The Washington Post

More reasons why the U.S. is the best place to be rich

Photo via Flickr user thefixer, used under a Creative Commons license.

It's great to be rich no matter where you live - but according to some new research from the OECD, it's really, really great to be rich in the U.S. Here's why:

Top earners are claiming a much larger share of the income pie, especially in the U.S.

top income shares

In the U.S., the share of total gross income (excluding capital gains) going to the top 1 percent of earners has more than doubled since 1981, standing at nearly 20 percent in 2012. Other countries have seen similar rises, but none as dramatic as the one in the U.S. And the super-rich - the top 0.1 percent - have quadrupled their share of the pie, from 2 percent in 1980 to more than 8 percent in 2010.

While the recession put a bit of a damper on the gains of the 1 percent, previous OECD research shows that they've already gained back their losses, and then some.

In the U.S., over 80 percent of income gains have gone to the top 10 percent of earners

Since 1975, the top 1 percent have captured nearly half of all income gains in the U.S., and the next 9 percent have captured nearly a third. That leaves 20 percent of income gains for the remaining 90 percent of wage earners. This disproportionate income surge "helps explain why so many people have not felt their incomes rising in line with national GDP growth," the OECD writes.

income growth

By contrast, in Denmark about 90 percent of the income gains have gone to the bottom 90 percent of earners. The bottom 90 percent received large shares of income growth in other European countries as well.

Long story short: the past 40 years have been much kinder to the top earners in the U.S. than to top earners anywhere else.

Tax policy has been a major driver of the rise of top incomes

In 1981, the average top income tax rate among OECD countries was 66 percent. Today, it's only 43 percent - effectively, top wage earners have seen their income taxes cut by one-third. "The decline in top rates of income tax leads to a reduction in the tax burden carried by high earners and thus increases their post-tax income," the OECD writes. "Higher disposable income makes it easier for individuals to save and accumulate capital which eventually increases incomes further." Paging Dr. Piketty?

Other taxes primarily affecting top earners - like inheritance and capital gains taxes - have seen substantial cuts as well.

Christopher Ingraham writes about politics, drug policy and all things data. He previously worked at the Brookings Institution and the Pew Research Center.



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