The top 1 percent of taxpayers received almost 17.5 percent of all income and paid a third of all income taxes in 2003, the I.R.S. found. The top tenth of 1 percent received 7.57 percent of reported income and paid more than 15.3 percent of all income taxes.

The share of all reported income reported by the top 1 percent of taxpayers increased by 0.57 percentage point, compared with 2002. Nearly all of this increase - 0.47 percentage point - went to the top tenth of 1 percent.

The top tenth of 1 percent had more income in 2003 than the poorest third of taxpayers, a group with 330 times the number of people, analysis of the data showed. This is a sharp change from 1979, the earliest year in the I.R.S. report, when the total income of the poorest third of Americans exceeded that garnered by the top tenth of 1 percent by 2.5 to 1.

The I.R.S. data tend to understate incomes for those at the very top because of different rules for reporting wages and capital gains, meaning the actual disparity was larger than the official data show.

Wow, that raises a lot of questions. Has the US disparity in wealth really gotten that large? What does this mean for Society? And how common is this yawning haves/have not relationship?

I cannot answer the first few questions, but the Times answers the last one: It turns out that we are #3 in wealth disparity:

"Other data show that among major world economies, the United States in recent years has had the third-greatest disparity in incomes between the very top and everyone else. Only Mexico and Russia, among major economies, have greater disparity."

Russia and Mexico. Those are hardly countries I ever thought we would want to emulate . . .



Source:
At the Very Top, a Surge in Income in '03

DAVID CAY JOHNSTON
NYT, October 5, 2005
http://www.nytimes.com/2005/10/05/business/05tax.html

Wednesday, October 05, 2005 | 12:30 PM | Permalink | Comments (14) | TrackBack (2)
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» Life Is Good at the Top from Trends I'm Watching
Barry Ritholtz continues the discussion of the diminishing Middle Class and the rise of the Ultra-Wealthy that he began in The Disconnect and Economic Classes and Wealth Concentration in America is Rising. Excerpts below. Source: The Big Picture: Top o... [Read More]

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» Life Is Good at the Top from Trends I'm Watching
Trend: The middle class is shrinking. Barry Ritholtz continues the discussion of the diminishing Middle Class and the rise of the Ultra-Wealthy that he began in The Disconnect and Economic Classes and Wealth Concentration in America is Rising. Excerpts... [Read More]

Tracked on Nov 11, 2005 9:50:26 PM

Comments

My theory is that the United States is becoming a latin american country: debt, plutocracy, corruption, cronism, etc. Banana republicans like the guys running the White House and Congress seem to be doing their damnest to make it happen.

Posted by: Brian | Oct 5, 2005 12:37:36 PM

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