New Income Data Show Even More Uneven Gains

At first glance, it appears that Californians as a whole are far wealthier today than they were two decades ago. The total adjusted gross income (AGI) of all California taxpayers rose by nearly $300 billion on an inflation-adjusted basis over the past two decades – a gain that is roughly equivalent to the gross domestic product of Argentina today. But, as we’ve blogged about before, most of that additional income has flowed to a small sliver of wealthy Californians. New Franchise Tax Board data that we recently received enabled us to extend our analysis of income gains back to 1987 – six years earlier than our previous analysis. These new data show that of the nearly $300 billion increase in total AGI  between 1987 and 2008:

  • 40 percent of the gains went to the wealthiest 1 percent of California taxpayers;
  • More than 70 percent of the gains went to the wealthiest 10 percent of taxpayers;
  • Just 16 percent of the gains went to the bottom 80 percent of Californians; and
  • Only about 3 percent of the gains went to the middle fifth.

As income has flowed to the top:

  • The wealthiest 1 percent of California taxpayers increased their share of total AGI from 13.0 percent in 1987 to 20.9 percent in 2008;
  • The top 10 percent of taxpayers increased their share from 37.0 percent to 47.0 percent; and
  • The share of total AGI going Californians in each of the bottom four fifths of the income distribution declined.

In other words, as California’s income pie has expanded, most Californians have received even smaller slices of the pie.

— Alissa Anderson