Top .001% Making 636% More Since 1980, But GOP Tax Scam Will 'Turbocharge Inequality'
As Republicans seek to ram through tax plan that favors corporations and uber wealthy, global inequality report shows ever-growing chasm between rich and poor
A new report released Thursday finds that economic inequality has soared in nearly every country around the world, with the United States' income and wealth gaps widening to a particularly extreme degree compared to European and other countries.
The World Inequality Report, compiled by five economists including Thomas Piketty and Emmanuel Saez, found that the richest one percent of Americans held 39 percent of the nation's wealth in 2016, compared with about 22 percent in 1980. Meanwhile, the average annual income for the bottom 50 percent of Americans has stayed at $16,000 per adult over the last four decades, adjusting for inflation.
Most of the increase in wealth at the top has been due to fast-rising incomes among the very richest Americans; while annual income for the one percent has shot up by 205 percent since 1980, the top .001 percent of Americans--only about 1,300 households--have seen their earnings go up by 636 percent.
In an editorial published in the Guardian alongside their new report, Piketty and his colleaguesnoted that the Republican tax plan that Congress is expected to vote on as early as next week "will not only reinforce this trend, it will turbocharge inequality in America. Presented as a tax cut for workers and job-creating entrepreneurs, it is instead a giant cut for those with capital and inherited wealth. It's a bill that rewards the past, not the future."
The tax bill would further leave out the bottom 50 percent of American earners, who have been left out of wealthy's income boom due to the collapse of federal minimum wage laws, the weakened power of unions, and increasingly unequal access to higher education, the report finds.
"Recent research shows that there can be an enormous gap between the public discourse about equal opportunity and the reality of unequal access to education," reads the study. "Democratic access to education can achieve much, but without mechanisms to ensure that people at the bottom of the distribution have access to well-paying jobs, education will not prove sufficient to tackle inequality. Better representation of workers in corporate governance bodies, and healthy minimum-wage rates, are important tools to achieve this."
While income inequality has reached a new extreme in the U.S., Western European countries have experienced slightly less severe gaps. The top 10 percent of earners hold about 37 percent of wealth in Europe, and the income share captured by the richest one percent in the region has only risen from about 10 percent in 1980 to about 12 percent in 2016, compared to the rapid rise in the U.S.
Meanwhile, the Middle East, Africa, and Brazil were noted as places where income gaps haven't grown much in the last four decades--instead staying at a severe level since 1980. In Brazil and sub-Saharan African nations, the wealthiest 10 percent of the population own about 55 percent of the national income, while in the Middle East they control more than 60 percent.
The World Inequality Report was released a day after the World Health Organization and the World Bank published its own study showing that nearly 100 million people around the world are forced to choose between healthcare costs and other necessities, including food and education, due to extreme poverty.
"Furthermore," the WHO-World Bank study notes, "some 800 million people spend more than 10 percent of their household budget on health care, and almost 100 million people are pushed into extreme poverty each year because of out-of-pocket health expenses."
In addition to access to education and a living wage, the World Inequality Report recommends progressive tax structures as a way to combat soaring inequality around the globe, as well as a crackdown on tax havens among the wealthy, like those detailed in the recently-released Paradise Papers.
In their report, Piketty and his fellow economists say that rising global inequality is "not inevitable in the future" and point to European nations, who have enacted policies specifically designed to lessen the gap between rich and poor. "If in the coming decades all countries follow the moderate inequality trajectory of Europe over the past decades," they write, "global income inequality can be reduced--in which case there can also be substantial progress in eradicating global poverty."