by Rhonda Winter, EcoLocalizer, 4/12/10
The greater the disparity in wealth between the very rich and everyone else, the more unstable an economy becomes. Our nation has now created a larger gap in the distribution of wealth than the massive chasm that helped fuel the Great Depression. In 1928, one year before the global economic collapse, the wealthiest .01% of the U.S. population owned 892 times more than 90% of the nation’s citizens. Today, the top .01% of the U.S. population owns 976 times more than the entire bottom 90%. This is not sustainable, and makes for a very volatile economy….
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n.b. For a better view of the following chart, see the article or, larger, The Nation.
The data for 1917 to 2006 on the top of the axis (in the green) show that the income of the top .01% of families reached a peak in 1928 compared to the income of families in the lowest 90%, then this extreme gap narrowed during most of the 20th century, until the age of Reagan revved up the wealthiest incomes again, and now the gap is higher than ever.
The bottom of the chart (in orange) shows the top marginal tax rate on the highest incomes. After oscillating between 50% and 90% for most of the 20th century, the rate has now declined to a top of 35% (and the effective rate is much lower, due especially to a multiplicity of “tax strategies.” Estate (inheritance) taxes have also declined, to the further advantage of the wealthiest.
Another chart in the article shows that income inequality is about twice as high in the US as the OECD (basically, developed countries) average, and higher than in any other OECD country except Luxembourg (which has the highest per capita income in the world; Norway, with the 2nd highest per capita income, has income inequality about 2/3 of the US).