CBO Finds Yawning Wealth Gap Continues, Highlights Congressional Imperative to Unrig Tax Code

10.02.24

CBO Finds Yawning Wealth Gap Continues, Highlights Congressional Imperative to Unrig Tax Code

The top 10 percent of families now control 60 percent of overall wealth, while families in the bottom half hold just 6 percent.

Washington, D.C. - A new report by the Congressional Budget Office (CBO) found wealth inequality in the United States has widened significantly since 1989, as the rich have captured an even larger share of overall wealth. According to the latest data, the wealthiest 10 percent of families now control 60 percent of U.S. wealth, while the bottom half of families hold just over 6 percent. At the very top, wealth has become even more concentrated: the top 1 percent of Americans now control more than 25 percent of the nation's wealth.

The new report, written at the request of Senator Sheldon Whitehouse (D-RI), Chairman of the Senate Budget Committee, also found that average wealth for the top 10 percent was $9.1 million, nearly 123 times that of families in the bottom 25 percent.

These new data highlight the yawning gap between the wealthiest Americans and everyone else as Congress begins negotiating the expiration of the Trump tax cuts, which overwhelmingly benefitted large corporations and the wealthy.

"This report should add urgency in Congress as the Trump tax scam expires next year and we negotiate future tax legislation," said Senator Whitehouse. "Do we want to reward billionaires, who have already captured so much of the nation's wealth, or do we want to de-corrupt the tax code, ensure the wealthy and big corporations pay their fair share, and reduce the deficit, all while making necessary investments to better the lives of all Americans?"

Although the gap between the wealthiest Americans and everyone else has widened considerably over the 33 years covered by the study, data show it would have been even worse if not for Social Security. The program's progressive benefit structure helped bolster middle- and low-income families' wealth amid rising inequality. This is the first report in which CBO has factored in future Social Security benefits, improving upon past wealthinequality reports.

But Social Security is now facing an impending financial shortfall, and without congressional action to shore up the trust funds, it will only be able to pay full benefits until 2035. Democrats have introduced multiple pieces of legislation to protect the program, but House Republicans have proposed cutting benefits, and Senate Republicans have put forward no plans of their own. If Republicans allow the Social Security trust funds to go insolvent, the wealth held by families in the bottom half of the wealth distribution would be cut by 10 percent. Because of the program's progressive benefits structure, the wealth of the top 1 percent would be essentially unchanged.

"Social Security is a bedrock of our retirement system and ensures millions of seniors can retire with dignity," added Senator Whitehouse. "Seniors earned their benefits throughout their working lives, but the program is now facing a looming cash flow problem. By making the wealthy pay their fair share, we can protect Social Security forever and unrig our tax code-exactly what my Medicare and Social Security Fair Share Act would do."

Senator Whitehouse's Medicare and Social Security Fair Share Act would preserve Social Security while safeguarding benefits. It would extend Social Security indefinitely by requiring taxpayers making more than $400,000 to contribute a fairer share to Social Security and by closing the pass-through business loophole that favors high-income earners.

To read the full CBO report, click here.

Key findings from the report:

• In 2022, families in the top 10 percent of the wealth distribution held 60 percent of the nation's wealth, while the bottom half held just 6.4 percent.

• The share of wealth owned by the top 1 percent has grown, from 23 percent in 1989 to 27 percent in 2022.

• Social Security is essential to the retirement security of low middle- and lower-income families: without this earned benefits program, the bottom half of families would hold just 3 percent of overall wealth, while the top 10 percent of families would control nearly 70 percent.
• If Social Security were allowed to go insolvent, families in the bottom half of the wealth distribution would lose 10 percent of their wealth, while the wealth of the top 1 percent of families would be essentially unchanged.

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