America's Soaring Inequality: Income Needed to Be a Top Earner
Income inequality in the U.S. is the highest it has been in decades. Not only has the gap between the richest and poorest Americans grown over the past few years, but recent IRS data shows that the new threshold for reaching the top 1% of earners in the U.S. has grown to more than half a million dollars. To further illustrate the wide disparity in income levels, our new visualization charts the minimum income needed for each income percentile, from the top 50% to the top 0.001%.
- Currently, the combined wealth of the 1% almost surpasses that of the combined wealth of middle-class Americans.
- Even after accounting for inflation, the income needed to reach the top 1% of earners increased 7.2% between 2016 and 2017.
- At the same time, the wealthy have the greatest tax burden. An analysis from Bloomberg shows that the top 1% earned 21% of the country’s income and paid 38.5% of federal income taxes. By contrast, the bottom 90% of earners paid 29.9% of federal income taxes.
This data comes from the Individual Statistical Tables by Tax Rate and Income Percentile released by the IRS. Notably, this data comes from 2017, before the tax overhaul went into effect. The visualization shows a few different metrics that illustrate income inequality in the U.S. Each bar in the graph shows an income percentile, ranging from the bottom 50% to the top 0.001%. The x-axis of the bar graph shows the percentage of the country’s total adjusted gross income that each percentile represents, while the y-axis shows the number of tax returns associated with each income percentile. To show the minimum amount of income required for each percentile, we included these dollar amounts in green circles next to each gray bar in the graph. The circles also grow progressively larger in size to show increasing levels of income.
How Much You Need to Earn For the Top Income Percentiles
1. Top 0.001%: $63,430,119
2. Top 0.01%: $12,899,070
3. Top 0.1%: $2,374,937
4. Top 1%: $515,371
5. Top 5%: $208,053
6. Top 10%: $145,135
7. Top 20%: $97,870
8. Top 30%: $72,268
9. Top 40%: $54,672
10. Top 50%: $41,740
Percent of Total Income Earned by Top Income Percentiles
1. Top 0.001%: 2.34% of total income
2. Top 0.01%: 5.17% of total income
3. Top 0.1%: 10.52% of total income
4. Top 1%: 21.04% of total income
5. Top 5%: 36.53% of total income
6. Top 10%: 47.74% of total income
7. Top 20%: 63.21% of total income
8. Top 30%: 74.23% of total income
9. Top 40%: 82.47% of total income
10. Top 50%: 88.75% of total income
Some experts say that inflation has been pressing more and more individuals into the lowest end of the income distribution. This is the current breakdown of four-member households that are considered to live in poverty, based on factors such as age, race, location, and educational attainment.
Over the past few years, this rising inequality has spurred the growth of social protests such as Occupy Wall Street, as well as a backlash against the ultra-wealthy. Some politicians have responded to rising income inequality by suggesting new legislation to redistribute wealth. Not surprisingly, these proposals have not been warmly received by the richest individuals. For example, after her proposed wealth tax, Elizabeth Warren faced opposition from many billionaires. Similarly, France tried to implement an ultra-wealthy tax, but it didn’t work out as expected due to billionaires leaving the country and the additional tax revenue being fairly small. Since there is less than a year left until the U.S. presidential election, income inequality will continue to be a hot-button issue.
Did any of these income thresholds surprise you? Are they higher or lower than you expected? Please let us know in the comments.