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key takeaway

Income inequality in California widened during the COVID-19 pandemic, with the richest 1% taking home a record share of statewide income. Policymakers can address this by closing tax loopholes for the wealthy and profitable corporations.

California’s rich got richer during the pandemic. Recent data show that in 2021, when many Californians were struggling amid the COVID-19 recession, the share of statewide income going to the richest 1% spiked to a new high. The top 1% held nearly one-third (30.5%) of all income reported for state tax purposes that year — up from 23% in 2019 and their highest share on record (data before 1970 were not available). In fact, the top 1% held more income in 2021 than they did in 2000, at the peak of the dot-com boom.

Income inequality worsened in the pandemic. The average income of Californians in the top 1% rose from $2.3 million to $3.6 million between 2019 and 2021, while it declined for middle-income Californians, from $46,600 to $46,400. As a result, the top 1% had 78 times the income of middle-income Californians, on average, in 2021, up from 49 times the income just two years earlier. In fact, the average Californian in the top 1% earned in just five days what the average middle-income Californian earned in a year.

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Learn how California tax breaks are distributed in our Data Hit: Less Than 2% of State Tax Breaks Go to Californians with Low Incomes.

Californians want state policymakers to reduce inequality. Strong majorities of Californians know that income inequality has worsened and they want state policymakers to do more to address this problem, according to polling by PPIC. State leaders can do this by closing tax loopholes that favor the wealthy and profitable corporations in order to prioritize the significant investments needed to make housing, health care, child care, and other basic needs affordable for all Californians.

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