AGOVERNMENT BY AND FOR THE WEALTHY
In 1976, the richest 1 percent of Americans held 21.8 percent of the country's wealth. By 1999, it had 33.8 percent. In 1980, the top one percent of Americans earned eight percent of the nation's total income. By 1992, the top one percent had risen to 14 percent of the country's population. Their average income in 1992 was $464,800, an increase of 215 percent from ten years before.
In 1980, the next nine percent of Americans earned 24 percent of the country's income. And 12 years later in 1992, that number crept up to 25 percent. That left the bottom 90 percent of Americans, who make under $65,000 annually, with 68 percent of the nation's income in 1980. By 1992 that number had dwindled to 61 percent.
The disparity between the rich and poor continued into the 1990s. The top one percent of Americans controlled 30.4 percent of all the nation's wealth (not income). The next nine percent controlled 36.8 percent of all the wealth. And the bottom 90 percent of Americans account for 32.8 percent of all the wealth in the United States. The economic explosion of the 1990s continued to create a large gulf between the haves and the have-nots. Four of every five households now takes home a smaller percentage of the national wealth than 20 years ago.
Between 1983 and 1997, only the nation's top 5 percent of households realized an increase in their net worth, while the wealth of the bottom 95 percent declined. In 1999 the top 20 percent of families controlled 49.2 percent of the national income, while the bottom 20 percent had just 3.6 percent.
Author Christopher Lasch (The Revolt of the Elites and the Betrayal of Democracy) wrote that between 1997 and 1999, the wealth of the top one percent of households exceeded the combined wealth of the bottom 95 percent. According to the Congressional Budget Office, the top 1 percent of households had an average before-tax income of $786,000 and after-tax income of $516,000. However, the average after-tax income of the country's poorest 20 percent of families fell 9 percent between 1977 and 1999.
Meanwhile, the net worth of the bottom 40 percent of households dropped by 40 percent. In The Overworked American, author Juliet Schor reported that the combined net worth of the Forbes 400 was $1 trillion in 1999. That easily surpassed the $655 million they were worth just a year before in 1998.
The Internal Revenue Service concluded that gaps between the rich and poor widened in the late 1990s. Published in the Los Angeles Times (October 10, 2000), IRS statistics revealed that average after-tax income rose nine times faster for those at the very top of the income spectrum than for most other Americans. The IRS data indicated that the average after-tax income of the top 1 percent of tax filers jumped $121,000 -- or 31 percent -- just between 1995 and 1997, after adjusting for inflation. That compared to an increase of 3.4 percent in the average after-tax income of the bottom 90 percent of tax filers. The $121,000 average income gain enjoyed by the top 1 percent of tax filers during this period was several times the total income of the typical middle-class household.
Since 1997, the incomes of virtually all groups improved. But IRS data since 1997 suggested that income gains for those at the top of the income spectrum continued to outstrip income gains for other Americans. These data indicated that capital gains income rose approximately 20 percent just between 1997 and 1998 and that 72 percent of all capital gains income in 1998 went to tax filers with incomes exceeding $200,000. This showed that income disparities widened further in 1998.
Income data compiled by the Congressional Budget Office from 1977 to 1995 showed dramatic increases in income gaps. During this period, average after-tax income dropped for the bottom two-fifths of the population, was stagnant for the middle fifth and rose for the upper 40 percent, including an increase of 27 percent for the top fifth. Meanwhile, the average after-tax income of the top 1 percent of the population soared by 87 percent.
Data obtained by the Census Bureau have been inadequate in assessing income disparities. Consequently, the agency never published income information for the top 1 percent of the population. For example the standard census data did not include capital gains income, thereby missing $426 billion in income in 1998. Therefore, data obtained by the IRS are the IRS data are the sole reliable source of data on the incomes of these individuals. The IRS data, which took up where the CBO data leave off -- since the CBO data currently extend only through 1995 -- suggested income disparities might have stopped growing in recent years.
Globally, the disparity between the privileged class and the poor widened in the 1980s and 1990s. A 1999 United Nations Human Development report concluded that in 1960 the income gap between the fifth of the people living in the world's richest countries and the fifth living in the world's poorest was 34 to 1. By 1990, the gap had widened to 60 to 1. And by 1998 it had escalated to 78 to 1. By the end of the 1990s, the income of the world's 200 richest people increased four-fold between 1995 and 1999 to more than $1 trillion. Americans ranked in the top seven slots of these elitists. Their average net worth was $5 billion each. The combined wealth of these 200 individuals equaled that of the world's poorest 2.5 billion people. In 1900, the United States' per-capita income was nine times larger than that of Chad and Ethiopia. In 1999 it was 45 times larger.