If you ever get the feeling that the rich keep getting richer, you’re not wrong. Not only do America’s top 10% own the majority of wealth in the country, but the top 1% control nearly a third.
That’s according to a new report from the Congressional Budget Office (CBO).
The report found that—adjusted for inflation—the wealth of America quadrupled between 1989 and 2022. In adjusted currency, Uncle Sam’s riches ballooned from $52 trillion to $199 trillion, at an average growth rate of about 4% a year.
In 2022 approximately 40% of Americans’ wealth was made up of retirement savings and social security benefits, with the rest being vested in home equity, non-retirement related financial assets and other holdings.
But not only is America getting richer, the CBO found, inequality became all the more pronounced over those three decades.
In 2022, families in America’s top 10% held 60% of all wealth, up from 56% in 1989. Families in the top 1% held 23% of the nation’s wealth in 1989, which has now grown to 27%.
While that’s good news for the super-rich, those more widely in the top half of income distribution actually saw their share of assets dwindle in the 33-year window.
The share of wealth held by the group occupying the 10% to 40% range saw their portion shrink from 37% of the nation’s assets to 33%. Families in the bottom half of the distribution held 6% of all wealth in both 1989 and 2022.
Life in the top 10%
Families whose wealth exceeds $2.9 million find themselves in the top 10% of wealth in the States. But although the benchmark to join the exclusive club is a meagre $3 million, the average funds of the top 10% in 2022 was $9.1 million.
“After falling during the 2007–2009 recession, the average wealth of the group rose, driven by increases in the value of all categories of assets,” the report reads. “From 2019 to 2022, the average value of almost every category of assets held by families in the group increased further.”
To be in America’s top 1%, the benchmark for entry is considerably higher—Bankrate puts the average wealth of the top echelon at $33.4 million in 2023.
Such levels of wealth would qualify many to fall within the boundaries for a proposed millionaires tax put forward by Sen. Bernie Sanders.
The issue of wealth inequality has piqued interest in recent months after Sen. Sanders discussed the topic with Microsoft co-founder and billionaire Bill Gates, who seemed open to some of the politician’s suggestions.
Sanders’s plan entails an annual 1% tax on a married couple’s net worth above $32 million. For example, a couple worth $32.5 million would pay an annual tax of $5,000. This tax rate would increase to 2% for couples with a net worth of $50 million to $250 million, 3% from $250 million to $500 million, and 4% from $500 million to $1 billion.
For the billionaire bracket, those with a net worth of between $2.5 billion and $5 billion would pay 6% tax over $32 million, 7% between $5 billion and $10 billion, and 8% on wealth over $10 billion.
Of the plan, Gates told the On With Kara Swisher podcast in an episode released last week: “We’d still have to grow the economy to get to the ideal level to set the safety net as high as Bernie alludes to. As you get richer, you raise the safety net.
“That’s the story of the United States, the government’s not very good at executing, so, you know, it’s always imperfect.”
Indeed the CBO’s report concludes that the top 1% are driving wealth gains across America, so Sen. Sanders’s so-called “safety net” may be in for an increase in the near future.
“Family wealth was skewed toward families at the top of the wealth distribution over the entire 33-year period,” the CBO writes. “The share of wealth held by families in the top 10% of the distribution increased; gains in the top 1% accounted for all of that growth.”
The bottom 25%
When JPMorgan CEO Jamie Dimon said the American dream is disappearing, he wasn’t wrong. In an opinion piece for the Washington Post, the 68-year-old wrote: “The American dream is disappearing for many because opportunity is not shared equally.”
The gains made by those on the lower end of the income spectrum—and their net wealth—are meager compared to those in the top percentile.
According to the CBO report, families in the bottom 25% of wealth had less than $178,600 to their names. On average, they had $74,200. Of that cohort, 23%—or 8% of the overall population—had a negative net worth where their debt exceeded their marketable wealth.
While inequality has become more pronounced the bottom 25% are fairing better than they did 30 years ago—and more so in recent years.
The CBO writes growth of wealth in the bottom 25% averaged 3.9% from 1989 to 2019 and 12.4% from 2019 to 2022—largely driven by increases through social security wealth.
