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What triggered this post was a Facebook meme claiming the wealthiest 0.1% have gained $4.4 trillion in the past two years, that they have grown their wealth at the expense of average Americans and that “without them your wealth would have doubled”
When I read that, my reaction is “that’s just wrong and so what, they earned it.” I wish I was that smart. But that is not the typical reaction. Many people readily believe such a meme and are willing to bash the wealthy. I think it is simply envy. I maintain that without the super wealthy many Americans would have less wealth than they do now, and some without a job.
Given the largest asset class of the super wealthy is equities, virtually everyone can build wealth as HD readers well know. We not may be capable of starting a company or new industry and changing the way people live in the process, but we can buy mutual funds and be a 80 percenter (about $3 million at age 65). No budget or spreadsheet required 🤑
As of Q4 2024, the top 0.1% of U.S. households held approximately $22.14 trillion in net worth. This figure is from the Federal Reserve and represents the net worth held by the 99.9th to 100th wealth percentiles. The average net worth for a household in the top 0.1% was $162 million as of Q4 2024.
The top 0.1% (around 134,000 households) owned roughly 15% of America’s total wealth as of Q3 2024. Their largest asset class was equities, valued at approximately $11 trillion.
The solution is easy, create a new company in your garage, issue an IPO and give yourself 20 million shares, wait a few years and bam! you’re an equity one percenter.
I’m not sure what the answer is but we have too many Americans living paycheck to paycheck, unable to afford a comfortable lifestyle without the worry of major medical and housing expenses. Whether that is the fault of the extremely wealthy, I don’t know.
Let’s not forget the spending portion of that equation. That is more than half the problem in many cases. It sure isn’t the fault of the wealthy. We have become a nation looking for others to blame.
I’m thinking if people are strapped, it is not because of overspending. Is it possible that our form of capitalism doesn’t work for the average American?
I think it’s a little of the economic conditions, like overpriced assets and low wage growth and tricky inflation, but it’s also definitely the spending habits of Americans on the whole that make things difficult. People think the government is inefficient at spending, but the American people on the whole are probably orders of magnitude less efficient with their money. We’ve lost the plot about needs and wants, and it doesn’t help that most companies are more than happy to foster this delusion. I mean, just look at all the car commercials out there advertising trucks that are the equivalent of a years salary or more… Yikes 😬
What form is that? I entered the workforce in 1961 with nothing but a high school degree. It worked for me, I made it work for me.
Nobody stopped it from working for me. During the years the stock market worked for me. During those years tax rates were much higher, no tax credits.,
Starting a small home side business worked for me.
Nothing anyone else did stopped it from working.
I see nothing to make capitalism not work over the last 65 years or today.
But if they cut back on spending, what will happen to the economy? We’ll end up in a recession of Americans began saving real amounts if money (>10% of income) for things like retirement!
Before considering new taxes or tax changes for the 1% – like a wealth tax or inheritance taxes or taxation of dividends- consider their application to more average Americans and then apply a fairness test.
The very concepts are important regardless if $3 million or $3 billion are involved.
“Comparison is the death of joy.”
Mark Twain
“a new report from the nonpartisan RAND Corporation, which found that nearly $80 trillion in wealth in the United States has been redistributed from the bottom 90 percent of Americans to the top 1% over the past 50 years.”
Gaming the system?
How has it been redistributed?
“[…]if we had
the income distribution from 1975, the majority of workers (the bottom 90 percent by income)
would have made an additional $3.9 trillion dollars in 2023. Cumulatively, the gap between what
workers from 1975 to 2023 earned and what they would have earned with the counterfactual
income distribution amounts to $79 trillion (in 2023 dollars).”
The study doesn’t actually say redistributed, it just points out that the gap between what bottom 90% workers make and the top 10% make has widened considerably since 1975, and the cumulative gap has reached $79 trillion.
I could see the argument that share buybacks and higher dividends are forms of upward wealth redistribution, since that money is going to enrich investors (generally the wealthiest people in the country) rather than workers. The bottom 50% of wealth holders in the nation have continually seen their share of the wealth pie shrink over that same period. (I believe these numbers were from recent Fed data, but fact check me if I’m wrong.) I wouldn’t be shocked to see it it go from ~2.5% now down to <1% in my lifetime, given current trends.
Since 1975 the biggest effect on this has been the move away from the rules of conquest to the world maritime order. Now the bottom 90% is global not to the nation or even the larger region (say the US and Europe). If we looked at the global group I think we’d see big advances for the bottom.
It also means that we’ve stopped having the rebuild periods where the bottom 50% (from the lucky victor nations) have tended to see prolonged periods of economic success.
You can even see it in the US post Civil War. The north grew and prospered top to bottom, the south not so much.
(My thinking is that we need to think about the bigger issues, what we really want and not fall prey to moving in a direction that could have dire results, that’s how we got WW1 and WW2)
All the angst over CEO pay is among only 500 people.
The majority of their pay is stock awards the value of which depends on the share performance.
Only about 18% of US workers are employed by the largest 500 companies.
The CEO pay has no impact on worker pay, but may be a concern for shareholders. The average pay of all CEOs is under $400,000.
I did an analysis on a large company on the impact on workers if 100% of CEO pay was given to workers. Take a look https://quinnscommentary.net/2020/05/11/fact-or-fiction/
I agree this meme is wrong, and also unproductive. A better solution to the problem expressed in the meme is to follow the principles of the FIRE movement. Instead of complaining about such “successful” individuals you could simply disdain them for their vast waste and abuse of valuable resources, all the while you live just fine on a modest income and save intentionally to exit a system that feeds their avarice.
Well said. I appreciate your putting “successful” in quotes – while those individuals may have an obscene amount of money, that is only one measure of success. And, in my view, not an important or meaningful one.
I also appreciate your proposed solution. Not participating in “a system that feeds their avarice” is better for one’s pocketbook, and is certainly better for the planet.
Thanks for posting this comment – it’s an important reminder that there are ways to channel our frustration/outrage/anger (insert your feeling here!) into actions that are productive and individually meaningful.
More than envy, I think it’s about recognizing that opportunity in America isn’t equally distributed due to capture of government by the wealthy.
Yes, many wealthy individuals have worked hard—but we can’t ignore how public systems like tax policy, bailouts, and regulatory choices have also played a role in concentrating wealth. Market structures today often favor capital over labor. Also, many in the 0.1% also inherited their wealth rather than create it.
I have no problem with inherited wealth. Somebody earned it along the way.
What has blocked anyone’s opportunity? I can think of many tax laws that favor modest and middle class earners, including tax credits, Roth accounts, etc. and all the laws regarding investments apply to everyone.
What wealth we have was accumulated through saving and investment over many years. All of our wealth is in equities or real estate in the form of homes. While on a much smaller scale, we are no different than the 1% and I suspect people at the 50% level would be envious of us.
Regarding inherited wealth, I remembered this from Jefferson:
Inherited wealth is not a problem so long as that wealth is not used to capture government to favor the inheritors.
“What has blocked anyone’s opportunity? I can think of many tax laws that favor modest and middle class earners, including tax credits, Roth accounts, etc. and all the laws regarding investments apply to everyone.”
This is just the latest iteration of how our wealthy federal politicians
per AI:
The median net worth of a member of Congress at the beginning of the 115th Congress (around 2017-2018) was $511,000, which was five times higher than the median net worth of an American household in 2016 ($97,300).Over half of the members of Congress were millionaires in 2020, with a median net worth of approximately $1 million.
tip the scales in tax law towards the most affluent:
per AI
Overall Benefit: Most households are projected to experience a tax cut in 2026 under the bill, compared to what they would pay if the 2017 Tax Cuts and Jobs Act (TCJA) provisions expire as scheduled.Disproportionate Benefits:High-income households: The highest-income 20 percent of households could receive more than 60 percent of the tax cuts, with a substantial portion going to those earning $460,000 or more. The top 1 percent of earners could see average tax cuts exceeding $100,000, representing a significant percentage of their after-tax income.Lower and Middle-Income Households: These groups would also see tax cuts, but they would be smaller in both dollar amount and as a percentage of after-tax income compared to higher earners. Some analyses suggest low-income households might even experience a decrease in after-tax income due to accompanying spending cuts in programs like Medicaid and SNAP.
About wealth and envy: people do not hate lottery winners because everyone has equal chance to buy lottery tickets; people love sport and music celebrities despite their wealth because the celebrities are not a threat to the common aspiration of being rewarded for our talents. The problems arise when the income inequality is perceived as unfair competition or unjust. Our current political division might be rooted in the income inequality being widening, with the haves putting up barriers to wealth via NIMBY policies, creating living-wage jobs only for those with degrees from expensive college names or high-priced licenses, treating the working-class population as slaves and the poor as social parasites. The golden rule is misunderstood – instead of treating others as one wishes to be treated, it becomes the tyrannical rule by the ones with the gold. Political instability in time became revolutions (French Revolution 1789, European revolutions of 1848, Russian Revolution 1917, Arab Spring 2010).
So that is how you see American business treating workers? Few large businesses are controlled by one person, they are public corporations not trying to push down the masses.
Then you could look at WalMart or Amazon or Microsoft and conclude without three people this jobs would not exist.
I don’t agree with your last statement that “… without three people this jobs would not exist.”. I think history is replete with examples of multiple people moving forward with something when the time is right. There were discount big box stores both before WalMart and since. Gates didn’t create the first pc operating system, he just managed the one he bought very well. And growing up in a rural setting I was buying books through the mail as a child long before Amazon. Did they all run and expand their companies exceptionally well; sure. But would other companies have filled those niches if they weren’t there; highly likely.
If not them, someone else. Only one in Portland before 1962. The point is hundreds of thousands of people have jobs because of them.
If IBM had decided that PCs were going to be big business and kept control of the operating system, no Microsoft.
Exactly. And we’d still have pc’s everywhere.
Corporate incentives have not tended to include generous worker compensation, outside of the upper echelons of course. It’s investors first, then customers, then workers.
All these large companies come at the expense of local businesses, and it’s not like Walmart invented groceries, or Amazon invented shipping, or Microsoft invented software. They just have the money and the supply-chain management to run other operations out of town. Walmart is especially egregious with this, often ruining local economies, while providing significantly less tax base to the city. What’s good for Walmart is often bad for cities and workers.
A business will pay what is necessary to hire the workers they need, and to retain them. If they don’t they can’t run the business successfully. To pay more than necessary is not good business. However, a smart business will also share profits in some manner.
Those companies you mention have the resources now, but not when they started.
WalMart no doubt affects small business, but at the same time provides significant benefits to those who shop there, many of modest income. It also provides thousands of jobs that would not exist without them.
Amazon has created selling opportunities for many small businesses, but no doubt impacts large retailers, but provides what shoppers want with great convenience. They were very valuable during the pandemic.
Would people want to go back before these businesses existed? I doubt it.
It’s like cars. We hear about buy American, but walk in any parking lot and see what people choose to drive. Only the Ford F-150 Is among the ten top selling vehicles.
US CEO’s are grossly overpaid. From 1978 to 2023 “top CEO compensation shot up 1,085%, compared with a 24% increase in a typical worker’s compensation”. This meant CEOs were paid 290 times as much as a typical worker. Back in 1965 they were paid 21 times as much. Business Insider makes the disparity 399 times.
In Europe the top 100 companies pay their CEO’s a median 4.15 million euro, which is 110 times the average worker salary. This, much lower, disparity is causing concern about “social cohesion and economic stability”.
Yes, companies need CEOs, but CEOs need workers, at least until they can replace them with robots and AI. At that point we will need to talk basic income, especially in an economy built on consumption.
No one needs a billion dollars, at that level money is just a marker in a status game. Kudos to Gates and French Gates and a few others for at least doing something useful with their money.
US CEOs as a group are not as you describe.
That may be true for the S&P 500, but not representative of all CEOs, the majority of which earn under $400,000.
Only about 18% of the US workforce is employed by a S&P 500 company and many of those are represented by a union.
The pay level and performance of CEOs is the problem of the shareholders and board of directors. It has no impact on workers.
Most CEO compensation is equity, not cash and much is at risk.
if we were fortunate to invest in an IPO and it took off and five years later we were multi millionaires would that be unfair? We took a risk and were rewarded, it could have gone the other way as well.
I admit that I have no business education or idea how to run a huge business. And I realize there are a lot of “CEOs” running small firms. But as for the CEOs of major corporations, it seems like something is off when you look at the widening gap between their total compensation and the median compensation of their employees which took place between 1978 and 2023. I find it hard to believe the boards couldn’t have found sufficiently qualified people for less money.
That is very unlikely they can find such a person. The CEO pool is very limited and no CEO is going to take the risk of moving to a new company without significant compensation. Sometimes you have to buy out the long term pay they leave behind.
Let’s say a CEO does move, but circumstances lead to his or her being let go a few years later. They get a payout, but how easy do you think it will be to get a comparable job?
With the kind of money they make they shouldn’t need another job.
Exactly – plus lots of CEOs regardless of “failure” in a role will end up with plenty of offers whether that be at “lesser” corporations or multiple non-Exec roles. Exactly because of the perception that RDQ identifies that the talent pool is shallow and experience of having played all the politics at board level is valued. See also Fortune 500 execs across the board who move into CEO positions elsewhere.
It seems to be a game that once you breach the ceiling to access the club you can bounce around for quite some time without relegation.
A Board has to be pretty stupid to hire a failed CEO and put themselves at risk.
Many times the dismissed CEO is the result of more than pure job performance. The top person gets the blame for everything.
sometimes it’s looking for the right fit and politics or a disgruntled key investor.
“The top person gets the blame for everything.” Of course. It goes with the job. Remember Eisenhower’s second D-Day letter.
Envy is not a sin that I am guilty of, though I have managed to check off lots of other ones.
It’s always been interesting to me that economic growth in the US was highest during the 1950s and 60s when tax rates topped out around 90%. When taxes were reduced to a more reasonable 37%, executive pay went nuclear in comparison to that of the worker bees.
Is there a connection between tax rates, economic growth, executive and worker pay?
I’m no historian, but I’m fairly confident that the majority of that growth in the 50s and 60s is a direct result of being the last nation standing economically after World War 2… I can’t imagine we’d be anywhere near as economically successful compared to the EU or Asia if that war had been fought primarily on US soil.
Good theory Liam. The returning servicemen getting married, having families, and entering the workforce would have sent demand soaring.
Side note, I think the top marginal tax rate hit 94% for a couple years during the war.
It’s more about not having any serious competition worldwide. The world needed to rebuild and America held all the money, a lot of the resources, and suffered relatively few negative consequences compared to countries in Europe and Asia. Frankly, it might be the greatest economic tailwind in all of modern history. You could hardly have had a more ideal situation. The war also saved the US from the depression, which was another fortunate benefit.
The ability to create and own great wealth has incentivized the advances that have reduced poverty (by about 90% globally) and increased standards of living at a faster pace than ever in human history.
What if the price of improving the lives of the billions of people is a system that allows super wealth for some small number? I say we should tread very carefully with large scale wealth envy. There’s more at risk than how much some people have accumulated.
Dick, can you supply your data source?
On a related note Barrons recently published their highest paid CEOs for 2025. I’ve since lost access to the whole article, but I did a review when it first came out. I was struck by how many of them were from old, established companies. For example, the #2 highest paid was GE, hardly a start-up. Many were regulated utilities, again not start-ups or high-flying tech companies. My experience in Fortune 500 corporations is that the C-suite are pretty much able to dictate compensation, with – often- little connection to corporate performance. This control of the executive compensation perks reaches down to the VP and director levels. I recall a number of conversations with high level engineers disgruntled with sharp cutoff between individual contributors and the exec-level. Start-ups that I’m familiar with seem to share more with the rank and file.
I would tend toward thinking its not so much the ultrawealthy founders that are the problem but the upper management who are on packages worth many multiples of what other workers are getting. The cliff edge of reward between senior value adders and exec levels can be dramatic yet execs are often more likely to show less loyalty.
Then you have organisations like Amazon etc where stock based comp can have a distorting effect on entire local economies. I’ve heard in Seattle there can be huge differences in being able to afford to buy a home for broadly equivalent jobs depending on whether one or more partners has vesting stock at Microsoft or Amazon.
That’s not to say that inheritance taxes on the superwealthy are not a valid idea – use the wealth for good while you are alive rather than gild family dynasties. Consumption taxes probably don’t touch the side with the superwealthy the whole point of their wealth is that they they simply cannot spend the amount it accretes in value.
In addition to a lower cut off for inheritance taxes, I would like to see an end to “step up on death”, which has never made any sense to me.
I got the summary from Gemini, but it’s Federal Reserve data.
I did exec compensation and the process depends on how strong the board compensation committee is. I wouldn’t say dictates compensation certainly not at the VP and Director level. But CEOs make “suggestions” for themselves. On the other hand companies need to attract and keep them and there is a limited pool of talent.
I agree the connection to pay and performance is tenuous. I spent many hours trying to craft valid incentives for officers and get them by the CEO.
It would be interesting to look at the top 0.1% of households in wealth, and see how many are the original entrepreneurs, and how many inherited their wealth?
Does it really matter, someone earned it. Estimates vary between 20% and 41% of the 1% inheriting some money but not necessarily tens of millions. Nobody actually knows though. I think the point is many grew the wealth they did inherit.
I once inherited a funeral bill.
Two points about the super wealthy:
1) They could share their wealth by paying their employees more- see Jeff Bezos
2) They should be paying more in taxes-income/inheritance/wealth(?)
Bezos owns less than 10% of Amazon. As you know, it’s a publicly traded company and like all of them operates in the interest of shareholders. If a company can’t hire needed workers and must raise wages that’s valid, but if wages are raised when that is not the case and shareholder value declines, probably not.
Income taxes perhaps, but I think inheritance and wealth taxes are a bad idea. I favor a VAT with exclusions for items most purchased by the lower 50% income wise. That way high end consumption by the wealthy is taxed.
“I think inheritance and wealth taxes are a bad idea.”
Your reasoning is?
Per Bloomberg 3 of the top 15 billionaires in the US are Walton inheritance recipients (over 100 billion dollars each.
You can’t even spend that much. The number is just a trophy.
America’s Richest 0.1% (134,000 households) own $11 trillion in equities, their largest asset class. This is worth more than the total combined wealth assets of the bottom 50% (66.6 million households) per Visualcapitalist.com as of March 2025.
This is the best of capitalism?
Yeah, it is. As long as there is the ability without artificial barriers blocking opportunity for anyone, why should there be limits?
The stock market has made most billionaires and should there be a deep recession or depression it will take it away.
When a billionaire buys a mega yacht or builds an outrageous mansion, businesses and workers benefit.
I take an RMD each year, but the markets so far have replaced it and more. Is that unfair?
There are two things in my opinion to guard against, opportunity taken away or blocked from citizens and the political influence of money and that has two parts, the influenced and influencers. We need to hold the influenced accountable.
My reasoning is wealth earned in a family belongs to the family. Don’t look at it as only billionaires, but more average people whose wealth may be a business or farm or even homes.
As far as a wealth tax, it’s a slippery slope to tax what has not been realized, especially when the amount taxed can easily decline. look at it a more mundane way. Should people be taxed on the value of their retirement savings before being accessed?
It’s not the amount of money involved, it is the concept.
Here is another tax giveaway for the ultra wealthy:
per AI:
For 2025, the federal estate tax exemption amount is $13.99 million per individual. This means that individuals can transfer up to $13.99 million in assets during their lifetime or at death without incurring federal gift or estate taxes. Married couples can combine their exemptions for a total exemption of $27.98 million.
The Tax Policy Center estimated that in 2023, only about 0.14 percent of decedents would pay any estate tax.
This policy doesn’t help the “average” American, but the Ultra wealthy