So just who are those top 1 percent of Americans that we're all supposed to hate?
If you listen to President Obama, the protesters at Occupy Wall Street, and much of the media, it's obvious. They're either "trust-fund babies" who inherited their money, or greedy bankers and hedge-fund managers. Certainly, they haven't worked especially hard for their money. While the recession has thrown millions of Americans out of work, they've been getting even richer. Worse, they don't even pay their fair share in taxes: Millionaires and billionaires are paying a lower tax rate than their secretaries.
In reality, each of these stereotypes is wrong.
By and large, the wealthy have worked hard for their money.
Roughly 80 percent of millionaires in America are the first generation of their family to be rich. They didn't inherit their wealth; they earned it. How? According to a recent survey of the top 1 percent of American earners, slightly less than 14 percent were involved in banking or finance.
Roughly a third were entrepreneurs or managers of nonfinancial businesses. Nearly 16 percent were doctors or other medical professionals.
Lawyers made up slightly more than 8 percent, and engineers, scientists and computer professionals another 6.6 percent.
Sports and entertainment figures — the folks flying in on their private jets to express solidarity with Occupy Wall Street — composed almost 2 percent.
By and large, the wealthy have worked hard for their money. NYU sociologist Dalton Conley says that "higher-income folks work more hours than lower-wage earners do."
Because so much of their income is tied up in investments, the recession has hit the rich especially hard. Much attention has been paid recently to a Congressional Budget Office study that showed incomes for the top 1 percent rose far faster from 1980 until 2007 than for the rest of us. But the nonpartisan Tax Foundation has found that since 2007, there has been a 39 percent decline in the number of American millionaires.
Among the "super-rich," the decline has been even sharper: The number of Americans earning more than $10 million a year has fallen by 55 percent. In fact, while in 2008 the top 1 percent earned 20 percent of all income here, that figure has declined to just 16 percent. Inequality in America is declining.
As for not paying their fair share, the top 1 percent pay 36.7 percent of all federal income taxes. Because, as noted above, they earn just 16 percent of all income, that certainly seems like more than a fair share.
Michael D. Tanner is a senior fellow at the Cato Institute, heading research into a variety of domestic policies with particular emphasis on health care reform, welfare policy, and Social Security. His most recent white paper, "Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law," provides a detailed examination of the Patient Protection and Affordable Care Act (Obamacare) and what it means to taxpayers, workers, physicians, and patients.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for September 15th, 2014 | John Ransom