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Private wealth / national income ratios 1870-2010
100%
200%
300%
400%
500%
600%
700%
800%
1870 1890 1910 1930 1950 1970 1990 2010Authors' computations using country national accounts. Private wealth = non-financial assets + financial assets - financial liabilities (household & non-profit sectors)
USA
Europe
Source: Piketty and Zucman '13
The changing nature of national wealth, France 1700-2010
0%
100%
200%
300%
400%
500%
600%
700%
800%
1700 1750 1780 1810 1850 1880 1910 1920 1950 1970 1990 2010National wealth = agricultural land + housing + other domestic capital goods + net foreign assets
(% n
atio
nal i
ncom
e)
Net foreign assets
Other domestic capital
Housing
Agricultural land
Source: Piketty, Handbook chapter, 2014Source: Piketty, Thomas [book]Capital in the 21st Century
The changing nature of national wealth, US 1770-2010 (incl. slaves)
0%
100%
200%
300%
400%
500%
600%
1770 1810 1850 1880 1910 1920 1930 1950 1970 1990 2010
National wealth = agricultural land + housing + other domestic capital goods + net foreign assets
(% n
atio
nal i
ncom
e)
Net foreign assetsOther domestic capitalHousingSlavesAgricultural land
Source: Piketty and Zucman '13
agreed that such redistribution should take the form of moving
wealth from the top quintile to the bottom three quintiles. In
short, although Americans tend to be relatively more
favorable toward economic inequality than members of other
countries (Osberg & Smeeding, 2006), Americans’ consensus
about the ideal distribution of wealth within the United States
Fig. 3. The actual United States wealth distribution plotted against the estimated and idealdistributions of respondents of different income levels, political affiliations, and genders.Because of their small percentage share of total wealth, both the ‘‘4th 20%’’ value (0.2%)and the ‘‘Bottom 20%’’ value (0.1%) are not visible in the ‘‘Actual’’ distribution.
Fig. 2. The actual United States wealth distribution plotted against the estimated and idealdistributions across all respondents. Because of their small percentage share of totalwealth, both the ‘‘4th 20%’’ value (0.2%) and the ‘‘Bottom 20%’’ value (0.1%) are not visiblein the ‘‘Actual’’ distribution.
Building a Better America 11
at Harvard Libraries on February 3, 2011pps.sagepub.comDownloaded from
Source: Norton and Ariely 2011
60%
70%
80%
90%
100%
Cumu
lated
value
of in
herite
d wea
lth (%
total
wea
lth o
f the l
iving
)
Figure 11.7. The share of inherited wealth in total wealth, France 1850-2100
Share of inherited wealth (2010-2100: g=1,7%, r=3,0%)
Share of inherited wealth (2010-2100: g=1,0%, r=5,0%)
30%
40%
50%
1850 1870 1890 1910 1930 1950 1970 1990 2010 2030 2050 2070 2090
Cumu
lated
value
of in
herite
d wea
lth (%
total
wea
lth o
f the l
iving
)
Inherited wealth represents 80-90% of total wealth in France in the 19th century; this share fell to 40%-50% during the 20th century, and might return to 80%-90% during the 21st century. Sources and series: see piketty.pse.ens.fr/capital21c
Source: Piketty (2014)
Treatment example: Information about the Estate Tax
14
40%
50%
60%
70%
80%
90%
100%
Sha
re o
f top
dec
ile o
r per
cent
ile in
tota
l wea
lth
Figure 10.5. Wealth inequality in the U.S., 1810-2010
0%
10%
20%
30%
1810 1830 1850 1870 1890 1910 1930 1950 1970 1990 2010
Sha
re o
f top
dec
ile o
r per
cent
ile in
tota
l wea
lth
The top 10% wealth holders own about 80% of total wealth in 1910, and 75% today. Sources and series: see piketty.pse.ens.fr/capital21c.
Top 10% wealth chare
Top 1% wealth share
Source: Piketty (2014)
40%
50%
60%
70%
80%
90%
100%
Sha
re o
f top
dec
ile o
r per
cent
ile in
tota
l wea
lthFigure 10.6. Wealth inequality: Europe and the U.S., 1810-2010
0%
10%
20%
30%
1810 1830 1850 1870 1890 1910 1930 1950 1970 1990 2010
Sha
re o
f top
dec
ile o
r per
cent
ile in
tota
l wea
lth
Until the mid 20th century, wealth inequality was higher in Europe than in the United States.Sources and series: see piketty.pse.ens.fr/capital21c.
Top 10% wealth share: Europe
Top 10% wealth share: U.S.
Top 1% wealth share: Europe
Top 1% wealth share: U.S.
Source: Piketty (2014)
2%
3%
4%
5%
6%An
nual
rate
of r
etur
n or
rate
of g
row
th
Figure 10.10. After tax rate of return vs. growth rate at the world level, from Antiquity until 2100
Pure rate of return to capital (after tax and capital losses)
Growth rate of world output g
0%
1%
0-1000 1000-1500 1500-1700 1700-1820 1820-1913 1913-1950 1950-2012 2012-2050 2050-2100
Annu
al ra
te o
f ret
urn
or ra
te o
f gro
wth
The rate of return to capital (after tax and capital losses) fell below the growth rate during the 20th century, and may again surpass it in the 21st century. Sources and series : see piketty.pse.ens.fr/capital21c
Source: Piketty (2014)
0%
5%
10%
15%
20%
25%
30%
35%
40%
1917
1922
1927
1932
1937
1942
1947
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
% o
f tot
al h
ouse
hold
wea
lth
Bottom 90% wealth share in the United States, 1917-2012
0%
5%
10%
15%
20%
25%
30%
35%
40%
1917
1922
1927
1932
1937
1942
1947
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
% o
f tot
al h
ouse
hold
wea
lth
Composition of the bottom 90% wealth share
Pensions
Business assets
Housing (net of mortgages)
Equities & fixed claims (net of non-mortgage debt)
0%
10%
20%
30%
40%
50%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f tot
al h
ouse
hold
wea
lth
Top 1% wealth share in the United States, 1913-2012
This figure depicts the share of total household wealth held by the 1% richest families, as estimated by capitalizing income tax returns. Source: Saez and Zucman (2014).
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
Bot
tom
90%
real
ave
rage
wea
lth
Top
1% re
al a
vera
ge w
elat
h
Real average wealth of bottom 90% and top 1% families
Top 1% (left y-axis)
Bottom 90% (right y-axis)
Real values are obtained by using the GDP deflator, 2010 dollars. Source: Appendix Tables B3.
0%
5%
10%
15%
20%
25%
30%
35%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f fac
tor-
pric
e na
tiona
l inc
ome
The composition of capital income in the U.S., 1913-2013
Housing rents (net of mortgages)
Noncorporate business profits
Net interest Corporate profits
Profits & interest paid to pensions
Source: Saez and Zucman '14
0%
100%
200%
300%
400%
500% 19
13
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f nat
iona
l inc
ome
The composition of household wealth in the U.S., 1913-2013
Housing (net of mortgages)
Sole proprietorships & partnerships
Currency, deposits and bonds Equities
Pensions
This figure depicts the evolution of the ratio of total household wealth to national income. This ratio has followed a U-shaped evolution and the composition of wealth has changed markedly since 1913. Source: Appendix Table A1.
Source: Saez and Zucman '14
0%
5%
10%
15%
20%
25%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f tot
al h
ouse
hold
wea
lth
Top 0.1% wealth share in the United States, 1913-2012
This figure depicts the share of total household wealth held by the 0.1% richest families, as estimated by capitalizing income tax returns. In 2012, the top 0.1% includes about 160,000 families with net wealth above $20.6 million. Source: Appendix Table B1.
-15% -10%
-5% 0% 5%
10% 15% 20% 25% 30% 35% 40% 45% 50% 55%
1917
-19
1920
-29
1930
-39
1940
-49
1950
-59
1960
-69
1970
-79
1980
-89
1990
-99
2000
-09
2010
-12
% o
f eac
h gr
oup'
s to
tal p
rimar
y in
com
e Saving rates by wealth class (decennial averages)
Top 10 to 1%
Top 1%
Bottom 90%
0
Life cycle savings and taxes theory
w(1+r)
c2 consumption while old
c2*
c1* c1 consumption while young
Indifference curves u(c1,c2)=constant
s*: savings
w
Utility maximizing choice
Budget line slope –(1+r)
0
Life cycle savings and taxes theory
w(1+r)
c2 consumption while old
c2*
c1* c1 consumption while young s*: savings
w
Introducing tax on savings
w(1+r(1-τ))
0
Life cycle savings and taxes theory
w(1+r)
c2 consumption while old
c2*
c1* c1 consumption while young s*: savings
w
w(1+r(1-τ))
Substitution effect: c1 up, s down, c2 down Income effect: c1 down, s up, c2 down
Net effect: c1 and s ambiguous, c2 down
0%
5%
10%
15%
20%
25%
30%
35% 19
13
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
% o
f tot
al h
ouse
hold
wea
lth
Wealth shares of bottom 90% and top 0.1% families
The figure depicts the share of total household wealth owned by bottom 90% and top 0.1% obained by capitalizing income tax returns (Saez and Zucman 2016). The unit of analysis is the familly.
Bottom 90% wealth share
Top 0.1% wealth share
inheritance share was rising fast in the late 19th and early 20th centuries. The shockscaused by the 1930s and the Second World War led to a downturn, but much lesspronounced than in Europe, so the US inheritance share became higher than in Europeby the mid-20th century. In recent decades, the inheritance share seems to haveincreased substantially in the USA. However, there is significant uncertainty about theexact levels and trends, due in particular to the limitations of US estate tax data (whichcovers only a small fraction of all decedents, so it cannot be used to produce aggregateseries).
We should also emphasize that there are significant variations within Europe. Forsimplicity, we define ‘Europe’ in Figure 1 as the average of France, Germany and theUK.2 We will see later that France and Germany follow a particulary marked U-shapedpattern, while the UK pattern is in some ways closer to the US evolution.
In brief, our general conclusion is that there are substantial variations in theinheritance share over time and across countries, and that one should be careful not tointerpret averages over one or two decades as steady-state outcomes. Wealthaccumulation takes time: it spans over several generations, so it is important to take avery-long-run perspective on these issues. Modigliani’s conclusions—with a largemajority of wealth coming from lifecycle savings—might have been right for theimmediate postwar period (though somewhat exaggerated). But the Kotlikoff–Summersestimates—with inheritance accounting for a significant majority of wealth—appear tobe closer to what we generally observe in the long run, in both the 19th and early 20thcenturies, and in the late 20th and early 21st centuries.
Regarding the very long run, we stress that there are many different possible steady-state levels for the inheritance share. As we will see, there are several forces that tend toimply that low-growth societies also have higher inheritance shares. But other effects cango in the opposite direction. Depending on the evolution of demographic parameters,
30%
40%
50%
60%
70%
80%
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Stoc
k of
inhe
rite
d w
ealth
(%
pri
vate
wea
lth)
Europe (France-Germany-UK)USA (benchmarkestimate)USA (high-giftestimate)
FIGURE 1. Share of inherited wealth, Europe and the USA 1900–2010.Notes: Simplified definitions using inheritance vs. saving flows; approximate lower-bound estimates. The
inheritance share in aggregate wealth accumulation was over 70% in Europe in 1900–10. It fell abruptlyfollowing 1914–45 shocks, down to 40% in the 1970–80 period. It was back to about 50–60% (and rising) in2000–10. The US pattern also appears to be U-shaped but less marked, and with significant uncertainty
regarding recent trends, due to data limitations.
Economica
© 2017 The London School of Economics and Political Science
240 ECONOMICA [APRIL
Source: Alveredo-Garbinti-Piketty '17
Figure 4: The distribution of offshore wealth and offshore tax evasion
0%
10%
20%
30%
40%
50%
60%
P0-50 P50-P90 P90-P99 P99-P99.9 P99.9-99.99 P.99.99-P100
% o
f tot
al (r
ecor
ded
or h
idde
n) w
ealth
Position in the wealth distribution
Distribution of wealth: recorded vs. hidden
Hidden wealth disclosed in amnesty
Hidden wealth held at HSBC
Recorded wealth
0%
10%
20%
30%
40%
50%
P90
-95
P95
-99
P99
-99.
5
P99
.5-9
9.9
P99
.9-P
99.9
5
P99
.95-
P99
.99
P99
.99-
P10
0
% o
f tot
al ta
xes
owed
that
are
not
pai
d
Position in the wealth distribution
Offshore tax evasion, by wealth group
Lower-bound scenario
High scenario
Notes: The top panel shows the distribution of wealth in Scandinavia (Norway, Sweden, Denmark) excluding
offshore wealth, and the distribution of wealth held at HSBC and disclosed by amnesty participants. The bottom
panel distributes the macro stock of offshore across wealth groups and computes the implied amount of taxes
evaded. See text for a description of the benchmark, higher, and lower-bound scenarios. 95% confidence intervals
based on bootstrapped standard errors. Source: Appendix Tables A.2, J.1, J.3, J.3b and J.3c.
Figure 2: Tax evasion at HSBC: intensive vs. extensive margin
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
P90-P95 [0.6 – 0.9]
P95-P99 [0.9 – 2.0]
P99-P99.5 [2.0 – 3.0]
P99.5-P99.9 [3.0 – 9.1]
P99.9-P99.95 [9.1 – 14.6]
P99.95-P99.99 [14.6 – 44.5]
Top 0.01% [> 44.5]
Net wealth group [millions of US$]
Probability to own an unreported HSBC account, by wealth group (HSBC leak)
0%
10%
20%
30%
40%
50%
P90-P95 [0.6 – 0.9]
P95-P99 [0.9 – 2.0]
P99-P99.5 [2.0 – 3.0]
P99.5-P99.9 [3.0 – 9.1]
P99.9-P99.95 [9.1 – 14.6]
P99.95-P99.99 [14.6 – 44.5]
Top 0.01% [> 44.5]
Net wealth group [millions of US$]
Average wealth hidden at HSBC, by wealth group (%oftotalwealth(includingheldatHSBC))
Notes: The top panel shows the fraction of households in Scandinavia (Norway, Sweden and Denmark) who had
an unreported bank account at HSBC Switzerland in 2006, by bins of 2006 Scandinavian wealth. The sample
includes 520 Scandinavian households who could be matched to a tax return; see text. The bottom panel shows
the ratio of the wealth held at HSBC over total observable wealth, in the sub-sample of 300 matched HSBC
account-holders for whom account values are available. Source: Appendix Tables E.2 and E.6.
Source: Alstadsaeter Johannesen Zucman 2019
0%
100%
200%
300%
400%
500% 19
13
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
2018
% o
f nat
iona
l inc
ome
Total household wealth (to national income)
This figure depicts the share of total household wealth relative to national income Source: Piketty, Saez, and Zucman (2018).
Market value
Capital stock (at replacement cost)
This figure depicts the share of total household wealth relative to national income Source: Piketty, Saez, and Zucman (2018).
0%5%
10%15%20%25%30%35%40%45%
Average tax rates by income group in 2018 (% of pre-tax income)
Corporate & property taxesConsumption taxes
Payroll taxesIndividual income taxes
Estate tax
0%
10%
20%
30%
40%
50%
P0-10
P10-20
P20-30
P30-40
P40-50
P50-60
P60-70
P70-80
P80-90
P90-95
P95-99
P99-99
.9
P99.9-
99.99
P99.99
-top 40
0
Top 40
0
Adding old Warren wealth tax (2% above $50m, 3% above $1b) with 15% avoidance/evasion rate (Saez-Zucman)
Corporate & property taxesConsumption taxes
Payroll taxes
Individual income taxes
Warren wealth taxEstate taxes
0%
10%
20%
30%
40%
50%
P0-10
P10-20
P20-30
P30-40
P40-50
P50-60
P60-70
P70-80
P80-90
P90-95
P95-99
P99-99
.9
P99.9-
99.99
P99.99
-top 40
0
Top 40
0
Adding old Warren wealth tax (2% above $50m, 3% above $1b) with 89% avoidance/evasion rate (Summers-Sarin)
Corporate & property taxesConsumption taxes
Payroll taxes
Individual income taxes
Warren wealth taxEstate taxes
Current 2018 wealth
($ billions)
With Warren wealth tax (3%
above $1b) since 1982
With Sanders wealth tax (5%
above $1b up to 8% above $10b)
Top Wealth Holder Source1. Jeff Bezos Amazon (founder) 160.0 86.8 43.02. Bill Gates Microsoft (founder) 97.0 36.4 9.93. Warren Buffett Berkshire Hathaway 88.3 29.6 8.24. Mark Zuckerberg Facebook (founder) 61.0 44.2 28.65. Larry Ellison Oracle (founder) 58.4 23.5 8.56. Larry Page Google (founder) 53.8 35.3 19.57. David Koch Koch industries 53.5 18.9 8.08. Charles Koch Koch industries 53.5 18.9 8.09. Sergey Brin Google (founder) 52.4 34.4 19.010. M. Bloomberg Bloomberg LP (f.) 51.8 24.2 11.311. Jim Walton Walmart (heir) 45.2 15.1 5.0…Total top 15 942.5 433.9 195.7
Long-Term Wealth Taxation and Top Wealth Holders
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
1982
1986
1990
1994
1998
2002
2006
2010
2014
2018
Forbes 400 wealth share (% of US wealth)
With Warren wealth tax (3% rate above $1bn)
With Sanders wealth tax (5% above $1bn graduated to
8% above $10bn)
Actual share of wealth owned by the Forbes 400
0%
1%
2%
3%
4%
1980
1985
1990
1995
2000
2005
2010
2015
2020
Wealth Share of the top 400 wealthiest Americans (top 0.00025%)
October 1st, 2021
0%
5%
10%
15%
20%
25%
30%
35%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
2018
% o
f tot
al h
ouse
hold
wea
lthWealth shares of bottom 90% and top 0.1% families
The figure depicts the share of total household wealth owned by bottom 90% and top 0.1% obained by capitalizing income tax returns (Piketty, Saez and Zucman 2018, updated to 2019). The unit of analysis is the familly.
Bottom 90% wealth share
Top 0.1% wealth share
0%
5%
10%
15%
20%19
80
1985
1990
1995
2000
2005
2010
2015
2020
Wealth of the top 400 wealthiest Americans (top 0.00025%) (% of US GDP)
October 1st, 2021
