SUMMARY

Summary: The Top 1 Percent in International and Historical Perspective



Summary: The Top 1 Percent in International and Historical Perspective

This article highlights the issue of an increase in the income level of the people belonging to the top 1 percent of the society. The income of the people belonging to top 1 percent in USA has increased to more than double in last three decades and is higher than the increase in the income of this class, in other countries such as France, Japan, Sweden or Germany. This article explores the reason behind this increase. This increase cannot be attributed to the technological advancements and increase in global output as countries with similar development as that in USA have experienced varying patterns of income inequality among the top class. Hence, it can be inferred that the increase in the income of people belonging to top 1 percent in USA is mainly due to the differences in policies and institutions among USA and other countries. The study has identified four reasons for the increase in the top shares and their decline for a particular period in the initial years of the twentieth century.

The first reason was the impact of taxation upon income share. After the World War II, the tax rate in USA raised to more than 60 percent from the year 1932 to 1981 as compared to the 70 percent in the early 1920s. This shows that the higher tax rates caused a decline in the income shares of top class. Apart from this, the tax rates varied among the classes, as well as, the cut in tax rates of the top classes among the various countries. For example, USA reduced the tax rate for top class by half in 2010 as compared to 1952, whereas, France only reduced the ...