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 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.