The world's super rich, according to a new report, are
squirreling away phenomenal quantities of their cash in secret tax havens.
Are America's
rich getting richer? Certainly. Every official yardstick shows that America's
most affluent are upping their incomes much faster than everyone else.
How fast? Between
1980 and 2010, note economists Emmanuel Saez and Thomas Piketty,
incomes for America's top 1 percent more than doubled after inflation. They now
average a little more than $1 million.
The top 0.1
percent saw their incomes more than triple, to $4.9 million, over that same
span. And income more than quadrupled for the top 0.01 percent — the richest
16,000 Americans — to nearly $24 million.
And what about
the rest of us? After inflation, average incomes for America's bottom 90
percent actually fell — by 4.8 percent — between 1980 and 2010, from $31,337 to
$29,840.
These numbers
tell us how much people make. Measuring wealth gauges how much
people have. The two, common sense tells us, ought to be related.
If incomes are getting much more unequal, then the distribution of our national
wealth ought to become much more unequal too.
But that doesn't
seem to be the case. A
Congressional Research Service of new Federal Reserve data indicates that the gap between the wealth of
America's most awesomely affluent and everyone else is holding steady.
In 2010, the Fed
data show, the top 1 percent held 34.5 percent of the nation's wealth, almost
the same exact share as in 1995, and not that much more than the 30.1 percent
share they held in 1989.
These numbers
just don't add up — income is increasingly skewed toward the top, but wealth
distribution is holding steady. What can explain this paradox?
Maybe the Federal
Reserve isn't doing a good job of assessing just how much wealth the wealthiest
Americans own. Indeed, Fed researchers do acknowledge that
they don't take into account — for privacy reasons — the wealth of anyone
listed in the Forbes magazine annual list of America's 400
richest.
But including
these 400 only moves the top 1 percent's share of America's wealth up by a bit
over a percentage point. It isn't enough to explain the disconnect between the
extraordinary income gains of America's rich and the modest rise in their share
of national wealth.
Maybe the rich
are simply living large, wasting their astronomical incomes on caviar, private
jets, and other luxuries. But wasteful consumption can't explain the inequality
paradox either. Deep pockets in America's top 0.01 percent could shell out
$5,000 every single day of the year and still have 93 percent of their annual
incomes left to spend.
So what in the
end can explain the inequality paradox? The London-based Tax Justice Network has
an answer. The world's super rich, the group has just reported,
are squirreling away — and concealing — phenomenal quantities of their cash in
secret global tax havens.
The Network's
new tax-dodging study "conservatively"
computes the total wealth stashed in these havens at $21 trillion. That total
could plausibly run as high as $32 trillion.
Americans make
up, we know from previous research,
almost a third of the global super rich. That would put the American share of
unrecorded offshore assets as high as $10 trillion.
Add this $10
trillion to the wealth of America's top 1 percent and the inequality disconnect
between wealth and income largely disappears. Paradox solved.
Now we have to
tackle a much bigger challenge: ending the march to ever greater inequality.
Shutting down tax havens would make a great place to start.
OtherWords columnist
Sam Pizzigati edits Too Much, the
online weekly on excess and inequality published by the Institute for Policy
Studies. OtherWords.org
