by Peter Franklin
Friday, 14
January 2022

The richest 0.00001% in America are getting richer

Just 18 individuals held more than $50 billion in wealth last year
by Peter Franklin

The division of society between the richest 1% of the population and everyone else has become a common way of conceptualising inequality. 

However, 1% is still a very large group. For instance, in the UK it comes to more than half a million people or over a quarter of a million households. According to Simon Lambert of This is Money, an income of at least £120,000 is required to make the cut. That’s a great deal of money for most people, but not an extraordinary level of wealth.

In a new paper, the economists Emmanuel Saez and Gabriel Zucman look at a rather more exclusive group — the richest 0.00001%. In America, this means “a group that includes 18 individuals with more than $50 billion in wealth in 2021.”

The key point is that this tiny handful of people don’t just own a vast amount of the country’s wealth — but a growing share of it: 

Top .00001% Wealth Share in the United States. Credit: Gabriel Zucman

In the early 1980s, the 0.00001% owned between 0.1 and 0.2% of America’s riches, but in the decades since their slice of the pie has “multiplied tenfold”.

What sort of taxes are the ultra-wealthy paying? In percentage terms, the answer is not as much as ordinary Americans. Saez and Zucman summarise the situation in the following chart:

Tax rates by income group (% of pre-tax income). Credit: Gabriel Zucman

Note that the blue area on the chart represents the effect of a hypothetical wealth tax.

The authors argue that previous attempts to levy wealth taxes in Europe haven’t been very successful because they’ve targeted the wrong people — i.e. the merely well-to-do rather than the very richest individuals.

But what is to stop these multi-billionaires from quitting America altogether if the taxman comes after them? Saez and Zucman note that possible reforms might include “a large… tax on wealth upon citizenship renunciation, dramatically reducing the scope for tax competition.”

On the other hand, the US government could just sit down with the richest individuals and negotiate on a case-by-case basis. Indeed, with a membership of just 18 people, the President could deal with 0.00001% himself.  

After all, senior politicians are used to asking billionaires for money. 

Join the discussion

  • This reminds me of the old days of The New Statesman when all articles contained the words, ‘get the Rich’ or ‘tax the Fat Cats’. In fact, for tax purposes, the rich means the middle classes. The super-rich or the super-super-rich can get away with it.

  • effect of a hypothetical wealth tax” – pure speculation. If we we do have such taxation, the incentives for the 18 wealthiest become to spend a great deal of effort avoiding taxation, rather than building better cars, rockets, online stores, search engines etc. Do you also confiscate from the next man down to maintain a differentials, so he too has motivation issues? I think these incentive problems are the main reason Britain grew so slowly before Thatcher’s reforms; British companies were run by accountants minimising taxes while German and Japanese were run by engineers making better products.
    The author is describing a system violating the rule of law; it has the President deciding the individual tax rates for the wealthiest 18 people. That is the road to tyranny.
    All societies have inequality and the the attempt to remove it both fails in that goal and leads to tyranny. The inequality in North Korea between gulag slaves and Kim Jong-Un is greater that the inequality the author describes. Even if you’re only talking about extremes, and the declining middle, where do you draw the line, and how do you stop short of trying (and failing) to end all inequality?
    We should care greatly about absolute poverty, but not relative wealth.

  • Is this like the thought experiment of who really has the power? The king, the priest or the knight?
    In this case, who really has the power: the people who make laws or the people who can buy the people who make the laws?

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