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The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts

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  • Emmanuel Saez
  • Gabriel Zucman

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.

Suggested Citation

  • Emmanuel Saez & Gabriel Zucman, 2020. "The Rise of Income and Wealth Inequality in America: Evidence from Distributional Macroeconomic Accounts," Journal of Economic Perspectives, American Economic Association, vol. 34(4), pages 3-26, Fall.
    • Handle: RePEc:aea:jecper:v:34:y:2020:i:4:p:3-26
    DOI: 10.1257/jep.34.4.3
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    References listed on IDEAS

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    1. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 553-609.
    2. Gabriel Zucman, 2013. "The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 1321-1364.
    3. Thomas Piketty & Gabriel Zucman, 2014. "Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1255-1310.
    4. Jesse Bricker & Alice Henriques & Jacob Krimmel & John Sabelhaus, 2016. "Measuring Income and Wealth at the Top Using Administrative and Survey Data," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 47(1 (Spring), pages 261-331.
    5. Matthew Smith & Owen Zidar & Eric Zwick, 2020. "Top Wealth in America: New Estimates and Implications for Taxing the Rich," Working Papers 264, Princeton University, Department of Economics, Center for Economic Policy Studies..
    6. Frémeaux, Nicolas & Leturcq, Marion, 2020. "Inequalities and the individualization of wealth," Journal of Public Economics, Elsevier, vol. 184(C).
    7. Emmanuel Saez & Gabriel Zucman, 2016. "Editor's Choice Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(2), pages 519-578.
    8. Congressional Budget Office, 2012. "The Distribution of Household Income and Federal Taxes, 2008 and 2009," Reports 43373, Congressional Budget Office.
    9. Facundo Alvaredo & Lucas Chancel & Thomas Piketty & Gabriel Zucman, 2018. "Distributional National Accounts," Post-Print halshs-03342488, HAL.
    10. Emmanuel Saez & Gabriel Zucman, 2020. "Trends in US Income and Wealth Inequality: Revising After the Revisionists," NBER Working Papers 27921, National Bureau of Economic Research, Inc.
    11. Zucman, Gabriel & Fagan, Teresa Lavender & Piketty, Thomas, 2015. "The Hidden Wealth of Nations," University of Chicago Press Economics Books, University of Chicago Press, number 9780226245423, Febrero.
    12. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    13. Congressional Budget Office, 2012. "The Distribution of Household Income and Federal Taxes, 2008 and 2009," Reports 43373, Congressional Budget Office.
    14. Congressional Budget Office, 2012. "The Distribution of Household Income and Federal Taxes, 2008 and 2009," Reports 43373, Congressional Budget Office.
    15. repec:hal:pseose:halshs-01109372 is not listed on IDEAS
    16. Congressional Budget Office, 2012. "The Distribution of Household Income and Federal Taxes, 2008 and 2009," Reports 43373, Congressional Budget Office.
    17. repec:hal:pseose:halshs-01053616 is not listed on IDEAS
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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