Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts
Journal of Economic Perspectives
vol. 34,
no. 4, Fall 2020
(pp. 3–26)
(Complimentary)
Abstract
This paper studies inequality in America through the lens of distributional macroeconomic accounts—comprehensive distributions of the aggregate amount of income and wealth recorded in the official macroeconomic accounts of the United States. We use these distributional macroeconomic accounts to quantify the rise of income and wealth concentration since the late 1970s, the change in tax progressivity, and the direct redistributive effects of government intervention in the economy. Between 1978 and 2018, the share of pre-tax income earned by the top 1 percent rose from 10 percent to about 19 percent, and the share of wealth owned by the top 0.1 percent rose from 7 percent to about 18 percent. In 2018, the tax system was regressive at the top-end; the top 400 wealthiest Americans paid a lower average tax rate than the macroeconomic tax rate of 29 percent. We confront our methods and findings with those of other studies, pinpoint the areas where more research is needed, and describe how additional data collection could improve inequality measurement.Citation
Saez, Emmanuel, and Gabriel Zucman. 2020. "The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts." Journal of Economic Perspectives 34 (4): 3–26. DOI: 10.1257/jep.34.4.3Additional Materials
JEL Classification
- D31 Personal Income, Wealth, and Their Distributions
- H22 Taxation and Subsidies: Incidence
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- K34 Tax Law