TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, January 28, 2015

New Emmanuel Saez Data: Gains From Economic Recovery Still Limited to the Top 1%

New York Times:  Gains From Economic Recovery Still Limited to Top One Percent, by Justin Wolters:

Emmanuel Saez, the economics professor who crunches these numbers based on data provided by the Internal Revenue Service, has just released preliminary estimates for 2013. The share of total income (excluding capital gains) going to the top 1 percent remains above one-sixth, at 17.5 percent. By this measure, the concentration of income among the richest Americans remains at levels last seen nearly a century ago.

It is tempting to note that the latest reading is somewhat below the 18.9 percent share that was recorded in 2012. But Professor Saez warns against reading too much into this year-to-year change. The problem is that his estimates rely on tax data, and tax rates on the rich rose sharply in 2013, leading many to shift taxable income out of 2013, and into 2012. Thus, the latest estimate is probably too low, just as the previous year’s number was probably too high.

Saez Table 1

Saez

When we count the robust increase in capital gains, the overall recovery appears stronger. But because capital gains are largely enjoyed by the rich, it remains the case that nearly all the fruits of that recovery have gone to the rich.

(Hat Tip: Mike Talbert.)

https://taxprof.typepad.com/taxprof_blog/2015/01/new-emmanuel-saez-data-.html

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Comments

Interesting how the "inequitable" recovery is the only one not labelled by its President. Wonder why the NYT would not have done that...

Posted by: MG | Jan 31, 2015 3:51:35 AM

Hmm… what was the big economic news between 2009-2013? Why, of course, the Fed pumping billions into the stock market! (Slapping forehead with hand.) Could it be that all this money flowing to the big banks ended up driving the stock market through the roof? When you combine this with the reality that most of the S&P 500 companies have been using their greedy profits to buyback stock, instead of investing in new business, how could wealth NOT flow to Wall Street? (Hint: Manhattan has the greatest income inequality in the country.)

Sorry, Professor Saez, but 70% tax rates would have done nothing to stop this tsunami of wealth to Wall Street.

Posted by: Dale Spradling | Jan 31, 2015 2:48:57 PM