Meet The Top 0.1%

I read Paul Pierson and Jacob Hacker’s Winner-Take-All Politics: How Washington Made the Rich Richer–and Turned Its Back on the Middle Class at the suggestion of sundry worthies, and one of the most interesting tidbits in there came from a pointer to Jon Bakija and Bradley Heim (PDF) “Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data” from which they reproduce a very interesting table:

In the underlying paper, I found an even more interesting table that, unfortunately, is too big to reproduce in a clearly legible way. So here’s an illegible version that you can click on to see a bigger one:

The moral of the story is that there’s been a fairly dramatic transformation of the composition of the top 0.1% of the income distribution. In particular, the share of financial services professionals has skyrocketed from 7.7% to 13.9% while the share of salaried executives at non-financial firms has plummeted from 21% to 11.3%. The share of managers and executives at “closely held” firms has also been on the rise.

I don’t have a grand conclusion here, but I’ll note for now that those executives and managers at “closely held” firms who represent a large and growing share of those earning more than 99.9% of Americans are people whose income mostly comes from S-Corporations. In other words, this is the “small businessman” of much tax cutting rhetoric. And the point I would make is simply that whether or not a business of this sort is genuinely “small,” anyone who’s in the top 0.1% of the income distribution is really, really rich. This is not mom & pop running the general store.