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Striking it Richer: The Evolution of Top Incomes in U.S.

preliminary estimates). Emmanuel Saez • September 3, 2013
What’s new for recent years? 2009-2012: Uneven recovery from the Great Recession
From 2009 to 2012, average real income per family grew modestly by 6.0%. Most of the gains happened in the last year when average incomes grew by 4.6% from 2011 to 2012. However, the gains were very uneven. Top 1% incomes grew by 31.4% while bottom 99% incomes grew only by 0.4% from 2009 to 2012. Hence, the top 1% captured 95% of the income gains in the first three years of the recovery. From 2009 to 2010, top 1% grew fast and then stagnated from 2010 to 2011. Bottom 99% stagnated both from 2009 to 2010 and from 2010 to 2011. In 2012, top 1% incomes increased sharply by 19.6% while bottom 99% incomes grew only by 1.0%. In sum, top 1% incomes are close to full recovery while bottom 99% incomes have hardly started to recover. Note that 2012 statistics are based on preliminary projections and will be updated in January 2014 when more complete statistics become available. Note also that part of the surge of top 1% incomes in 2012 could be due to income retiming to take advantage of the lower top tax rates in 2012 relative to 2013 and after. Retiming should be most prevalent for realized capital gains as individuals have great flexibility in the timing of capital gains realizations. However, series for income excluding realized capital gains also show a very sharp increase, suggesting that retiming likely explains only part of the surge in top 1% incomes in 2012. Retiming of income should produce a dip in top reported incomes in 2013. Hence, statistics for 2013 will

show how important retiming was in the surge in top incomes from 2011 to 2012.”

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