A Progress Postcard:

A little over a week ago, Elon Musk became the world’s first trillionaire. That’s a net worth equal to about 3 percent of the current US GDP. For comparison, the leading figure of the Gilded Age, John D. Rockefeller, was worth about 1.5 percent of total national output.

So Musk has become an avatar, a one-man case in point, of American inequality.

That’s not wrong, but it’s more interesting than that. The share of households with middle incomes – between $50,000 and $150,000 in 2024 dollars – has shrunk over the past half century. The middle is thinning out. But the share earning less than that has thinned out even more. The share of households at the top, earning more than $150,000 (again, inflation-adjusted) is six times larger. So it’s a most-people-are-richer form of inequality.

The most common way to measure economic inequality is the Gini index, which in a single number tells where an economy falls between everyone having or earning exactly the same (0) or one person owning everything (1). The US has a higher number (more unequal) than most rich countries. But it has been fairly static. The Gini index for US household incomes in 2024, the latest year available, is the same as ten years earlier. 

The American story in recent years is of modestly rising real median incomes with the poorest actually rising relative to the middle, and many in the middle rising up further. But we have also seen explosive rises in the assets of a tiny sliver of the population, the billionaire class.

Yet American tax policy is more progressive (top-loaded) than many realize. The top 1 percent’s share of US income was 20.6 percent in 2023, and its share of federal income taxes paid was 38.4 percent. The bottom 50 percent of households paid about 3 percent of federal income tax revenues. Taxes are concentrated on the rich in America more than in even the Scandinavian countries.

Sources: Our World in Data; Jeremy Horpedahl; Tax Foundation