The Truth About the 'One Percent'

The typical 'rich' person works for a salary. Only 18% are in the financial industry.

Article by James Piereson. WSJ, 2-18-14. Excerpts:

"This crusade is based on three questionable claims. One is that the wealthy are mostly Wall Street bankers benefitting from rising stock and real estate prices, or executives who pay themselves extravagant salaries. Another claim is that such people unfairly benefit from a system that taxes capital gains at half the highest marginal rate paid by those who earn salaries and wages. Then there is the assertion that the "super rich" have abundant funds that can be taxed to improve the living standards of everyone else. 

All of these claims are false."

"the top 1% received 15% of the national household income (before taxes) in 2010, up from 9% in 1980. A taxpayer needed a taxable income of $307,000 to enter the top 1%, a figure that hardly qualifies as "rich" today, especially in cities like New York, Chicago, Los Angeles or San Francisco"

"the top 1% consists primarily of salaried executives at nonfinancial businesses (30%) and secondarily of doctors (14%), people working in finance (13%) and lawyers (8%). Among the "super rich" in the top 0.1% (about 110,000 households), the distribution still favors business executives (41%) over people in finance (18%)"

"there were approximately 330,000 salaried non-financial executives in the top 1% and some 45,000 in the top 0.1%."

"The vast majority must have earned their salaries in small- and medium-size businesses—not in the largest firms and definitely not in finance."

"The top 1%, and especially the top 0.1%, also includes a growing number of professional athletes"

"Scores of college football or basketball coaches, like Nick Saban and Mike Krzyzewski, earn annual salaries in excess of $2 million."

"The top earners depend heavily on salaries. In 2010 the top 1% earned 36% of their incomes from salaries and wages (what the CBO calls labor income), 22% from businesses, farms and partnerships, and just 19% from capital gains. The majority of their income would thus be taxed today either at the corporate or the highest marginal rate rather than at the lower capital-gains rate of 23.8%."

"The typical "rich" person today is someone who works for a salary and accumulates stocks and bonds through savings,"

"From 1980 to 2010, as the top 1% increased their share of total before-tax income to 15% from 9%, their share of the individual income tax soared to 39% of the total paid, up from 17%."

"in 2010 the federal government raised approximately $900 billion from the individual income tax, of which about $350 billion (39%) was paid by the top 1% of income earners"

"The shift in incomes in favor of the wealthy has been due to several large forces, including a world-wide boom in asset prices, the rise of global markets, and technological innovation that has increased the earning power of the well educated. These have been positive—not negative—forces that have elevated living standards around the globe."