New data from the Federal Reserve shows that the top 1 percent of wealthy individuals in the U.S. now have more wealth than the entire middle class combined.
As of this summer, the middle 60 percent of American earners, which economists typically categorize as the middle class, now own only 26.6 percent of the national wealth, Bloomberg reported. Meanwhile, the top 1 percent control 27 percent of the nation’s collective wealth. This is the first time the richest Americans have had more wealth than the middle class since the Fed began recording such data in 1989.
The past decades have seen growing accumulation of wealth for the richest Americans, coupled with steadily declining wealth for the middle class. In 1989, the top 1 percent controlled 17.2 percent of the nation’s wealth, whereas the middle 60 percent controlled 36.4 percent.
The top 1 percent is made up of 1.3 million households making more than about $500,000 a year — a small fraction of the over 120 million households in the U.S. The 77.5 million middle class families make between about $27,000 and $141,000 a year.
The middle 60 percent have seen declining shares in key financial areas like real estate and corporate equities over past decades. In 1991, the middle class owned 44.3 percent of real estate; they now own 38 percent. That same year, the middle 60 percent owned 21 percent of corporate equities, a number that has now plummeted to only 12 percent.
The pandemic has only exacerbated these gaps. While middle and working class families have struggled over the past year and a half, kept afloat partially by Congress’s stimulus bills, billionaires continued to accumulate tremendous amounts of wealth.
As of August, billionaires in the U.S. have gotten 62 percent richer during the pandemic, accumulating a whopping $1.8 trillion of wealth. This is nearly half of the entire wealth of the bottom 20 percent of earners in the U.S. — accumulated in just 18 months.
Bloomberg notes that part of the reason for the rising wealth gap, especially within the past months, could be due to the inflated housing market, which has led to skyrocketing rents while boosting the wealth of property owners. The middle class also holds a growing portion of consumer debt.
In order to stem the upwards flow of wealth, lawmakers and progressive advocates have been fighting for higher taxes on the wealthy. Sen. Elizabeth Warren (D-Massachusetts) and other progressives have called for the implementation of a wealth tax, and Warren introduced a proposal earlier this year that would levy a 2 percent tax on wealth over $50 million and a 3 percent tax on wealth over $1 trillion. Progressive lawmakers have also called for levying enough taxes on the wealthiest Americans so that there are no billionaires left in the U.S.
The top 1% now has more wealth than the entire middle class. Does that make sense to anyone?
Yes. It’s time for Congress to take on the greed of the billionaires and deliver for the working class of this country.
— Bernie Sanders (@SenSanders) October 13, 2021
Meanwhile, Congress continues to uphold a tax code that often allows the country’s richest individuals to avoid paying taxes altogether. In 2007 and 2011, Jeff Bezos didn’t pay any federal income taxes, according to ProPublica. Bezos is the wealthiest man in the world, sometimes sharing the title with Elon Musk, who has also circumnavigated paying income taxes.
Last month, the Treasury Department found that the top 1 percent of wealthiest people avoid paying more than $160 billion in taxes every year. “Today’s tax code contains two sets of rules,” the Treasury wrote in that report — one for the rich, and one for everyone else.
Progressive lawmakers recently took steps to address systems that allow the tax code to become skewed toward the wealthy in the first place. Last week, Warren and Rep. Pramila Jayapal (D-Washington) sent letters to top accounting firms in a probe into the revolving door between those firms and agencies like the Treasury Department and the Internal Revenue Service (IRS). “Americans are sick and tired of these corrupt schemes,” Warren and Jayapal wrote.