Income gains for 1% break records

GREENWICH, CT - SEPTEMBER 15: A multi-million dollar home is viewed in the wealthy town of Greenwich where in 2006 the median price for a single-family home was $1.7 million on September 15, 2010 in Greenwich, Connecticut. In the run-up to midterm elections congress is debating extending the Bush tax cuts on the wealthy. President Obama and most Democrats are advocating that current tax cuts, set to expire shortly, extended for the middle class only, or those making less than $250,000. (Photo by Spencer Platt/Getty Images)
Spencer Platt

WASHINGTON The income gap between the richest 1 percent and the rest of America last year reached the widest point since the Roaring Twenties, an academic study shows.

The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share since 1928. Last year, the incomes of the top 1 percent rose nearly 20 percent, compared with a 1 percent increase for the remaining 99 percent.

The share held by the top 10 percent of earners last year reached a record 48.2 percent.

U.S. income inequality has been growing for almost three decades. But it grew again last year, according to an analysis of IRS figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

One of the researchers, Emmanuel Saez of the University of California, Berkeley, said the incomes of the richest Americans might have surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January, although he said that such a scenario could only explain part of the disparity.

Saez was careful to point out that the 2012 data is based on projections and subject to revision. But from 2009 to 2012, using established data, the conclusions for the vast majority of Americans are just as dreary .

Saez said that during those years, average real income per family grew a modest 6 percent. "However, the gains were very uneven," he wrote. "Top 1 percent incomes grew by 31.4 percent while bottom 99 percent incomes grew only by 0.4 percent from 2009 to 2012.

"Hence, the top 1 percent captured 95 percent of the income gains in the first three years of the recovery."

The top 10 percent haven't done badly, either. Last year, they captured 48.2 percent of income, up from the previous record, 46.6 percent, in 2011.

"We now have more data to show that workers aren't getting fair share of income, which is strengthening the burgeoning movement of worker protests in fast food, retail and the Occupy Movement," said Tamara Draut, vice president of policy and research at public interest advocacy group Demos. "If you think about the notions of what Americans believe about their country, like the American dream of a broad middle class, this should be a wake-up call that this is not a good path for our democracy to be on."

The top 1 percent of American households had income above $394,000 last year. The top 10 percent had income exceeding $114,000.

The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.