‘The Rich’ Are an Ever-Changing Group |
| ‘The Rich’ Are an Ever-Changing Group Posted: 12 May 2011 08:11 AM PDT The media like to refer to “the rich” as a fixed group — an entrenched plutocracy that's forever held aloft by government bailouts, rigged financial markets and socio-economic advantage. The chances of moving into the ranks of the rich, or falling out, seem increasingly remote.
It's a compelling narrative — but it may not be true. Every year, the IRS publishes data on the highest-paid 400 taxpayers . This year's report shows that the average incomes of the top 400 fell by 21.5%, to $271 million from $345 million the year before. Their share of national income also fell, to 1.31% from 1.59%. Most of the drop was due to a decline in capital gains. No one should pity a person who's income fell to $271 million, of course. But the study showed that this is not a constant group, but rather a revolving door of riches. Since the list began in 1994, only 27% have made the list more than one year. Only four people have made it every year. That means that about three quarters of the Fortunate 400 are one-time wonders — most of whom probably made it into the group by selling a business. This doesn't mean it's easy to get into the group, or that mobility is growing more broadly in America. And the top 400 incomes are still in another stratosphere compared to the rest of us. But it does mean that the top group is constantly in flux. “There's a lot of churning in this group," said Roberton Williams, a senior fellow at the nonpartisan Tax Policy Center. "My guess from looking at the data is that these are people selling a business or cashing out of a large accumulation of stock grants or options." Williams has also studied churn among the top 1%, or those with income of more than $380,000 in 2008. He found that half of the group over a 10 year period made the cut only once. That means that the very top of the American income pyramid is bit like the top of Mt. Everest — a pinnacle reached by an ever-changing group of extreme economic climbers, but very rarely done more than once.
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