Income Gap and Marginal Tax Rate 1917-2006

From the Nation. The top graph shows the average income of the top o.o1% compared to the bottom 90%. The higher the peak the bigger the gap between the two groups. In 2006 you would need an income of over $10 million to make it into the top 0.01% while your income would have to be less than $100,000 to be in the bottom 90. The second graph shows the marginal tax rate over the same time period. Here is graph I created plotting similar data. {Click on the image to take a closer look}

[tags]Income Inequality, United States, Marginal Tax Rate[/tags]

Average Income in the United States (1913-2006)

I have updated my most popular graph Average Income in the United States. It now includes data through 2006 (in 2006$). I also added recessions from National Bureau of Economic Research {Click on the image to take a closer look}

Data from Emmanuel Saez's web site

[tags]Average Income, United States, Recessions[/tags]

Historical Tax Rates by Income Group: Part 2

In an earlier post, I had a graph showing the Historical Tax Rates by Income Group using data from Pitketty & Saez. Here is another graph (found on Greg Mankiw's Blog) which shows historical tax rates by income group but this time the data is from the Congressional Budget Office.

Addendum 3/3/08 The large difference between the two graphs is due to the treatment of payroll taxes paid by employers and the corporate income tax. The Pitketty & Saez data assumes these taxes are actually paid by employees and stockholders but the CBO data in the above graph does not include them.

Historical Tax Rates by Income Group [NYTimes]

A recent NY Times article included a graph showing the amount of taxes paid to the federal government based on income groups. While I like the graph it does not explain what the income thresholds are for each income group. However, I was able to pull out of the original journal article that the average income for the highest earning 0.01% was $18,113,612.

See also: What does Top 1%, Top 0.1%, Top 0.01% mean? 2005 US Income Distribution part 3

[tags]NYTimes, Taxes, income inequality, wealth, income distribution, superrich[/tags]

All Sources of Income for Top 0.01 Percent

In my earlier post on Sources of Income of the super rich I plotted the percentage of income that comes from wages, entrepreneurial income, dividend income, interest income, rental income, and capital gains for the Top 0.01 percent. Here I am posting the same data but this time all income sources are on the same graph. {Click on the graph to take a closer look}

A few items that caught my attention: the decline (starting in the 1930s) of the importance of Dividend income which was replaced in part by "Entrepreneurial" income then Capitals Gains and finally in the 60s by Wages. Also in the 70s and 80s Interest income becomes more important no doubt due to the high interest rates during those decades.

The income data can be found on Emmanuel Saez's web site.

[tags]income distribution, US income distribution, US income inequality, income inequality, capital gains, super rich[/tags]

Sources of Income for Top 0.01 Percent

In my earlier post on Sources of Income of the super rich I plotted the percentage of income that comes from wages, entrepreneurial income, dividend income, interest income, and rental income for the Top 0.01 percent; but this did not include capital gains. In 2005 capital gains was 18% of the income of the super rich (if you exclude capital gains when determining the Top 0.01 percent). In the graphs below, I have plotted the all 6 income sources for Top 0.01% (this time including capital gains as one of the income sources).

{Click on the graph to take a closer look}

The income data can be found on Emmanuel Saez's web site.

[tags]income distribution, US income distribution, US income inequality, income inequality, capital gains, super rich[/tags]

Sources of Income for Top 0.01 Percent (excluding capital gains)

In my earlier post I plotted the percentage of income that comes from capital gains for the Top 0.01 percent. (In 2005 it was 18% if you exclude capital gains when determining the Top 0.01 percent and 51% if you include capital gains when determining the Top 0.01 percent). In the graphs below, I have plotted the other income sources for Top 0.01% (excluding capital gains when you rank the families). The question I am trying to answer: since most of the income was not from capital gains in the original graph, what are the sources of the unaccounted for income?

{Click on the graph to take a closer look}

The income data can be found on Emmanuel Saez's web site.

[tags]income distribution, US income distribution, US income inequality, income inequality, super rich[/tags]

Capital Gains and the Top 0.01 Percent

The following two graphs look at the capital gains of high income earners but they need a little explanation. Capital gains are a volatile component of personnel income. For example, depending on what is happening in the stock market capital gains can make up a relatively large or small part of the total income. Also capital gain tend to be realized in a lumpy way. Every year there are families who have a one-time jump in income due to the sale of a house, a business or some other assets like stocks. In these cases the income for those families might qualify them for the Top 1%, Top 0.1%, or Top 0.01% but only for a single year. When you are choosing which families are members of the high-income "super rich" you have to make a decision whether to include capital gains when you rank the families by personnel income before calculating the share of income that is capital gains. The blue graph excludes capital gains when determining the top 0.01%, the purple graph includes capital gains when determining the top 0.01%

{Click on the graph to take a closer look}

The income data can be found on Emmanuel Saez's web site.

[tags]income distribution, US income distribution, US income inequality, income inequality, Capital Gains, super rich[/tags]

NYTimes: Income Gap Is Widening, Data Shows

The New York Times had an income graph in a Mar 29th article that reminded me of the Income/GDP post I made last October. The difference is that I was looking at the share of GDP going to the top 10% as compared to the bottom 90% rather than the share of individual income going to the top 1% and bottom 90%. However, both graphs rely on the IRS data collected by Saez and Piketty. One critique I had about their graphic: by using a different scale for the second graph (the average income for the early 2001-05) it was difficult to compare it to the larger graph. This means the relationship between the two graphs was not very clear.

[tags]income distribution, US income distribution, US income inequality, income inequality[/tags]

US Income of Top 0.1 Percent vs Marginal Tax Rate

While the graph in my previous post compared the Top 0.1 percent in different countries, here I made a direct comparison between the US Top Marginal Tax Rate and the Top 0.1 percent income share since 1913. This time just focusing on the United States. {Click on the graph to take a closer look}

Again the effect by the two World Wars is there but what I wanted to emphasize is the relationship between the share of income going to the very wealthy and the change in the top marginal income tax rate.

The income data can be found on Emmanuel Saez's web site. I found the marginal tax rate for the United States in the SOI Bulletin Historical Table A at the IRS site via truthandpolitics.org

[tags]income distribution, marginal tax rate, US income distribution, US income inequality, income inequality[/tags]