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Income Distribution in the U.S.

This page is intended to collect some of the best sources of data on income concentration for easy reference.

The first source is the spreadsheet created annually by Emmanuel Saez, of the University of California, Berkeley, and Thomas Piketty, published originally under the title Income Inequality in the United States, 1913-1998, in the Quarterly Journal of Economics in 2003 (39 pages). The article includes numerous tables and graphs, and each year since then, the authors have provided an updated spreadsheet containing the data and the extended graphs; as of January, 2009, the data is complete through 2006. A shorter article for the more casual reader, entitled Striking it Richer: The Evolution of Top Incomes in the United States is also updated through 2006. The spreadsheet itself is at http://www.econ.berkeley.edu/~saez/TabFig2006.xls, and one can download it and do one's own calculations, if that is of interest.

They show income for 8 groups:

  • P0-89 (bottom 90%) —    9 out of 10 households — income below $104,696 (average income, $30,374*)
  • P90-100 (top 10%) —      1 out of 10 households — income above $104,696 (average income, $269,658*)
  • P90-95 (next 5%) —         1 out of 20 households — income between $104,696 and $148,423 (average income, $122,429*)
  • P95-99 (next 4%) —         4 out of 100 households — income between $148,423 and $382,593 (average income, $210,597*)
  • P99-100 (top 1%) —         top 1 out of 100 households — income above $382,593 (average income, $1,243,516*)
  • P99.5-100 (top 0.5%) —   top 1 out of 200 households — income above $597,584 (average income, $2,022,315*)
  • P99.9-100 (top 0.1%) —   top 1 out of 1,000 households — income above $1,898,200 (average income, $6,289,800*)
  • P99.99-100 (top .01%) — top 1 out of 10,000 households — income above $10,659,283 (average income, $29,638,027*)

    * calculated including capital gains [source: P&S spreadsheet, table A6] ... see discussion below

They calculate these percentile groups excluding and including capital gains. For 2006, capital gains were equivalent to 9.38% of the aggregate income before capital gains (in 1986, 13.49%; in 2000, 10.76%; in 2005 9.71%; in many other recent years, in the range of 4%). Notice that ranking on income excluding capital gains provides a very different result from ranking including capital gains — some households in the top 1% by one criterion are not in the top 1% by the other.

Here are a few highlights, along with the table where you'll find the supporting data.

  • Excluding capital gains, in 2006,
    • the P99-100 (Top 1%) received 18.24% of the income
    • the P90-99 (Next 9%) received 27.04% of the income
    • the P0-89 (Bottom 90%) received 54.70% of the income [Table A1]
      • in 1976, these percentages were 7.89%, 24.53% and 67.58%.
    • the P99.99-100 (Top 1 out of every 10,000) received 3.48% of the income; the next .09% received 4.66%
      • in 1976, these percentages were 0.56% and 1.46%
  • Keeping the same ranking criterion — excluding capital gains from the ranking, but including them in the income,
    • the P99-100 (Top 1%) received 20.32% of the income including capital gains
    • the P90-99 (Next 9%) received 26.51% of the income including capital gains
    • the P0-89 (Bottom 90%) received 53.17% of the income including capital gains [Table A2]
      • in 1976, these percentages were 8.33%, 24.31% and 67.37%.

    • the P99.99-100 (Top 1 out of every 10,000) received 3.89% of the income; the next .09% received 5.39%
      • in 1976, these percentages were 0.65% and 1.59%

  • Shifting the ranking criterion to include capital gains when sorting households,
    • the P99-100 (Top 1%) received 22.90% of the income including capital gains
    • the P90-99 (Next 9%) received 26.79% of the income including capital gains
    • the P0-89 (Bottom 90%) received 50.34% of the income including capital gains [Table A3]
      • in 1976, these percentages were 8.86%, 24.55% and 66.59%.

    • the P99.99-100 (Top 1 out of every 10,000) received 5.46% of the income; the next 0.09% received 6.13%
      • in 1976, these percentages were 0.86% and 1.73%
    • In the P99.99-100 group, 49.6% of the income is from capital gains; in the next 0.09% group, 32.9% is from capital gains; in the lower half of the top 1%, only 12.9% of income is from capital gains. [Table A8]

The Congressional Budget Office also provides some data at http://www.cbo.gov/ftpdocs/88xx/doc8885/12-11-HistoricalTaxRates.pdf It is broken out not by quantiles of households, but quantiles of individuals, so it looks a little different. Summary Table 1 shows, among other things, that for the first four quintiles and, likely, for at least part of the top quintile, Social Insurance Taxes (column 6) are higher than Individual Income Taxes (column 5), and that corporate income taxes fall rather heavily on the top 1% (column 8, row 090, but not all that heavily on the remainder of the households.

Blue type denotes WealthandWant calculations.

Summary Table 1. Effective Federal Tax Rates, 2005
 
Income Category
Millions
of
House-
holds
Average Income
(2005 dollars)
Effective Tax Rate (Percent)
Pre-
tax
After-
Tax
All
Federal Taxes
Individual Income
Taxes
Social Insurance
Taxes
Individual plus Social Insurance
Corporate Income
Taxes
Excise
Taxes
 
(1) (2) (3) (4) (5) (6) (7) (8) (9)
01 Lowest Quintile
24.1
15,900
15,300
4.3
-6.5
8.3
1.8
0.4
2.1
02 Second Quintile
22.0
37,400
33,700
9.9
-1.0
9.2
8.2
0.5
1.3
03 Middle Quintile
22.2
58,500
50,200
14.2
3.0
9.5
12.5
0.7
1.0
04 Fourth Quintile
22.6
85,200
70,300
17.4
6.0
9.7
15.7
1.0
0.8
05 Highest Quintile
23.1
231,300
172,200
25.5
14.1
6.0
20.1
4.9
0.5
06 All Quintiles
114.5
84,800
67,400
20.5
9.0
7.6
16.6
3.1
0.8
07 Top 10%
11.7
339,100
246,300
27.4
16.0
4.8
20.8
6.1
0.4
08 Top 5%
5.8
520,200
369,800
28.9
17.6
3.5
21.1
7.4
0.3
09 Top 1%
1.1
1,558,500
1,071,500
31.2
19.4
1.7
21.1
9.9
0.2
Source: Congressional Budget Office.
Notes: Income categories are defined by ranking all people by their comprehensive household income adjusted for household size - -that is, divided by the square root of the household's size. (A household consists of the people who share a housing unit, regardless of their relationships.) Quintiles, or fifths, of the income distribution contain equal numbers of people.
Comprehensive household income equals pretax cash income plus income from other sources. Pretax cash income is the sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement benefits plus taxes paid by businesses (corporate income taxes and the employer's share of Social Security, Medicare, and federal unemployment insurance payroll taxes) and employee contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance).
Households with negative income are excluded from the lowest income category but are included in the totals.

Summary Table 2 shows (column 2) that the top 1% of us receive 18.1% of the pre-tax income, the next 9% receive 22.8%, and the bottom 90% 59.1%. After federal taxes, those percentages (column 3) are 15.6%, 21.8% and 62.6%. The lowest income quintile receives only 4.8% of the after-tax income. Column 7 shows that this lowest quintile is not asset-rich seniors living off of a portfolio of corporate shares, at least not tax-sheltered ones. (Table 1 shows us that average after-tax income is this quintile is $15,300.) The final column, Excise Taxes, might give us some notion of what the distribution of a national Sales Tax, such as the "FairTax" might be.

Summary Table 2: Shares of Federal Tax Liabilities, 2005
 


Share of Income
Share of Tax Liabilities
 
Income
Category
Percentage
of
Households
Pre-
tax
After-
Tax
All
Federal
Taxes
Individual
Income
Taxes
Social
Insurance
Taxes
Corporate
Income
Taxes
Excise
Taxes
   
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
00
All Quintiles [from Summary Table 1] Effective Federal Tax Rates (additive across):
20.5%
9.0%
7.6%
3.1%
0.8%
01 Lowest Quintile
21.1
4.0
4.8
0.8
-2.9
4.3
0.6
11.1
02 Second Quintile
19.2
8.5
9.6
4.1
-0.9
10.1
1.4
14.4
03 Middle Quintile
19.3
13.3
14.4
9.3
4.4
16.7
3.0
18.1
04 Fourth Quintile
19.7
19.8
20.6
16.9
13.1
25.1
6.2
21.9
05 Highest Quintile
20.2
55.1
51.6
68.7
86.3
43.6
87.8
34.1
06 All Quintiles
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
07 Top 10%
10.2
40.9
37.4
54.7
72.7
25.8
81.6
21.2
08 Top 5%
5.1
31.1
27.8
43.8
60.7
14.4
74.9
13.5
09 Top 1%
1.0
18.1
15.6
27.6
38.8
4.0
58.6
5.5
10 Next 4%
4.1
13.0
12.2
16.2
21.9
10.4
16.3
8.0
11 Next 5%
5.1
9.8
9.6
10.9
12.0
11.4
6.7
7.7
12 Second 10%
10.0
14.2
14.2
14.0
13.6
17.8
6.2
12.9
13 Bottom 80%
78.2
44.9
48.4
31.3
13.7
56.4
12.2
65.9
 
14 Top 1%
1.0
18.1
15.6
27.6
38.8
4.0
58.6
5.5
15 Next 9%
9.2
22.8
21.8
27.1
33.9
21.8
23.0
15.7
16 Bottom 90%
88.2
59.1
62.6
45.3
27.3
74.2
18.4
78.8
Source: Congressional Budget Office.
Notes: Income categories are defined by ranking all people by their comprehensive household income adjusted for household size--that is, divided by the square root of the household's size. (A household consists of the people who share a housing unit, regardless of their relationships.) Quintiles, or fifths, of the income distribution contain equal numbers of people.
Comprehensive household income equals pretax cash income plus income from other sources. Pretax cash income is the sum of wages, salaries, self-employment income, rents, taxable and nontaxable interst, dividends, realized capital gains, cash transfer payments, and retirement benefits plus taxes paid by businesses (corporate  income taxes and the employer's share of Social Security, Medicare, and federal unemployment insurance payroll taxes) and employee contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance).
Households with negative income are excluded from the lowest income category but are included in the totals.

 


 

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