TOP WEALTH IN AMERICA: NEW ESTIMATES AND IMPLICATIONS FOR TAXING THE RICH

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This paper uses administrative tax data to estimate top wealth in the United States. We build on the capitalization approach in Saez and Zucman (2016) while accounting for heterogeneity within asset classes when mapping income flows to wealth. Our approach reduces bias in wealth estimates because wealth and rates of return are correlated. We find that the top 0.1% share of wealth increased from 7% to 14% from 1978 to 2016. While this rise is half as large as prior estimates, wealth is very concentrated: the top 1% holds nearly as much wealth as the bottom 90%. However, the “P90-99” class holds more wealth than either group after accounting for heterogeneity. Private business and public equity wealth are the primary sources of wealth at the top, and pension and housing wealth account for almost all wealth of the bottom 90%. Our approach substantially reduces estimates of mechanical wealth tax revenue and top capital income in distributional national accounts, which depend on well-measured estimates of top wealth. From 1980 to 2014, capital income accounts for 2.4 out of 8.1 percentage points of the rise of the top 1% income share.