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A chat with Emmanuel Saez: Doing the math for the 99 percent
Key Excerpts from Article on Website of UC Berkeley's alumni publication 'The Promise of Berkeley.'
Posted: July 3rd, 2012
http://promise.berkeley.edu/lib/pdf/2012_spring_promise.pdf
Emmanuel Saez is ... director of Berkeleys Center for Equitable Growth. In 2008, on the cusp of the Great Recession, Saez co-authored a landmark study that revealed a stark gap between the earnings of Americas wealthiest households and the remaining 99 percent. Saezs recent work shows that, while the recession initially reduced the income gap, postrecession gains have mostly gone to the top 1 percent. The extraordinary increase in income concentration in the United States from 2002 to 2007 was driven in large part by deregulation of the financial and real estate industries. The resulting real estate bubble triggered the 2008 recession. Evidence shows that progressive taxation is the most powerful tool for curbing income concentration. For example, from the Great Depression into the 1970s, when the U.S. had very high tax rates on top earners, the income gap was very small, and economic growth was incredibly strong. During the 1990s, incomes for the top 1% nearly doubled, while paychecks for the bottom 99% went up only 20%. Between 2002 and 2007 2/3 of all income gains went to the top 1%. In 2010, the first year of economic recovery, the top 1% captured 93% of income gains.
Note: For Prof. Saez's excellent study, "The Evolution of Top Incomes in the United States" click here.
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