Chart of the Day: How the Rich and the Rest of Us Earn Our Money


This won’t come as any big surprise, but the chart below from the Tax Policy Center does a very nice job of showing how the rich are different from you and me. Most of us earn money from our jobs. Even up at the 90th percentile (about $150,000 or so), ordinary income makes up 77 percent of all cash earnings. Business and investment income make up only 9 percent. But in the top 0.1 percent, the domain of millionaires and billionaires, business and investment income make up 57 percent of cash earnings. As Jared Bernstein says, this explains a lot about economic policy preferences:

Think about these differences the next time you hear a politician explaining why we need to cut taxes on corporate income or capital gains….The framing is invariably “trickle-down”—such cuts will lift everybody’s fortunes—but the real motivation is what you see here. Once you get up to the very top of the income scale—the top 0.1% in the bar furthest to the right (as it were)—you’ve got two-thirds of their income coming from non-labor sources.

Low corporate and capital gains taxes, as well as cuts to top marginal rates, are always framed as crucial to economic growth. Conversely, high payroll taxes are always framed as crucial to keeping Medicare and Social Security fully funded. And maybe so. But it’s quite a coincidence that all of these policies just happen to be precisely what benefits rich people the most, isn’t it? Keep that in mind the next time you hear the latest self-serving bit of richsplaining from some Wall Street titan about taxes and the economy. You know the drill: job creators, incentive effects, globalization, capital formation, etc. etc. Just don’t worry your pretty little head about the details, OK?

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate