Resource Category: Studies of Wealth Inequity

This report offers a lot that’s worth digging into, but a few key takeaways include:

• From 1989 to 2019, total family wealth increased substantially — but that wealth became less equally distributed over the 30-year period. Families in the top half of the wealth distribution (especially the top 10% and 1%) enjoyed greater increases in wealth than families in the bottom half. For example, between 1989 to 2019 total share of wealth of families in the top 10% of the wealth distribution increased from 63% to 72% respectively, meanwhile total share of wealth decreased from 4% to 2% for families in the bottom half of the distribution.
• Part of the wealth disparity between families at different points on the wealth distribution spectrum can be explained by the types of assets making up families’ wealth. While families in the bottom half of the distribution were more likely to hold their wealth in home equity, families in the top half were more likely to hold their wealth in defined contribution and non-retirement financial assets, which were also asset types whose real value increased substantially more during the 30-year period.
• Overall median family wealth varied by racial and ethnic groups over the 30-year period. However, wealth of white families remained significantly greater than wealth of any other race and ethnicity throughout the timeframe. Notably, the median wealth of Hispanic families and Black families increased more overall than median wealth of White families and Asian and other families during the 30-year period. However, by 2019 White families and Asian and other families still had higher median wealth than Black and Hispanic families because Black and Hispanic families started with so little wealth to begin with.

The researchers find that extreme wealth is highly concentrated in Massachusetts and that the Northeast, more broadly, has the highest concentration of any region in the U.S. Their analysis finds that nationally thirty percent of wealth is held by a small fraction (0.25%) of households whose wealth totals over $30 million. When breaking the data down by race, they find that among families with net worth over $30 million, 92% of total wealth is held by white families.

This type of extreme wealth is often held in unrealized capital gains, which is income made on investments that is largely sheltered from taxation under current tax policy. Income from wealth has long been taxed more lightly than income from work — meaning ultra-wealthy families pay less in taxes and can build substantial wealth from their existing assets. This report points to tax policy as an important lever for reducing extreme wealth and economic inequality. The authors explore options for changing state and federal tax codes to increase taxation on extreme wealth as a strategy to reduce the wealth gap and to increase revenue for public services.