There is very little data about the distribution of
wealth in America. There is one source, the Survey
of Consumer Finances, sponsored by the Federal Reserve Board,
that does provide data from 1983.
These data suggest that wealth is concentrated in the hands of a small number of families. The wealthiest 1 percent of families owns roughly 35% of the nation's net worth, the top 10% of families owns over 71%, the top 20% owns about 85%, and the bottom 40% of the population owns way less than 1%. As with the case of income, the evidence suggests an increase in inequality over time.
The distribution of wealth is much more unequal than the distribution of income, especially when focussing on the bottom 60% of all households. The bottom 60% of households possess only about 4% of the nation's wealth while it earns 28.7% of all income.
Can you think of any reason for the much greater inequality in wealth than in income?
What do we tax more in the US: wealth (assets) or income?
Think of all kinds of "income" taxes that exist --
federal,
state, and (in some cases) local. Think of the very few kinds of
assets that are taxed: property taxes, in some states taxes on
the
value of cars. If you own considerable assets do you have
a reason to keep them in forms that will not be taxed?
Looking at the distribution of wealth and looking
at the distribution of income gives the researcher two quite different
views of the amount of inequality in American society.
Which
economic measure -- wealth or income -- should be emphasized?
Those who argue for the greater importance of income make the case that for wealth to actually have a significant impact on one's standard of living it has to be translated into higher income.
Alan Greenspan, former chairman of the Federal Reserve Bank, made the case for wealth:
"Ultimately, we are interested in the question of relative standards of living and economic well-being. We need to examine trends in the distribution of wealth, which, more fundamentally than earnings or income, represents a measure of the ability of households to consume."
