New government data indicate that the concentration of corporate wealth
among the highest-income Americans grew significantly in 2003, as a trend that
began in 1991 accelerated in the first year that President Bush and Congress
cut taxes on capital.
In 2003 the top 1 percent of households owned 57.5 percent of corporate wealth,
up from 53.4 percent the year before, according to a Congressional Budget Office
analysis of the latest income tax data. The top group's share of corporate wealth
has grown by half since 1991, when it was 38.7 percent.
In 2003, incomes in the top 1 percent of households ranged from $237,000 to
several billion dollars.
For every group below the top 1 percent, shares of corporate wealth have declined
since 1991. These declines ranged from 12.7 percent for those on the 96th to
99th rungs on the income ladder to 57 percent for the poorest fifth of Americans,
who made less than $16,300 and together owned 0.6 percent of corporate wealth
in 2003, down from 1.4 percent in 1991.
The analysis did not measure wealth directly. It looked at taxes on capital
gains, dividends, interest and rents. Income from securities owned by retirement
plans and endowments was excluded, as were gains from noncorporate assets such
as personal residences.
This technique for measuring wealth has long been used in standard economic
studies, though critics have challenged that tradition.
Among them is Stephen J. Entin, president of the Institute for Research on
the Economics of Taxation in Washington, which favors eliminating most taxes
on capital and teaches that an unintended consequence of the corporate income
tax is depressed wage rates. Mr. Entin said the report's approach was so flawed
that the data were useless.
He said reduced tax rates on long-term capital gains may have prompted wealthy
investors to sell profitable investments. That would show up in tax data as
increased wealth that year, even though the increase may have built up over
Long-term capital gains were taxed at 28 percent until 1997, and at 20 percent
until 2003, when rates were cut to 15 percent. The top rate on dividends was
cut to 15 percent from 35 percent that year.
The White House said it did not believe that the 2003 tax cuts had much influence
on wealth shares. It also said that since wealth is transitory for many people,
a more important issue is how incomes and wealth are influenced by the quality
"We want to lift all incomes and wealth," said Trent Duffy, a White
House spokesman. "We are starting to see that the income gap is largely
an education gap."
"The president thinks we need to close the income gap, and he has talked
about ways in which we can do that," especially through education, Mr.
The data showing increased concentration of corporate wealth were posted last
month on the Congressional Budget Office Web site. Isaac Shapiro, associate
director of the Center on Budget and Policy Priorities in Washington, spotted
the information last week and wrote a report analyzing it.
Mr. Shapiro said the figures added to the center's "concerns over the
increasingly regressive effects" of the reduced tax rates on capital. Continuing
those rates will "exacerbate the long-term trend toward growing income
inequality," he wrote.
The center, which studies how government affects the poor and supports policies
that it believes help alleviate poverty, opposes Mr. Bush's tax policies.
The center plans to release its own report on Monday that questions the wisdom
of continuing the reduced tax rates on dividends and capital gains, saying the
Congressional Budget Office analysis indicates that the benefits flow directly
to a relatively few Americans.