To be in the top 1% of Americans, you must now earn more than $515,371 a year, an amount that has increased by 7.2% in one year. Although the growth of recent years has benefited the country as a whole, the inequality is increasing, putting the entire economy at risk.
Inequality is increasing in the United States. The latest figures from the Federal Tax Administration (IRS), the tax authorities, confirm this. To be in the top 1% of Americans with the highest income, you now have to earn $515,371. The figures refer to the result for 2017 and represent an increase of 7.2%, adjusted for inflation.
To reach the richest 0.1% of Americans, you need an income of at least 2.4 million dollars. This is 38% more than in 2011. The 0.001% richest, a small group of 1,433 households across the country, earned more than $63.4 million over the year, an increase of 51% since 2011.
America as a whole is richer
The health of the American economy has benefited the entire population and poverty has decreased in recent years, but the wealth of other classes has grown less compared to other classes. The median income has increased by 20% over the same period over the last six years.
The richest are also the ones who pay the most taxes. The richest 1% of Americans received 21% of the country’s produced wealth, but contributed 38.5% to federal tax revenues. Proportionally, the rich paid more, but these figures include only federal taxes. Poor families therefore pay other taxes at the local level, but also taxes related to, for example, the Medicare health program.
Almost all federal taxes (97%) are paid by the richest half of Americans, who receive more than $41,740 million a year, or the equivalent of 89% of the country’s income.
Further increase in inequalities
Economists are starting to sound the alarm. Inequalities are increasingly affecting the country’s economic performance, particularly health care spending. According to the Bureau of the Census, they have continued to increase over the past year and only five OECD countries are more unequal than the United States. According to Federal Reserve data, at the beginning of this year the richest 1% of households owned 31% of the US wealth, compared to 28% ten years ago and 23% thirty years ago.
Observers expect future figures from the tax authorities to be even more skewed. They will take into account the consequences of the tax reform of the Trump administration, which has primarily benefited the wealthier classes. The reform has reduced the average rate for businesses (from 35% to 21%) and individuals, while abolishing some deductions.