# How the ultra-rich are pulling away from the ‘merely’ rich

Thomas Piketty and Emmanuel Saez have for a decade now maintained the world's best database on income inequality in various industrialized countries, and in the U.S. in particular. Their newest update (Excel), which extends the dataset to 2011, just came out last month. Here are five things to take away from it.

1. Yes, income inequality is increasing

Here's how different groups' shares of the income pie have changed from 1917 to 2011:

Inequality shrunk dramatically during the 1940s, stayed constant until about 1970, and since then the rich's share of income has been growing. In 2011, 4.48 percent of all income in the United States was captured by the top 0.01 percent of Americans — a group of less than 16,000 households (or "tax units" in IRS parlance). That's actually down from a peak of 6.04 percent in 2007. Of the top 10 years for the top 0.01 percent, eight have come since 2000; the other two were 1928 and 1929, right before the Great Depression.

2. Capital gains income is exacerbating the problem

Here's a GIF comparing the above chart to an equivalent one that excludes capital gains income:

If you don't look at capital gains, the top 0.01 percent only captures 3.15 percent of income in the United States. That's about a third smaller a share as when capital gains are included. That suggests that capital gains income is exacerbating the income inequality problem.

3. The merely rich aren't gaining ground as fast as the ultra-rich

The average member of the top 0.01 percent made \$23,679,531 in 2011; the cutoff for membership in the group was \$7,969,900. That's a good deal less than 2007, when the average member of the group made \$38,016,760. For comparison, the average member of the bottom 90 percent made \$30,437 in 2011 and \$35,173 in 2007. Because of the difference in scale, it's hard to graph all these groups on the same scale, so I normalized them all such that their average income in 1917 equals 100:

Until the 1970s, the bottom 90 percent had actually seen its income grow more than any other income group. The income gap was shrinking. But the ultra-rich quickly reversed that trend. In 2007, the top 0.01 percent had an average income almost seven times that of 1917; the average income of the bottom 90 percent had barely tripled. The country has grown more unequal, not less, since then. And, interestingly, the 90-99th percentiles all saw their average income grow faster than all but the tippy-top of the top 1  percent. The divide between the rich and the rest isn't the only gap growing, in other words. The gap between the ultra-rich and the merely rich is growing, too.

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