“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
“Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
“…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
“…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
“…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
“There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
“Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
“…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
“Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
“…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute

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Reply: Trends in US Income and Wealth Inequality: Revising After the Revisionists

David Splinter Working Paper

Date Posted:: November 19, 2020
Is Database:: Database

US federal tax rates remain progressive, with negligible rates for the bottom quintile, 11-16% for the middle quintile, and about 33% for the top 1%.

Between 1979 and 2016, average federal tax rates for the top quintile decreased by about 1 percentage point, while middle and bottom quintile rates fell by approximately 5 and 8 percentage points, respectively, indicating increased tax progressivity. Recent estimates show that federal taxes remain progressive, with negligible rates for the bottom quintile, 11-16% for the middle quintile, and about 33% for the top 1%. Despite little change in top average tax rates since the 1960s, the bottom 50% have seen substantial reductions. The stability of top tax burdens over time is due to falling statutory rates being offset by an increasing share of top incomes becoming taxable. These trends highlight the evolving nature of tax policy and its implications for income distribution across different economic strata.

Just an FYI, David Splinter updated his work in response to a critique from PSZ and contrasts it with other high quality estimates (CBO) and finds that AS estimate of the pre-tax income of top one percent increasingly 3.6pp btw 1988-2015 is consistent with CBO 3.4pp.

He also confirms that the tax code has grown more progressive,”…. In AS, we found that top average tax rates have changed little since the early 1960s while bottom 50 percent average tax rates have fallen substantially... Between 1979 and 2016, top quintile rates decreased by about 1 percentage point, middle quintile rates decreased by about 5 percentage points, and bottom quintile rates decreased by about 8 percentage points. The larger decrease at the bottom of the distribution means tax progressivity increased….”

See his Figure 1, “…Mainstream estimates show that federal taxes are progressive in recent years. Figure 1 displays estimates of average tax rates by income from Piketty and Saez (2007), the Congressional Budget Office (CBO, 2019), the Joint Committee on Taxation (JCT), Treasury’s Office of Tax Analysis (OTA), and the Urban-Brookings Tax Policy Center (TPC). These estimates, as well as those from AS (which have lower levels due to the inclusion of additional untaxed income sources), are broadly consistent with one another: negative or negligible tax rates for the bottom income quintile, 11 to 16 percent for the middle quintile, and about 33 percent for the top one percent…..”

Reply: Trends in US Income and Wealth Inequality: Revising After the Revisionists: Extended Excerpt Image 1

On the increase in 1% share of pre-tax income, "......Bricker et al. (2016) used Survey of Consumer Finance data. Between 1988 and 2012, they found a top one percent share increase of 3 percentage points (pp). The AS pre-tax increase of 3.6pp resembles thisand the PSZ pre-tax increase of 6pp exceeds it. The Congressional Budget Office (2019) used tax return and survey data. Between 1988 and 2015, CBO found that the top one percent share of pre-tax income increased 3.4pp. The AS pre-tax increase of 2.5pp is a bit lower and the PSZ pre-tax increase of 5pp exceeds it.16 Burkhauser et al. (2012) used internal Census data to overcome top-coding issues. Between 1967 and 2004, they found a top one percent share increase of 2pp. The AS pre-tax increase of 2pp is similar and the PSZ pre-tax increase of 5pp exceeds it..."
He also reiterates that the tax code has become more progressive, "….Recent estimates also show increasing tax progressivity. In AS, we found that top average tax rates have changed little since the early 1960s while bottom 50 percent average tax rates have fallen substantially... Between 1979 and 2016, top quintile rates decreased by about 1 percentage point, middle quintile rates decreased by about 5 percentage points, and bottom quintile rates decreased by about 8 percentage points. The larger decrease at the bottom of the distribution means tax progressivity increased. SZ contrasted this finding with the much higher marginal tax rates for individual income taxes in the 1960s. But very few people paid those top rates. For example, fewer than 500 tax returns paid the top marginal rate in 1962.15 The reason top average tax rates (total taxes of an income group divided by their income) are lower than expected in the 1960s is that a significant share of top one percent income was not reported on individual tax returns, largely due to corporate retained earnings. This explains why measures using national accounts by Pechman (1985), AS, and PSZ, found that the 1966 average federal income tax rate for the top one percent was between 14 and 16 percent. The stability of top tax burdens over time is because falling statutory rates were offset by an increasing share of top incomes being taxable...."

David Splinter, "Reply: Trends in US Income and Wealth Inequality: Revising After the Revisionists," Working Paper, November 17, 2020, http://www.davidsplinter.com/Splinter2020-SaezZucmanReply.pdf

US Corporate Profits Surge To Record As Worker Payouts Wilt

Myles McCormick Financial Times

Date Posted:: August 28, 2026
Is Database:: Database

Corporate profits have risen to 18% of national income, their highest share since 1947, while labor’s share has fallen to 60%, a low not seen since the 1950s. The decline in labor’s share has accelerated over the past year.

Pre-tax earnings hit an annualised $4.8tn in the second quarter, or 18% of national income, according to Bureau of Economic Analysis data, the highest share since the aftermath of the second world war. Employees’ share from wages and benefits fell to 60%, the lowest level since the 1950s. “Regardless of what measure you look at, workers, in terms of employee compensation, have been receiving an increasingly small share of national income over time,” said Abiel Reinhart, an economist at JPMorgan. The decline in labour’s share of income has gained pace in the past five years and especially over the past 12 months.

The Rise Of The Deserving Rich

Economist Staff The Economist

Date Posted:: July 24, 2026
Is Database:: Database
Is Important:: Important

An Economist analysis of the wealth of 7,000 billionaires finds that over the past decade, the share of billionaire wealth “derived from self-made entrepreneurs in competitive sectors has surged to an all-time high.”

Drawing on data from Forbes, a magazine, Hurun, a research firm, and Gapminder, a Swedish foundation, we have assembled a list of about 7,000 billionaires from the past 25 years. We call a billionaire’s wealth “uncompetitive” when it mainly comes from industries such as gambling, construction, defence, and raw materials. These sectors often depend on political access. We count inheritors in the “uncompetitive” category. From 2001, when our data begin, to 2014, the uncompetitive share of billionaire wealth rose slightly. Yet over the past decade, the share derived from self-made entrepreneurs in competitive sectors has surged to an all-time high. For the first time, half the wealth of the world’s billionaires is reasonably fairly earned. And since 2021, the total wealth derived from uncompetitive sectors has declined.

Takeaways by Macro Roundup^® AI

For the first time in the 25-year dataset, half of global billionaire wealth derives from self-made entrepreneurs in competitive sectors, marking a structural shift away from politically connected and inherited fortunes.
The uncompetitive share of billionaire wealth—spanning gambling, construction, defence, raw materials, and inheritance—rose modestly from 2001 to 2014 but has declined in absolute terms since 2021.
Inherited wealth, though typically lawfully held, represents a policy failure in wealth distribution, as heirs’ fortunes reflect birth advantage rather than competitive value creation.

Another Reason the Labor Share Keeps Falling: Taxes!

Owen Zidar and Eric Zwick The Everywhere Millionaire

Date Posted:: July 1, 2026
Is Database:: Database
Is Important:: Important

Zidar & Zwick suggest about one‑third of the post‑1970s drop in labor’s share is due to stock‑based pay to workers, in addition to the one‑third they already attribute to pass‑through income. That leaves only around one‑third for genuine shifts in technology, power, etc.

In our data for 2017, after adjustments for the rise of pass-throughs, we report employee compensation of $7.2 trillion and corporate value added of $12.2 trillion. The unadjusted corporate profits number (which excludes partnership profits) is $1.7 trillion. If we could find around $200 billion of “missing” labor compensation, that would account for about a third of the fall in the labor share since the late 1970s. Thus, if workers owned a bit above 10% of those corporate profits via stock compensation, then that would cover the difference. Distributing this amount across the top 10% of public company employees, of which there are 4.2 million, this ownership would imply an additional $40,000 or so in pay. The aggregate numbers are thus quite plausible in terms of how much pay might have shifted to corporate profits serving as tax-preferred payments to high earners.

Takeaways by Macro Roundup^® AI

$200bn in missing labor compensation since the late 1970s drives roughly one-third of the labor share decline, reflecting tax-advantaged stock.
Top 10% of public company employees ($40k additional implicit pay via equity ownership) concentrate gains that would equal $200bn aggregate.
$12.2tn corporate value added vs. $7.2tn employee compensation reveals labor’s shrinking claim on output, as tax-preferred equity arrangements redirect worker.

Do Past Wealth Gaps Explain Modern Inequality? Evidence From Immigration To The United States

Brian Marein Wake Forest University

Date Posted:: June 30, 2026
Is Database:: Database
Is Important:: Important

Except possibly at the very top of the distribution which SIPP cannot measure, the wealth of “new” Southern and Eastern European immigrants to the US has fully caught up with “old” immigrants. Wealth converges quickly once earnings inequality vanishes.

Inferring the determinants of long-run inequality from group-level data is complicated by the arrival of 30 million Europeans during the Age of Mass Migration (roughly 1850 to 1924), who are by construction included in average white wealth despite having no direct claim to the wealth accumulated by earlier Americans. By1920, nearly half of white adults were either foreign-born or had foreign-born parents. Using the United States Immigration Commission Reports (commonly known as the Dillingham Commission Reports), I document that immigrants at the turn of the twentieth century arrived with almost no wealth. [Thus] a large share of the white population started from a substantial wealth disadvantage. Northwestern Europeans comprised the overwhelming majority of earlier immigrants, dating back to the initial European settlement of North America, while Southern and Eastern Europeans predominated at the turn of the twentieth century. If initial wealth disadvantages persisted across generations, one would expect households of Southern or Eastern European ancestry to possess less wealth than those of Northwestern European ancestry, since their families arrived later and started with substantially fewer resources. In fact, they do not. On average, they are wealthier.

Takeaways by Macro Roundup^® AI

By 1920, 50% of white adults were foreign-born or had foreign-born parents, yet Southern and Eastern European descendants achieved wealth.
European immigrants arrived at the turn of the twentieth century with nearly zero wealth, yet their descendants’ wealth distributions converged.
White ancestry groups exhibit nearly identical wealth distributions by 1980–1990 despite staggered arrival times spanning 270+ years, while Black, Cuban.

The Great $110 Trillion Wealth Transfer Won’t Happen Any Time Soon

Rachel Louise Ensign and James Benedict Wall Street Journal

Date Posted:: May 5, 2026
Is Database:: Database

The age at which Americans are inheriting money has risen. According to Federal Reserve surveys, btw 1998 and 2010, Americans in their late 50s were most likely to report receiving an inheritance; by 2013–2022, that age had ticked up to the mid 60’s.

Fed data [indicates] that what is known as the bequeathable wealth rose from 256% of gross domestic product in 1997 to 424% in 2021, the last year of available data. A staggering 97% of that increase was due to wealth gains in households where the head of household was 55 or older. Older Americans may keep accumulating wealth, especially if the stock market keeps rising. But some will spend it on living costs and expensive long-term care, leaving less for heirs. When they die, many will leave their money to their spouses, who are often in their same generation. This year, around $1.3 trillion is expected to be passed onto spouses, compared with about $2 trillion to heirs in Gen X and younger generations, according to projections from research firm Cerulli Associates.

Takeaways by Macro Roundup^® AI

Bequeathable wealth surged to 424% of GDP in 2021 from 256% in 1997, with 97% of gains concentrated in households.
The wealthiest 10% of households age 55+ captured 75% of total bequeathable wealth gains since 1997, resulting in widening inequality.
Boomers accumulated $1tn+ in wealth during Q4 alone, outpacing all other generational groups, as stock and business valuations drive outsized.

Has Generational Progress Stalled? Income Growth Over Five Generations of Americans

Kevin Corinth and Jeff Larrimore Demography

Date Posted:: April 23, 2026
Is Database:: Database
Is Important:: Important

As measured by the 36–40 cohort across generations, Americans’ real market income has continued to rise but at a slower pace. Accounting for taxes and transfers partially offsets the slowdown in the growth of market income.

We zoom in on a focal age range in people’s late 30s—an age at which we observe the five generations from the Greatest Generation (born 1901–1927) through the Millennial Generation (born 1981–1996)—and assess both whether generational progress is positive and the extent to which the rate of growth is speeding up or slowing down. Focusing first on median market income, there are two notable takeaways that apply for both the individual/couple and the household sharing units.The first is that generational progress has clearly slowed since the Baby Boom Generation, although it remains positive. Second, despite the perception that slowing generational progress is a recent phenomenon, the substantial slowdown did not start with Millennials but began a generation earlier with Generation X. Looking at the patterns formed in household market income by generation, the income of Baby Boomers in their late 30s was 31% above that for similarly aged adults in the Silent Generation. Progress slowed substantially for Generation X—their incomes increased by 10% relative to Baby Boomers—and then ticked up for Millennials, whose incomes rose by 15% relative to Generation X. Although market income is an important indicator of progress, it does not reflect the full set of resources that individuals have available for consumption. The slowdown in generational progress is softened when accounting for taxes and transfers.

Takeaways by Macro Roundup^® AI

Income growth for Americans in their late 30s declined 50% from the Silent Generation (born 1928–1945) to Millennials (born 1981–1996).
Wage growth deceleration across five generations results in widening inequality, with top earners capturing disproportionate income gains while median earners.
Workforce participation shifts and wage stagnation for Millennials vs. prior generations lead to delayed wealth accumulation and reduced intergenerational economic.

US federal tax rates remain progressive, with negligible rates for the bottom quintile, 11-16% for the middle quintile, and about 33% for the top 1%.

Corporate profits have risen to 18% of national income, their highest share since 1947, while labor’s share has fallen to 60%, a low not seen since the 1950s. The decline in labor’s share has accelerated over the past year.

Are record corporate profits coming at workers' expense?

Related Articles:

An Economist analysis of the wealth of 7,000 billionaires finds that over the past decade, the share of billionaire wealth “derived from self-made entrepreneurs in competitive sectors has surged to an all-time high.”

Does self-made wealth now dominate billionaire fortunes globally?

Takeaways by Macro Roundup® AI

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Zidar & Zwick suggest about one‑third of the post‑1970s drop in labor’s share is due to stock‑based pay to workers, in addition to the one‑third they already attribute to pass‑through income. That leaves only around one‑third for genuine shifts in technology, power, etc.

Does tax-preferred stock compensation explain the labor share decline?

Takeaways by Macro Roundup® AI

Related Articles:

Except possibly at the very top of the distribution which SIPP cannot measure, the wealth of “new” Southern and Eastern European immigrants to the US has fully caught up with “old” immigrants. Wealth converges quickly once earnings inequality vanishes.

Does initial wealth explain persistent inequality across immigrant groups?

Takeaways by Macro Roundup® AI

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The age at which Americans are inheriting money has risen. According to Federal Reserve surveys, btw 1998 and 2010, Americans in their late 50s were most likely to report receiving an inheritance; by 2013–2022, that age had ticked up to the mid 60’s.

Will the concentration of inherited wealth impact economic equality?

Takeaways by Macro Roundup® AI

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As measured by the 36–40 cohort across generations, Americans’ real market income has continued to rise but at a slower pace. Accounting for taxes and transfers partially offsets the slowdown in the growth of market income.

Takeaways by Macro Roundup® AI

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Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI

Takeaways by Macro Roundup^® AI