Increasingly Unequal States of America 1917 To 2012

EARN REPORT
January 26, 2015
THE INCREASINGLY UNEQUAL

STATES OF AMERICA
Income Inequality by State, 1917 to 2012
BY ESTELLE SOMMEILLER AND MARK PRICE
EARN 1333 H STREET, NW SUITE 300, EAST TOWER WASHINGTON, DC 20005 202.775.8810 WWW.EARNCENTRAL.ORG
Table of contents
Executive summary.....................................................................................................................................................3
Introduction ...............................................................................................................................................................4
Unequal income growth in the economic recovery....................................................................................................5
Income inequality across the states in 2012 ..............................................................................................................8
Lopsided income growth from 1979 to 2007 ..........................................................................................................10
Inequality back at levels not seen since the late 1920s ............................................................................................12
Income inequality in the last 10 economic expansions ...........................................................................................15
Conclusion................................................................................................................................................................18
About the authors.....................................................................................................................................................22
Acknowledgments.....................................................................................................................................................22
Methodological appendix.........................................................................................................................................23
Endnotes ...................................................................................................................................................................31
References .................................................................................................................................................................33
EA RN | J AN UARY 26, 2015
PAGE 2
Executive summary
conomic inequality is, at long last, commanding attention from policymakers, the media, and everyday citizens. There is growing recognition that we need an inclusive economy that works for everyonenot just for
those at the top.
While there are plentiful data examining the fortunes of the top 1 percent at the national level, this report uses the
latest available data to examine how the top 1 percent in each state have fared over 19172012, with an emphasis
on trends over 19282012 (data for additional percentiles spanning 19172012 are available at go.epi.org/topincomes1917to2012). In so doing, this analysis finds that all 50 states have experienced widening income inequality in
recent decades.
Specific findings include:
After incomes at all levels declined as a result of the Great Recession, income growth has been lopsided since the
recovery began in 2009, with the top 1 percent capturing an alarming share of economic growth.
University of California at Berkeley economist Emmanuel Saez estimates that between 2009 and 2012, the
top 1 percent captured 95 percent of total income growth.1
Data for individual states show that rising inequality is a pervasive trend: Between 2009 and 2012, in 39
states the top 1 percent captured between half and all income growth.
The states in which all income growth between 2009 and 2012 accrued to the top 1 percent
include Delaware, Florida, Missouri, South Carolina, North Carolina, Connecticut, Washington,
Louisiana, California, Virginia, Pennsylvania, Idaho, Massachusetts, Colorado, New York, Rhode
Island, and Nevada.
The remaining states in which the top 1 percent captured half or more of income growth between
2009 and 2012 include Alabama (where 98.9 percent of all income growth was captured by the top
1 percent), Illinois (97.2 percent), Texas (86.8 percent), Arkansas (83.7 percent), Michigan (82.0
percent), New Jersey (80.5 percent), Maryland (80.5 percent), Nebraska (74.9 percent), Kansas
(74.4 percent), Ohio (71.9 percent), Wisconsin (69.6 percent), Oklahoma (69.2 percent), Tennessee (68.5 percent), Iowa (65.0 percent), Georgia (63.6 percent), New Hampshire (59.5 percent),
Arizona (59.0 percent), Maine (58.3 percent), Oregon (57.3 percent), Utah (56.6 percent), Minnesota (56.0 percent), and South Dakota (53.4 percent).
Focusing on inequality in 2012, the most recent year for which state data are available, New York and Connecticut had the largest gaps between the average incomes of the top 1 percent and the average incomes of
the bottom 99 percent. In both states the top 1 percent earned average incomes more than 48 times those of
the bottom 99 percent. This reflects in part the relative concentration of the financial sector in and beyond
the New York City metropolitan area.
Lopsided income growth is also a long-term trend. Between 1979 and 2007, the top 1 percent took home well over
half (53.9 percent) of the total increase in U.S. income. Over this period, the average income of the bottom 99
PAGE 3
percent of U.S. taxpayers grew by 18.9 percent. Simultaneously, the average income of the top 1 percent grew over
10 times as muchby 200.5 percent.
Lopsided income growth characterizes every state between 1979 and 2007.
In four states (Nevada, Wyoming, Michigan, and Alaska), only the top 1 percent experienced rising
incomes between 1979 and 2007, and the average income of the bottom 99 percent fell.
In another 15 states the top 1 percent captured between half and 84 percent of all income growth
between 1979 and 2007. Those states are Arizona (where 84.2 percent of all income growth was
captured by the top 1 percent), Oregon (81.8 percent), New Mexico (72.6 percent), Hawaii (70.9
percent), Florida (68.9 percent), New York (67.6 percent), Illinois (64.9 percent), Connecticut
(63.9 percent), California (62.4 percent), Washington (59.1 percent), Texas (55.3 percent), Montana (55.2 percent), Utah (54.1 percent), South Carolina (54.0 percent), and West Virginia (53.3
percent).
In the 10 states in which the top 1 percent captured the smallest share of income growth from 1979
to 2007, the top 1 percent captured between about a quarter and just over a third of all income
growth. Those states are Louisiana (where 25.6 percent of all income growth was captured by the
top 1 percent), Virginia (29.5 percent), Iowa (29.8 percent), Mississippi (29.8 percent), Maine
(30.5 percent), Rhode Island (32.6 percent), Nebraska (33.5 percent), Maryland (33.6 percent),
Arkansas (34.0 percent), and North Dakota (34.2 percent).
The lopsided growth in U.S. incomes observed between 1979 and 2007 resulted in a rise in every state in
the top 1 percents share of income. This rise in income inequality represents a sharp reversal of the patterns
of income growth that prevailed in the half century following the beginning of the Great Depression; the
share of income held by the top 1 percent declined in every state but one between 1928 and 1979.
Introduction
In 2012, the Economic Policy Institute and the Center on Budget and Policy Priorities jointly released Pulling Apart, a
report on the growth of income in the top, middle, and bottom fifths of households in the United States and each state
(McNichol et al. 2012). That report also included information on the incomes of the top 5 percent of earners.
Pulling Apart found that, based on the most recent data available, the richest 5 percent of U.S. households had an average income 13 times higher than the poorest 20 percent of households.
As its authors note, the Census data source relied on by Pulling Apart does not permit analysis of trends in the top 1
percent of households at the state level. In addition to sample sizes being too small in some states (even when data are
pooled across multiple years), Census data do not permit analysis of trends for the top 1 percent because these data are
top coded: above a certain threshold, the highest incomes are not recorded at the actual income level reported to Census survey takers. Instead, they are reported at a specified top income. Top coding is used to ensure that small numbers
of erroneous outliers do not distort Census data.
PAGE 4
The present report does permit analysis of state-level trends among the top 1 percent of earners. It uses the same methodology employed by Thomas Piketty and Emmanuel Saez (2003) to generate their widely cited findings on the incomes
of the top 1 percent in the United States as a whole. This methodology relies on tax data reported by the Internal Revenue Service for each of the 50 states plus the District of Columbia (see the methodological appendix for more details
on the construction of our estimates).
Piketty and Saezs (2003) groundbreaking work, now more than a decade old, increased attention to the body of work
compiled since the 1980s documenting rising inequality in the United States. Their work helped inspire the Occupy
Wall Street movement of 2011 and continues to resonate in public protests. Growing public concern over rising inequality has also reinvigorated academic debates about whether inequality matters at all (Mankiw 2013) and about the role
of finance and top executives in driving the growth of inequality (Bivens and Mishel 2013), and has spurred interest in
the impact of rising top incomes on the number of Americans who actually experience a rags to riches story over their
lifetime (Corak 2013).
Applying Piketty and Saezs methods to state-level data provides insight into the rise of incomes among the top 1 percent
within each state (a population that significantly overlaps, but is not the same as, the national top 1 percent).2 This
analysis can shed light on the degree to which the growth in income inequality is a widely experienced phenomenon
across the individual states.
Before we begin our analysis of state data, it is useful to briefly summarize Piketty and Saezs updated (2012) findings
with respect to U.S. income inequality overall, focusing specifically on the share of income earned by the top 1 percent
of taxpayers. They find the share of income captured by the top 1 percent climbed from 9.9 percent in 1979 to 23.5
percent in 2007.3 The share of income earned by the top 1 percent in 2007 on the eve of the Great Recession was
just shy of 23.9 percent, the peak in the top 1 percent income share reached in 1928 (the year before the start of the
Great Depression). Although the Great Recession reduced the incomes of the top 1 percent, their income growth once
again outpaced the growth of incomes among the bottom 99 percent starting in 2010. By 2012, the most recent year
for which national-level data are available, the top 1 percent earned 22.5 percent of all income in the United States. In
the following sections we present data unique to this study that replicates Piketty and Saezs method for each of the 50
states plus the District of Columbia.
Unequal income growth in the economic recovery

We begin our analysis with an examination of trends in income growth overall and among both the top 1 percent and
the bottom 99 percent over 20092012, the first three years of economic recovery following the end of the Great Recession. After incomes at all levels declined as a result of the Great Recession, income growth has been lopsided since the
recovery began, with the top 1 percent capturing an alarming share of economic growth. Over this period, the average
income of the bottom 99 percent in the United States actually fell (by 0.4 percent). In contrast, the average income of
the top 1 percent climbed 36.8 percent. In sum, only the top 1 percent gained as the economy recovered.4
As illustrated in Table 1, among the individual states between 2009 and 2012, we find:
In 39 states the top 1 percent captured between half and all income growth.
PAGE 5
TA B L E 1
Income growth from 2009 to 2012, overall and for the top 1% and bottom 99%, U.S. and by state
and region
Average real income growth
Rank (by
top
1% income
growth)
State/region
Overall
Top 1%
Bottom 99%
Share of total growth

(or loss) captured by
top 1%
Wyoming
283.6%
North Dakota
32.4%
103.6%
21.2%
43.4%
Texas
10.5%
50.2%
1.7%
86.8%
California
6.8%
49.6%
-3.0%
135.6%
Colorado
6.6%
48.4%
-1.0%
112.6%
Nebraska
8.3%
47.7%
2.4%
74.9%
Michigan
8.7%
47.3%
1.8%
82.0%
Massachusetts
7.7%
46.8%
-1.5%
115.8%
Washington
3.9%
45.0%
-3.5%
175.0%
10
South Dakota
12.7%
42.7%
7.0%
53.4%
11
Utah
11.3%
41.9%
5.8%
56.6%
12
Nevada
-4.2%
39.8%
-16.0%
13
Oklahoma
9.4%
39.6%
3.5%
69.2%
14
Florida
3.4%
39.5%
-7.1%
259.9%
15
Iowa
7.0%
39.3%
2.8%
65.0%
16
Minnesota
10.4%
37.9%
5.4%
56.0%
17
Kansas
7.3%
37.5%
2.2%
74.4%
18
Ohio
7.1%
37.0%
2.3%
71.9%
19
Idaho
3.9%
35.0%
-1.0%
122.8%
20
Connecticut
5.3%
35.0%
-5.4%
175.7%
21
Illinois
6.5%
34.5%
0.2%
97.2%
22
Missouri
2.1%
33.0%
-3.3%
236.5%
23
New York
7.8%
32.0%
-1.1%
110.7%
24
Virginia
3.2%
32.0%
-1.3%
134.8%
25
Tennessee
7.2%
31.2%
2.7%
68.5%
26
Rhode Island
4.0%
30.4%
-0.4%
108.5%
27
New Hampshire
7.8%
30.3%
3.7%
59.5%
28
Arkansas
6.0%
29.3%
1.2%
83.7%
29
Oregon
7.0%
28.6%
3.5%
57.3%
30
Pennsylvania
3.7%
28.6%
-1.1%
124.4%
31
Arizona
7.5%
27.7%
3.7%
59.0%
32
Georgia
6.7%
26.8%
2.9%
63.6%
33
Wisconsin
5.9%
26.7%
2.1%
69.6%
34
New Jersey
5.9%
26.4%
1.4%
80.5%
35
Indiana
7.2%
26.3%
4.2%
49.4%
36
Maryland
4.2%
25.4%
0.9%
80.5%
37
Louisiana
2.9%
25.0%
-1.3%
137.0%
38
Montana
8.5%
24.8%
5.2%
48.9%
39
South Carolina
1.8%
24.3%
-1.9%
192.0%
40
North Carolina
1.7%
22.7%
-1.8%
188.0%
PAGE 6
TA B L E 1 ( C O N T I N U E D )

Rank (by
top
1% income
growth)
State/region
Overall
Top 1%
Bottom 99%

top 1%
41
Maine
4.9%
22.4%
2.3%
58.3%
42
Vermont
7.0%
21.8%
4.6%
42.5%
43
Kentucky
7.7%
21.3%
5.5%
38.4%
44
Mississippi
5.0%
17.7%
2.9%
49.2%
45
Alabama
2.4%
15.6%
0.0%
98.9%
46
New Mexico
5.3%
15.0%
3.7%
40.3%
47
Alaska
5.4%
15.0%
4.0%
34.2%
48
Delaware
0.7%
15.0%
-1.6%
301.2%
49
Hawaii
3.5%
4.2%
3.4%
15.3%
50
West Virginia
5.0%
-2.5%
6.4%
-7.4%
29*
District of Columbia
5.0%
29.1%
-1.1%
117.5%
United States
6.3%
36.8%
-0.4%
105.5%
Northeast
6.2%
28.3%
0.2%
97.3%
Midwest
7.4%
34.7%
2.4%
71.9%
South
5.8%
33.7%
0.1%
99.0%
West
6.3%
42.8%
-1.4%
117.8%
* Rank of the District of Columbia if it were ranked with the 50 states

Only estimates of top incomes are currently available for Wyoming in 2012.
Overall income declined even as top 1% incomes grew over this period.
Note: Data are for tax units.
Source: Authors analysis of state-level tax data from Sommeiller (2006) extended to 2012 using state-level data from the Internal Revenue Service SOI Tax Stats (various years), and Piketty and Saez (2012)
In 16 states the incomes of the top 1 percent grew and the incomes of the bottom 99 percent fell, but top
1 percent incomes rose enough to generate an overall increase in average incomes (in other words, for 100
percent of taxpayers). Thus, in these states the top 1 percent captured more than 100 percent of the overall
increase in income. These 16 states are Delaware, Florida, Missouri, South Carolina, North Carolina, Connecticut, Washington, Louisiana, California, Virginia, Pennsylvania, Idaho, Massachusetts, Colorado, New
York, and Rhode Island.
The remaining 22 states in which the top 1 percent captured half or more of income growth include
Alabama (where 98.9 percent of all income growth was captured by the top 1 percent), Illinois (97.2 percent), Texas (86.8 percent), Arkansas (83.7 percent), Michigan (82.0 percent), New Jersey (80.5 percent),
Maryland (80.5 percent), Nebraska (74.9 percent), Kansas (74.4 percent), Ohio (71.9 percent), Wisconsin (69.6 percent), Oklahoma (69.2 percent), Tennessee (68.5 percent), Iowa (65.0 percent), Georgia (63.6
percent), New Hampshire (59.5 percent), Arizona (59.0 percent), Maine (58.3 percent), Oregon (57.3 percent), Utah (56.6 percent), Minnesota (56.0 percent), and South Dakota (53.4 percent).
PAGE 7
Nevada was the only state where the growth in top 1 percent incomes (which grew 39.8 percent) was offset
by a decline in bottom 99 percent incomes (which fell 16.0 percent). As such, overall incomes in the state
fell 4.2 percent from 2009 to 2012.
In nine states, both top 1 percent and bottom 99 percent incomes rose, and the top 1 percent captured between
zero percent and half of all income growth. Those states are Indiana (where 49.4 percent of all income growth was
captured by the top 1 percent), Mississippi (49.2 percent), Montana (48.9 percent), North Dakota (43.4 percent),
Vermont (42.5 percent), New Mexico (40.3 percent), Kentucky (38.4 percent), Alaska (34.2 percent), and Hawaii
(15.3 percent).
In only one state, West Virginia, did the incomes of the top 1 percent decline as the average income of the bottom
99 percent grew.
A precise estimate of the share of all income growth captured by the top 1 percent in Wyoming between 2009 and
2012 is not currently available. However, we were able to estimate that the income of the top 1 percent rose 283.6
percent from 2009 to 2012the largest increase of any state over this period.5
Income inequality across the states in 2012

Table 2 presents data by state for 2012 on the average income of the top 1 percent of taxpayers, the average income
of the bottom 99 percent, and the ratio of these values. According to estimates by University of California at Berkeley
economist Emmanuel Saez, in the United States as a whole, on average the top 1 percent of taxpayers earned 28.7 times
as much income as the bottom 99 percent in 2012.6
According to state-level data, Connecticut and New York have the largest gaps between the top 1 percent and the bottom 99 percent. In both states the top 1 percent in 2012 earned on average over 48 times the income of the bottom 99
percent of taxpayers. This reflects in part the relative concentration of the financial sector in the greater New York City
metropolitan area.
After New York and Connecticut, the next eight states with the largest gaps between the top 1 percent and bottom 99
percent in 2012 are Nevada (where the top 1 percent earned 44.1 times as much as the bottom 99 percent, on average),
Florida (43.3), California (34.9), Massachusetts (34.5), Texas (32.5), Illinois (29.7), New Jersey (27.0), and Washington (26.8). (In 2011, Wyoming ranked sixth with a ratio of 27.6 and an average top 1 percent income of $1.5 million.
In 2012 we were not able to estimate the average income of the bottom 99 percent in Wyoming, but with an average
top 1 percent income of $5.1 million, it would most likely have ranked first, as this is roughly double the average top 1
percent income of Connecticut or New York.)
Even in the 10 states with the smallest gaps between the top 1 percent and bottom 99 percent in 2012, the top 1 percent
earned between about 14 and 19 times the income of the bottom 99 percent. Those states include Delaware (where the
top 1 percent earned 18.5 times as much as the bottom 99 percent, on average), Kentucky (18.5), New Mexico (18.3),
Mississippi (18.2), Vermont (18.1), Iowa (17.6), Maine (17.2), West Virginia (16.2), Alaska (15.3), and Hawaii (14.6).
Reported in Table 3 are the threshold incomes required to be considered part of the top 1 percent by state. Table 3 also
includes the threshold to be included in the 1 percent of the 1 percent (or the top 0.01 percent). Finally, the average
income of the top 0.01 percent (the highest one out of 10,000 taxpayers) is ranked among the 50 states.
PAGE 8
TA B L E 2
Ratio of top 1% income to bottom 99% income, U.S. and by state and region, 2012
Rank (by
top-to-bottom
ratio)
State/region
Average income of the top

1%
Average income of the

bottom 99%
Top-to-bottom ratio
Connecticut
$2,683,600
$52,603
51.0
New York
$2,130,743
$44,049
48.4
Nevada
$1,497,185
$33,970
44.1
Florida
$1,488,367
$34,387
43.3
California
$1,598,161
$45,775
34.9
Massachusetts
$1,819,077
$52,758
34.5
Texas
$1,499,944
$46,102
32.5
Illinois
$1,366,958
$46,080
29.7
New Jersey
$1,546,481
$57,299
27.0
10
Washington
$1,272,313
$47,517
26.8
11
Colorado
$1,347,381
$50,367
26.8
12
Oklahoma
$1,105,521
$41,995
26.3
13
Arkansas
$895,844
$34,179
26.2
14
North Dakota
$1,566,183
$59,931
26.1
15
Michigan
$942,993
$37,324
25.3
16
South Dakota
$1,249,327
$50,089
24.9
17
Pennsylvania
$1,069,318
$43,847
24.4
18
Utah
$1,117,330
$46,612
24.0
19
Louisiana
$974,376
$40,792
23.9
20
Tennessee
$925,479
$38,942
23.8
21
Montana
$920,802
$38,931
23.7
22
Missouri
23
Minnesota
24
$936,785
$39,778
23.6
$1,185,238
$50,476
23.5
Arizona
$877,466
$37,811
23.2
25
Georgia
$939,291
$41,121
22.8
26
Kansas
$1,093,986
$48,312
22.6
27
New Hampshire
$1,182,788
$52,994
22.3
28
Wisconsin
$974,753
$44,123
22.1
29
Rhode Island
30
Nebraska
31
$966,071
$44,563
21.7
$1,106,763
$51,654
21.4
Idaho
$855,227
$40,438
21.1
32
Ohio
$852,569
$40,469
21.1
33
South Carolina
$724,646
$35,167
20.6
34
Virginia
$1,162,017
$56,584
20.5
35
Alabama
$751,844
$36,659
20.5
36
North Carolina
$828,487
$40,429
20.5
37
Oregon
$810,196
$40,314
20.1
38
Maryland
$1,160,114
$61,528
18.9
39
Indiana
$775,603
$41,259
18.8
40
Delaware
$863,734
$46,686
18.5
41
Kentucky
$685,742
$37,124
18.5
42
New Mexico
$676,217
$36,883
18.3
PAGE 9
Rank (by
top-to-bottom
ratio)
State/region
Average income of the top

1%

bottom 99%
Top-to-bottom ratio
43
Mississippi
$634,614
$34,947
18.2
44
Vermont
$807,836
$44,656
18.1
45
Iowa
$855,918
$48,739
17.6
46
Maine
$688,169
$40,032
17.2
47
West Virginia
$537,989
$33,109
16.2
48
Alaska
$939,371
$61,333
15.3
49
Hawaii
$770,679
$52,630
14.6
8*
$1,959,334
$60,745
32.3
Wyoming
$5,078,696
United States
$1,303,198
$43,713
29.8
Northeast
$1,656,523
$48,199
34.4
Midwest
$1,022,655
$43,618
23.4
South
$1,138,251
$42,113
27.0
West
$1,347,158
$44,759
30.1

The average income of the bottom 99% could not be estimated in 2012 in Wyoming.
Wyoming had the highest average income in 2012 for the top 0.01 percent, $368.8 million. Connecticuts top 0.01
percent had an average income of $83.9 million, and New Yorks, in third place, had an average income of $69.6 million.
The lowest average incomes of the top 0.01 percent were $7.3 million in West Virginia, $10.5 million in Mississippi,
and $11.2 million in Maine.
Lopsided income growth from 1979 to 2007

It is important to note that lopsided income growth is not a recent trend. Its reemergence in the recovery is a continuation of a pattern that began three-and-a-half decades ago, as evidenced by the following examination of trends in
income growth overall, among the top 1 percent, and among the bottom 99 percent from 1979 to 2007. The data
in this section start in 1979 because it is both a business cycle peak and a widely acknowledged beginning point for a
period of rising inequality in the United States. We end this analysis in 2007 as it is the most recent business cycle peak.
The average inflation-adjusted income of the bottom 99 percent of taxpayers grew by 18.9 percent between 1979 and
2007. Over the same period, the average income of the top 1 percent of taxpayers grew by 200.5 percent. This lopsided
income growth means that the top 1 percent of taxpayers captured 53.9 percent of all income growth over the period.
Table 4 presents these similar estimates for the 50 states and the District of Columbia (the data in the table are sorted
by the amount of income growth experienced by the top 1 percent). It shows that:
PAGE 10
TA B L E 3
Income threshold of top 1% and top .01%, and average income of top .01%, U.S. and by state and
region, 2012
Rank (by
average
income of
top .01%)
State/region
1
2
Income threshold of top 1%
Income threshold of top

.01%
Average income of top .01%
Wyoming
$388,339
$25,091,848
$368,823,036
Connecticut
$677,608
$21,182,598
$83,891,599
New York
$506,051
$16,962,741
$69,619,330
Nevada
$306,498
$12,013,471
$57,684,623
Massachusetts
$532,328
$13,959,144
$49,729,141
California
$437,575
$12,455,195
$47,532,949
Florida
$378,342
$11,755,699
$45,325,718
Texas
$423,099
$11,570,378
$41,586,204
North Dakota
$502,393
$11,490,500
$36,568,024
10
Colorado
$405,348
$10,213,488
$36,284,155
11
Washington
$378,569
$9,659,716
$34,885,559
12
Illinois
$424,473
$10,211,642
$33,727,697
13
New Jersey
$538,666
$10,931,922
$32,091,153
14
New Hampshire
$365,186
$8,905,817
$31,734,092
15
Arkansas
$228,298
$6,761,754
$30,839,902
16
Oklahoma
$328,072
$8,371,194
$28,439,334
17
South Dakota
$404,010
$9,084,338
$28,176,830
18
Utah
$339,990
$8,403,232
$28,145,004
19
Nebraska
$355,138
$8,158,123
$26,663,664
20
Kansas
$358,333
$7,985,550
$25,879,120
21
Virginia
$401,058
$8,307,828
$25,489,433
22
Minnesota
$413,748
$8,414,499
$25,392,641
23
Pennsylvania
$354,868
$7,772,417
$24,847,479
24
Michigan
$300,570
$6,935,849
$23,501,671
25
Rhode Island
$314,647
$7,041,364
$23,014,540
26
Maryland
$418,745
$8,010,295
$22,646,099
27
Montana
$304,296
$6,675,326
$22,045,342
28
Wisconsin
$319,803
$7,073,798
$21,969,976
29
Missouri
$309,262
$6,785,160
$21,599,281
30
Tennessee
$304,993
$6,715,678
$21,148,119
31
Idaho
$279,793
$6,202,520
$19,923,273
32
Louisiana
$338,979
$6,795,780
$19,114,542
33
Arizona
$299,717
$6,246,648
$18,995,716
34
Georgia
$337,237
$6,501,977
$18,713,392
35
Hawaii
$278,718
$5,320,253
$15,956,172
36
Ohio
$315,857
$5,761,707
$15,912,504
37
Iowa
$325,066
$5,705,531
$15,672,556
38
North Carolina
$311,294
$5,577,992
$15,656,009
39
Vermont
$299,025
$5,479,073
$15,386,951
40
Oregon
$305,637
$5,429,998
$15,266,403
41
Alabama
$271,733
$5,145,289
$14,768,967
PAGE 11
Rank (by
average
income of
top .01%)
State/region
42
Income threshold of top 1%

.01%
Average income of top .01%
Alaska
$369,436
$5,946,114
$14,562,798
43
Delaware
$331,759
$5,649,053
$14,368,951
44
Indiana
$293,655
$5,146,604
$13,746,581
45
New Mexico
$240,847
$4,663,944
$13,234,720
46
South Carolina
$274,574
$4,825,085
$12,955,010
47
Kentucky
$262,653
$4,527,477
$12,281,894
48
Maine
$274,437
$4,395,889
$11,179,504
49
Mississippi
$262,809
$4,096,602
$10,509,430
50
West Virginia
$242,774
$3,188,283
$7,325,738
5*
$555,341
$15,072,505
$53,468,734
United States
$385,195
$9,912,787
$34,739,488
Northeast
$534,873
$13,303,039
$47,883,490
Midwest
$381,704
$7,464,161
$22,338,071
South
$406,939
$8,724,042
$28,504,333
West
$465,969
$10,815,791
$38,812,137

In four states (Nevada, Wyoming, Michigan, and Alaska), only the top 1 percent experienced rising incomes
between 1979 and 2007.
In another 15 states, the top 1 percent captured between half and 84 percent of all income growth from 1979 to
2007. Those states are Arizona (where 84.2 percent of all income growth was captured by the top 1 percent), Oregon (81.8 percent), New Mexico (72.6 percent), Hawaii (70.9 percent), Florida (68.9 percent), New York (67.6
percent), Illinois (64.9 percent), Connecticut (63.9 percent), California (62.4 percent), Washington (59.1 percent),
Texas (55.3 percent), Montana (55.2 percent), Utah (54.1 percent), South Carolina (54.0 percent), and West Virginia (53.3 percent).
The lowest shares of income captured by the top 1 percent between 1979 and 2007 are in Louisiana (25.6 percent),
Virginia (29.5 percent), Iowa (29.8 percent), Mississippi (29.8 percent), Maine (30.5 percent), Rhode Island (32.6
percent), Nebraska (33.5 percent), Maryland (33.6 percent), Arkansas (34.0 percent), and North Dakota (34.2 percent).
Inequality back at levels not seen since the late 1920s

This lopsided income growth means that income inequality has risen in recent decades. Figure A presents the share
of all income (including capital gains income) held by the top 1 percent of taxpayers between 1917 and 2012 for the
United States and by region. As Figure A makes clear, income inequality reached a peak in 1928 before declining rapidly
in the 1930s and 1940s and then more gradually until the late 1970s. The 1940s to the late 1970s, while by no means
PAGE 12
TA B L E 4
Income growth from 1979 to 2007, overall and for the top 1% and bottom 99%, U.S. and by state
and region
Rank (by
top
1% income
growth)
State/region
Overall
Top 1%
Bottom 99%

top 1%
Connecticut
72.6%
414.6%
29.5%
63.9%
Massachusetts
82.1%
366.0%
51.7%
43.1%
New York
60.5%
355.1%
22.2%
67.6%
Wyoming
31.5%
354.3%
-0.8%
102.3%
New Jersey
62.6%
264.7%
41.3%
40.3%
Washington
31.2%
222.3%
13.9%
59.1%
Florida
38.8%
218.8%
13.8%
68.9%
Vermont
42.4%
217.0%
27.8%
39.5%
South Dakota
44.8%
216.0%
30.5%
37.2%
10
New Hampshire
53.2%
215.9%
37.6%
35.5%
11
Utah
31.0%
214.9%
15.4%
54.1%
12
Virginia
58.2%
214.8%
44.6%
29.5%
13
Illinois
31.4%
211.6%
12.2%
64.9%
14
Maryland
51.0%
202.1%
37.0%
33.6%
15
Colorado
37.4%
200.8%
21.2%
48.3%
16
Idaho
30.1%
197.6%
16.3%
49.9%
17
California
31.5%
191.8%
13.2%
62.4%
18
Pennsylvania
40.0%
184.9%
25.2%
42.8%
19
Tennessee
35.3%
178.0%
20.2%
48.4%
20
Minnesota
44.4%
175.9%
30.9%
36.8%
21
North Carolina
44.8%
172.0%
32.1%
34.8%
22
Georgia
37.5%
170.9%
23.5%
43.3%
23
Rhode Island
53.8%
170.3%
40.4%
32.6%
24
Nevada
8.6%
164.0%
-11.6%
218.5%
25
South Carolina
25.4%
163.5%
12.8%
54.0%
26
Nebraska
43.5%
160.3%
31.8%
33.5%
27
Alabama
33.7%
158.8%
20.5%
44.9%
28
Arizona
17.0%
157.8%
3.0%
84.2%
29
Wisconsin
28.5%
150.4%
17.4%
44.0%
30
Oklahoma
33.9%
149.6%
20.3%
46.6%
31
Maine
39.9%
149.4%
30.2%
30.5%
32
North Dakota
33.7%
147.8%
24.0%
34.2%
33
Montana
22.3%
146.8%
10.9%
55.2%
34
Missouri
31.9%
140.5%
20.3%
42.5%
35
Kansas
37.0%
132.3%
26.6%
35.0%
36
Oregon
13.5%
127.2%
2.7%
81.8%
37
Texas
26.6%
124.1%
13.5%
55.3%
38
Delaware
31.5%
122.6%
21.2%
39.7%
39
Arkansas
35.0%
121.6%
25.6%
34.0%
40
New Mexico
14.0%
119.3%
4.2%
72.6%
PAGE 13

Rank (by
top
1% income
growth)
State/region
Overall
Top 1%
Bottom 99%

top 1%
41
Alaska
-10.3%
118.6%
-17.5%
42
Hawaii
12.4%
118.0%
3.9%
70.9%
43
Indiana
21.4%
115.3%
12.6%
46.5%
44
Ohio
20.4%
111.2%
11.3%
49.4%
45
Iowa
30.9%
110.5%
23.7%
29.8%
46
Kentucky
19.9%
105.1%
11.2%
48.8%
47
Michigan
8.9%
100.0%
-0.2%
101.7%
48
Mississippi
31.8%
93.4%
24.8%
29.8%
49
Louisiana
35.4%
84.6%
29.5%
25.6%
50
West Virginia
12.9%
74.1%
6.6%
53.3%
6*
88.1%
239.4%
65.8%
34.8%
United States
36.9%
200.5%
18.9%
53.9%
Northeast
59.0%
301.2%
31.0%
52.9%
Midwest
26.5%
147.1%
14.4%
50.7%
South
37.6%
167.5%
22.6%
46.1%
West
27.3%
186.2%
10.5%
65.2%

Only the incomes of the top 1% grew over this period.
a golden age (as evidenced, for example, by the perpetuation of gender, ethnic, and racial discrimination in the job
market), was a period in which workers from the lowest-paid wage earner to the highest-paid CEO experienced similar growth in incomes. This was a period in which a rising tide really did lift all boats. This underscores that there
is nothing inevitable about top incomes growing faster than other incomes, as has occurred since the late 1970s. The
unequal income growth since the late 1970s has brought the top 1 percent income share in the United States to near its
1928 peak.
The patterns of income growth over time in individual states reflect in broad terms the national pattern. Table 5 presents three snapshots of the income share of the top 1 percent in each state and the District of Columbia: in 1928,
1979, and 2007. We chose 2007 rather than 2012 because it is the recent peak in the share of income flowing to the
top 1 percent. Table 5 shows that:
Between 1928 and 1979, in 49 states plus the District of Columbia, the share of income held by the top 1 percent
declined, following the national pattern.7
From 1979 to 2007 the share of income held by the top 1 percent increased in every state and the District of
Columbia.
PAGE 14
FIGURE A VIEW INTERACTIVE on epi.org
Share of all income held by the top 1%, United States and by region, 19172012
30%
Year
United
States
(by Northeast
Piketty
and
Saez)
Northeast
West
United States (by Piketty and Saez)
Midwest
South
West
1917
18%
23
13
16
13
25
1918
16
20
12
15
12
1919
16
21
13
14
12
1920
15
18
12
13
11
1921
16
18
13
14
12
1922
17
20
14
15
13
1923
16
18
13
14
12
1924
17
20
15
15
13
1925
5
20
17
18
1926
20
17
18
20
15
10
1920
23
22
1940
15
1960
16
South
1980
Midwest
2000
Note:
Tax data from 1983
hence the gap in regional figures. Income includes capital gains
18 to 1985 were
19 unavailable,
16
1927Data are21for tax units. 23
income.
1928
24
26
21
20
19
1930
17
19
15
15
14
1931
15
16
14
15
13
1937
17
18
15
17
15
Source: Authors analysis of state-level tax data from Sommeiller (2006) extended to 2012 using state-level data from the Internal Revenue
Service
years), and Piketty
(2012) 16
18 and Saez17
1929 SOI Tax22Stats (various27
The 10 states with the biggest jumps (at least 11.8 percentage points) in the top 1 percent share from 1979 to 2007
16
16
13
15
12
1932
include four states with large financial services sectors (New York, Connecticut, New Jersey, and Illinois), three with
16
18
14
15
13
1933
large information technology sectors (Massachusetts, California, and Washington), one state with a large energy indus16 one with 17
15 industry
16 (Nevada),
14 and Florida, a state in which many wealthy individuals
1934
try (Wyoming),
a large gaming
18states, the 14
1935
retire.
In 18 of17
the other 40
increase in16
the top 114percent share is between 8.5 and 11.0 percentage points. In
the remaining
22 states, the
19
20increase ranges
18 between
19 3.9 and
16 8.0 percentage points.
1936
Income
inequality
in the
last 10
economic
expansions
16
15
14
16
13
1938
Normally
the economic
expansion
that
16
16
15
16 follows13a recession that workers make wage gains which hopefully
1939 its during
leave1940
them better
recession started.
But
16 off than16before the 15
17
13 examining trends throughout economic recoveries in the
postwar
era demonstrates
a startling pattern
in which
the 13
top 1 percent is capturing a larger and larger fraction of the
16
15
15
16
1941
income growth. Between 1949 and 2012 there have been 10 economic expansions, with four occurring since 1979. Fol1942
13
14
13
13
11
1946
13
14
12
13
11
1947
12
12
11
12
10
lowing Tcherneva (2014), Figure B presents the share of overall income growth captured by the top 1 percent during
12
13
11
12
11
1943
each of those expansions for the United States and by region. As Figure B makes clear, prior to 1979 the share of growth
11
11
13
1944
captured
by the
top 1 percent
was much
smaller12than in11each of the expansions since 1979. Before 1979, the top 1
12 between
12 a low11of 9.5 percent in the Midwest to a high of 13.9 percent in
1945 share13
percents
of income 15
growth averaged
1948
12
13
11
13
12
1949
12
12
11
12
11
PAGE 15
TA B L E 5
Top 1% share of all income, U.S. and by state and region, 1928, 1979, 2007
Change in income share of the top 1%
(percentage points)
Rank (by
change in
share
19792007)
State/region
1928
Wyoming
Connecticut
1979
2007
19281979
19792007
12.2%
9.1%
23.6%
11.2%
31.4%
-3.1
22.3
33.4%
-12.5
New York
29.4%
22.2
11.5%
32.6%
-17.9
21.1
Nevada
Florida
17.8%
11.5%
28.0%
-6.3
16.5
22.2%
12.2%
28.1%
-10.0
15.9
Massachusetts
24.2%
9.7%
24.8%
-14.5
15.1
Illinois
22.5%
9.6%
22.8%
-12.9
13.2
California
20.0%
10.2%
22.7%
-9.7
12.5
Washington
14.9%
8.3%
20.4%
-6.6
12.1
10
New Jersey
22.9%
9.5%
21.4%
-13.4
11.8
11
Utah
16.0%
7.8%
18.8%
-8.2
11.0
12
Arizona
17.5%
9.1%
20.0%
-8.4
10.9
13
Colorado
19.3%
9.0%
19.7%
-10.3
10.7
14
Tennessee
20.6%
9.6%
19.7%
-11.0
10.1
15
Idaho
10.1%
7.6%
17.4%
-2.5
9.8
16
Pennsylvania
22.0%
9.3%
18.9%
-12.8
9.6
17
Vermont
17.5%
7.7%
17.2%
-9.8
9.5
18
New Hampshire
18.9%
8.8%
18.0%
-10.1
9.3
19
South Carolina
14.9%
8.4%
17.6%
-6.5
9.2
20
Georgia
20.3%
9.5%
18.7%
-10.8
9.2
21
Texas
18.7%
11.9%
21.0%
-6.8
9.1
22
South Dakota
12.6%
7.7%
16.9%
-4.9
9.1
23
Oklahoma
19.6%
10.6%
19.7%
-9.1
9.1
24
Alabama
17.6%
9.5%
18.5%
-8.0
8.9
25
Oregon
15.1%
8.7%
17.3%
-6.5
8.7
26
Montana
15.6%
8.4%
16.9%
-7.2
8.5
27
Maryland
26.4%
8.5%
17.0%
-17.9
8.5
28
Minnesota
19.7%
9.3%
17.8%
-10.4
8.5
29
North Carolina
16.7%
9.1%
17.0%
-7.7
8.0
30
Missouri
21.4%
9.6%
17.6%
-11.8
7.9
31
Wisconsin
16.8%
8.3%
16.2%
-8.5
7.9
32
Virginia
18.7%
8.0%
15.9%
-10.7
7.9
33
New Mexico
17.1%
8.5%
16.4%
-8.6
7.9
34
Rhode Island
23.6%
10.3%
18.1%
-13.3
7.8
35
Alaska
5.2%
5.3%
12.8%
0.1
7.6
36
Michigan
20.9%
9.0%
16.5%
-11.9
7.5
37
Nebraska
14.9%
9.1%
16.5%
-5.8
7.4
38
Delaware
45.0%
10.2%
17.3%
-34.8
7.1
39
Hawaii
21.0%
7.5%
14.5%
-13.5
7.0
40
Ohio
21.2%
9.0%
15.9%
-12.1
6.8
PAGE 16
Change in income share of the top 1%

(percentage points)
Rank (by
change in
share
19792007)
State/region
1928
1979
2007
19281979
19792007
41
Kansas
15.7%
9.8%
16.6%
-5.9
6.8
42
Indiana
17.1%
8.6%
15.3%
-8.5
6.7
43
North Dakota
12.8%
7.8%
14.4%
-5.1
6.6
44
Kentucky
19.4%
9.2%
15.8%
-10.1
6.6
45
Maine
20.5%
8.1%
14.5%
-12.4
6.4
46
Arkansas
14.0%
9.8%
16.1%
-4.2
6.3
47
Iowa
16.0%
8.3%
13.4%
-7.7
5.1
48
West Virginia
16.5%
9.2%
14.3%
-7.2
5.0
49
Mississippi
13.7%
10.1%
14.9%
-3.5
4.7
50
Louisiana
18.3%
10.7%
14.6%
-7.6
3.9
14*
District of
Columbia
24.1%
12.8%
23.1%
-11.3
10.3
United States
23.4%
9.9%
21.8%
-13.4
11.8
Northeast
26.3%
10.3%
26.1%
-16.0
15.8
West
18.8%
9.6%
21.5%
-9.2
11.9
South
20.4%
10.4%
20.1%
-10.0
9.8
Midwest
20.6%
9.1%
17.8%
-11.5
8.7

the Northeast. In the four economic expansions since 1979, the top 1 percents share of average growth ranged between
50.4 percent in the Midwest to 81.3 percent in the West.
For ease of presentation, instead of presenting data for each expansion for all 50 states, Table 6 presents four averages:
the average share of income growth captured by the top 1 percent and bottom 99 percent in the six expansions prior to
1979, and the same averages over the four expansions since 1979.8 It shows that:
The 10 states where the top 1 percent captured the largest share of income growth in economic expansions since
1979 are Nevada (where 130.1 percent of all income growth was captured by the top 1 percent), Delaware (110.9
percent), Florida (110.8 percent), Washington (91.8 percent), Connecticut (90.1 percent), Missouri (88.5 percent),
California (85.4 percent), Colorado (82.6 percent), South Carolina (77.6 percent), and North Carolina (73.9 percent).
The 10 states where the top 1 percent captured the smallest share of income growth in economic expansions since
1979 are Montana (where 40.4 percent of all income growth was captured by the top 1 percent), Indiana (40.3
percent), Vermont (37.3 percent), Iowa (36.4 percent), Maine (36.1 percent), Hawaii (32.9 percent), Mississippi
(29.0 percent), West Virginia (23.1 percent), North Dakota (23.0 percent), and New Mexico (17.8 percent).
PAGE 17
FIGURE B VIEW INTERACTIVE on epi.org
Average share of growth during economic expansions captured by the top 1%,
nationally and by region, 19492012
United
States
125%
1949-1953
1954-1957
100
1958-1960
Northeast
United States
1.0%
0.0%
Northeast
5.0%
Midwest 5.0%
South
8.0%
4.0%
West
Midwest
South
West
3.0%
0.0%
-1.0%
7.0%
6.0%
3.0%
9.0%
11.0%
7.0%
75
1961-1969
10.0%
11.0%
9.0%
11.0%
8.0%
1970-1973
10.0%
0.0%
6.0%
14.0%
16.0%
50
1975-1979
23.0%
63.0%
20.0%
20.0%
20.0%
1982-1990
48.0%
39.0%
38.0%
46.0%
93.0%
1991-2000
45.0%
57.0%
28.0%
35.0%
58.0%
2001-2007
57.0%
50.0%
64.0%
56.0%
57.0%
2009-2012
106.0%
97.0%
72.0%
99.0%
118.0%
25
-25
1949-1953 1954-1957 1958-1960 1961-1969 1970-1973 1975-1979 1982-1990 1991-2000 2001-2007 2009-2012
Source: Authors analysis of state-level tax data from Sommeiller (2006) extended to 2012 using state-level data from the Internal Revenue
Service SOI Tax Stats (various years), and Piketty and Saez (2012)
In all 50 states, the share of income growth captured by the top 1 percent is higher in the post-1979 recoveries than
in the pre-1979 recoveries.
Conclusion
The rise in inequality experienced in the United States in the past three-and-a-half decades is not just a story of those
in the financial sector in the greater New York City metropolitan area reaping outsized rewards from speculation in
financial markets. While many of the highest-income taxpayers do live in states like New York and Connecticut, IRS
data make clear that rising inequality and increases in top 1 percent incomes affect every state. Between 1979 and 2007,
the top 1 percent of taxpayers in all states captured an increasing share of income. And from 2009 to 2012, in the wake
of the Great Recession, top 1 percent incomes in most states once again grew faster than the incomes of the bottom 99
percent.
The rise between 1979 and 2007 in top 1 percent incomes relative to the bottom 99 percent represents a sharp reversal
of the trend that prevailed in the mid-20th century. Between 1928 and 1979, the share of income held by the top 1
percent declined in every state except Alaska (where the top 1 percent held a relatively low share of income throughout
the period). This earlier era was characterized by a rising minimum wage, low levels of unemployment after the 1930s,
widespread collective bargaining in private industries (manufacturing, transportation [trucking, airlines, and railroads],
PAGE 18
TA B L E 6
Average share of overall income growth captured by the top 1% and bottom 99%, pre- and
post-1979 economic expansions
Rank (by share of
growth captured
by top 1% in
post-1979
expansions)
State/region
Average share of growth captured

by top 1%
Pre-1979
expansions
Post-1979
expansions

by bottom 99%
Pre-1979
expansions
Post-1979
expansions
Nevada
11.6%
130.1%
88.4%
-30.1%
Delaware
-8.1%
110.9%
108.1%
-10.9%
Florida
15.2%
110.8%
84.8%
-10.8%
Washington
10.8%
91.8%
89.2%
8.2%
Connecticut
16.5%
90.1%
83.5%
9.9%
Missouri
8.4%
88.5%
91.6%
11.5%
California
9.2%
85.4%
90.8%
14.6%
Colorado
6.4%
82.6%
93.6%
17.4%
South Carolina
10.5%
77.6%
89.5%
22.4%
10
North Carolina
11.0%
73.9%
89.0%
26.1%
11
Wyoming
3.0%
71.0%
97.0%
29.0%
12
New York
-6.4%
70.7%
106.4%
29.3%
13
Illinois
12.3%
67.0%
87.7%
33.0%
14
Texas
11.0%
65.1%
89.0%
34.9%
15
Massachusetts
20.1%
63.8%
79.9%
36.2%
16
Utah
7.9%
62.0%
92.1%
38.0%
17
Idaho
6.5%
62.0%
93.5%
38.0%
18
Pennsylvania
7.1%
61.0%
92.9%
39.0%
19
Arizona
11.1%
60.8%
88.9%
39.2%
20
Oregon
6.6%
59.9%
93.4%
40.1%
21
Louisiana
14.3%
58.6%
85.7%
41.4%
22
Georgia
11.1%
58.1%
88.9%
41.9%
23
Alabama
7.8%
57.3%
92.2%
42.7%
24
Tennessee
8.6%
57.1%
91.4%
42.9%
25
Virginia
7.3%
56.0%
92.7%
44.0%
26
Alaska
14.1%
51.5%
85.9%
48.5%
27
Oklahoma
10.0%
50.4%
90.0%
49.6%
28
Kansas
10.3%
50.3%
89.7%
49.7%
29
Rhode Island
16.7%
50.1%
83.3%
49.9%
30
New Jersey
14.0%
49.7%
86.0%
50.3%
31
Nebraska
13.9%
47.9%
86.1%
52.1%
32
Michigan
7.7%
46.5%
92.3%
53.5%
33
New Hampshire
6.4%
45.0%
93.6%
55.0%
34
Maryland
7.1%
44.8%
92.9%
55.2%
35
Wisconsin
9.0%
44.5%
91.0%
55.5%
36
Arkansas
4.6%
44.1%
95.4%
55.9%
37
Ohio
8.7%
43.7%
91.3%
56.3%
38
Kentucky
7.0%
41.3%
93.0%
58.7%
39
South Dakota
5.8%
40.6%
94.2%
59.4%
40
Minnesota
10.0%
40.5%
90.0%
59.5%
PAGE 19
Rank (by share of

growth captured
by top 1% in
post-1979
expansions)
State/region

by top 1%

by bottom 99%
Pre-1979
expansions
Post-1979
expansions
Pre-1979
expansions
Post-1979
expansions
41
Montana
6.1%
40.4%
93.9%
59.6%
42
Indiana
7.4%
40.3%
92.6%
59.7%
43
Vermont
7.6%
37.3%
92.4%
62.7%
44
Iowa
9.2%
36.4%
90.8%
63.6%
45
Maine
6.8%
36.1%
93.2%
63.9%
46
Hawaii
6.0%
32.9%
94.0%
67.1%
47
Mississippi
9.5%
29.0%
90.5%
71.0%
48
West Virginia
3.9%
23.1%
96.1%
76.9%
49
North Dakota
-7.8%
23.0%
107.8%
77.0%
50
New Mexico
10.0%
17.8%
90.0%
82.2%
18*
11.5%
61.9%
88.5%
38.1%
United States
9.5%
64.0%
90.5%
36.0%
Northeast
13.9%
60.8%
86.1%
39.2%
Midwest
8.8%
50.4%
91.2%
49.6%
South
10.4%
58.9%
89.6%
41.1%
West
8.7%
81.3%
91.3%
18.7%

Note: Certain expansions in the following states were excluded from the analysis because overall income growth was negative while
top 1 percent incomes grew and bottom 99 percent incomes fell: Alaska (19821990), Colorado (19821990), Delaware (19751979),
District of Columbia (19751979), Hawaii (19701973), Hawaii (19751979), Hawaii (19912000), Louisiana (19821990), Michigan
(20012007), Montana (19821990), Nevada (20092012), New Mexico (19821990), Oklahoma (19821990), Texas (19821990), and
Wyoming (19821990). The 19751979 economic expansion produced three additional outliers in New York, Maryland, and Montana,
where there were slight gains in overall income but declines in income for the bottom 99 percent. As a result, the top 1 percent share
of overall income growth was 1248 percent in New York, 301 percent in Maryland, and 301 percent in Montana. These figures raised the
average share of growth captured by the top 1 percent during pre-1979 expansions from -6 percent to 203 percent in New York, from 7
percent to 56 percent in Maryland, and from 6 percent to 55 percent in Montana. We thus eliminated these three states from the analysis in Table 6. The expansion from 2009 to 2012 was dropped for Wyoming because we cant currently reliably calculate the change in
overall income in Wyoming. Data from the above states were all included in the calculation of trends by region.
telecommunications, and construction), and a cultural and political environment in which it was unthinkable for executives to receive outsized bonuses while laying off workers.
Today, unionization and collective bargaining levels are at historic lows not seen since before 1928 (Freeman 1997). The
federal minimum wage purchases fewer goods and services than it did in 1968 (Cooper 2013). And executives in companies from Hostess (Castellano 2012) to American International Group (AIG) think nothing of demanding bonuses
after bankrupting their companies and receiving multibillion-dollar taxpayer bailouts (Andrews and Baker 2009).
Policy choices and cultural forces have combined to put downward pressure on the wages and incomes of most Americans even as their productivity has risen. CEOs and financial-sector executives at the commanding heights of the private
economy have raked in a rising share of the nations expanding economic pie, setting new norms for top incomes often
PAGE 20
emulated today by college presidents (as well as college football and basketball coaches), surgeons, lawyers, entertainers,
and professional athletes.
The yawning economic gaps in todays 1 percent economy have myriad economic and societal consequences. For
example, growing inequality blocks living standards growth for the middle class. The Economic Policy Institutes The
State of Working America, 12th Edition found that between 1979 and 2007, had the income of the middle fifth of households grown at the same rate as overall average household income, it would have been $18,897 higher in 200727.0
percent higher than it actually was. In other words, rising inequality imposed a tax of 27.0 percent on middle-fifth
household incomes over this period (Mishel et al. 2012). Thompson and Leight (2012) find that rising top 1 percent
shares within individual states are associated with declines in earnings among middle-income families.
Additionally, increased inequality may eventually reduce intergenerational income mobility. More than in most other
advanced countries, in America the children of affluent parents grow up to be affluent, and the children of the poor
remain poor (Corak 2012). Todays levels of inequality in the United States raise a new American Dilemma (Myrdal
1944): Can rising inequality be tolerated in a country that values so dearly the ideal that all people should have opportunity to succeed, regardless of the circumstances of their birth?
In the next decade, something must give. Either America must accept that the American Dream of widespread economic
mobility is dead, or new policies must emerge that will begin to restore broadly shared prosperity.
Since the 1 percent economy is evident in every state, every stateand every metro area and regionhas an opportunity to demonstrate to the nation new and more equitable policies. We hope these data on income inequality by state
will spur more states, regions, and cities to enact the bold policies our nation needs to become, once again, a land of
opportunity.
PAGE 21
About the authors

Estelle Sommeiller, a socio-economist at the Institute for Research in Economic and Social Sciences in France, holds
two Ph.D.s in economics, from the University of Delaware as well as from the Universit Lumire in Lyon, France.
Thomas Piketty and Emmanuel Saez both approved her doctoral dissertation, Regional Inequality in the United States,
1913-2003, which was awarded the highest distinction by her dissertation committee. This report is based on, and
updates, her dissertation.
The Institute for Research in Economic and Social Sciences (IRES) in France is the independent research center of the
six labor unions being officially granted representation nationwide. Created in 1982 with the governments financial support,
IRES is registered as a private non-profit organization under the Associations Act of 1901. IRESs mission is to analyze the
economic and social issues, at the national, European, and international levels, of special interest to labor unions. More information is available at www.ires.fr.
Mark Price, a labor economist at the Keystone Research Center, holds a Ph.D. in economics from the University of
Utah. His dissertation, State Prevailing Wage Laws and Construction Labor Markets, was recognized with an honorable
mention in the 2006 Thomas A. Kochan and Stephen R. Sleigh Best Dissertation Awards Competition sponsored by
the Labor and Employment Relations Association.
The Keystone Research Center (KRC) was founded in 1996 to broaden public discussion on strategies to achieve a more
prosperous and equitable Pennsylvania economy. Since its creation, KRC has become a leading source of independent analysis
of Pennsylvanias economy and public policy. The Keystone Research Center is located at 412 North Third Street, Harrisburg,
Pennsylvania 17101-1346. Most of KRCs original research is available from the KRC website at www.keystoneresearch.org.
Acknowledgments
The authors thank the staff at the Internal Revenue Service for their public service and assistance in collecting state-level
tax data, as well as the staff at the University of Delaware library for their assistance in obtaining IRS documentation.
The authors also wish to thank Emmanuel Saez for graciously providing details on the construction of the Piketty and
Saez top-income time series and for providing guidance on adjustments to make when constructing a state-by-state time
series. This work would also have not been possible without Thomas Pikettys (2001) own careful work and notes on
how he constructed his top-income time series. Thanks also to Stephen Herzenberg at the Keystone Research Center;
Frdric Lerais at the Institute for Research in Economic and Social Sciences; Lawrence Mishel, David Cooper, Lora
Engdahl, Michael McCarthy, Elizabeth Rose, Eric Shansby, Dan Essrow, and Dont Donald at the Economic Policy
Institute; Colin Gordon at the Iowa Center for Public Policy; and Doug Hall at the National Priorities Project for their
helpful comments and support in the preparation of this report.
PAGE 22
Methodological appendix
The most common sources of data on wages and incomes by state are derived from surveys of households such as the
Current Population Survey and the American Community Survey. These data sources are not well-suited to tracking
trends in income by state among the highest-income households, especially the top 1 percent. Trends in top incomes
can be estimated from data published by the IRS on the amount of income and number of taxpayers in different income
ranges (Internal Revenue Service SOI Tax Stats various years). Table A1 presents this data for Pennsylvania in 2011.
TA B L E A 1
Individual income and tax data for Pennsylvania, by size of adjusted gross income, tax year 2011
All returns
Under $1
Number of returns
Adjusted gross income

(thousands)
Share of aggregate adjusted

gross income
6,183,225
$348,612,836
100%
-1%
82,325
-$4,608,529
$1 < $25,000
2,419,804
$28,102,112
8%
$25,000 < $50,000
1,458,749
$52,856,101
15%
$50,000 < $75,000
859,952
$52,954,678
15%
$75,000 < $100,000
543,875
$47,004,707
13%
$100,000 < $200,000
633,858
$84,200,638
24%
$200,000 < $500,000
151,006
$43,064,934
12%
$500,000 < $1,000,000
23,476
$15,763,810
5%
$1,000,000 or more
10,180
$29,274,384
8%
Knowing the amount of income and the number of taxpayers in each bracket, we can use the properties of a statistical
distribution known as the Pareto distribution to extract estimates of incomes at specific points in the distribution of
income, including the 90th, 95th, and 99th percentiles.9 With these threshold values we then calculate the average
income of taxpayers with incomes that lie between these ranges, such as the average income of taxpayers with incomes
greater than the 99th percentile (i.e., the average income of the top 1 percent).
Calculating income earned by each group of taxpayers as well as the share of all income they earn requires state-level
estimates in each year between 1917 and 2012 of the universe of potential taxpayers (hereafter called tax units) and the
total amount of income earned in each state. Piketty and Saez (2012) have national estimates of tax units10 and total
income (including capital gains), which we allocate to the states.11
In the sections that follow we describe in more detail the assumptions we made in generating our top income estimates
by state. We will then review errors we observe in our interpolation of top incomes from 1917 to 2012 and compare
our interpolation results to top income estimates obtained from the Pennsylvania Department of Revenue. Next we will
briefly illustrate the calculations we used to interpolate the 90th, 95th, and 99th percentiles from the data presented in
Table A1. Finally, the last section of the appendix will present our top income estimates for the United States as a whole,
alongside the same estimates from Piketty and Saez (2012).
PAGE 23
Estimating tax units by state

In order to allocate Piketty and Saezs national estimate of tax units to the states, we estimate each states share of the
sum of married men, divorced and widowed men and women, and single men and women 20 years of age or over.
From 1979 to 2012, tax unit series at the state level are estimated using data from the Current Population Survey (basic
monthly microdata). From 1917 to 1978, the state total of tax units had to be proxied by the number of household
units released by the Census Bureau, the only source of data available over this time period.12 For inter-decennial years,
the number of household units is estimated by linear interpolation.
Estimating total income (including capital gains)

We allocate Piketty and Saezs total income to the states using personal income data from the Bureau of Economic
Analysis (BEA). From 1929 to 2012 we calculate each states share of personal income after subtracting out personal
current transfer receipts.13 These shares are then multiplied by Piketty and Saezs national estimate of total income
(including capital gains) to estimate total income by state over the period. Because BEA personal income data are not
available prior to 1929, we inflate total income derived from the tax tables for each state in each year from 1917 to 1928
by the average of the ratio of total taxable income to total personal income (minus transfers) from the BEA from 1929
to 1939. The resulting levels are summed across the states and a new share is calculated and multiplied by Piketty and
Saezs national estimate of total income (including capital gains).
Pareto interpolation
In a study of the distribution of incomes in various countries, the Italian economist Vilfredo Pareto observed that as
the amount of income doubles, the number of people earning that amount falls by a constant factor. In the theoretical
literature, this constant factor is usually called the Pareto coefficient (labeled bi in Table A5).14 Combining this property
of the distribution of incomes with published tax data on the number of tax units and the amount of income at certain
levels, it is possible to estimate the top decile (or the highest-earning top 10 percent of tax units), and within the top
decile, a series of percentiles such as the average annual income earned by the highest-income 1 percent of tax units, up
to and including the top 0.01 percent fractile (i.e., the average annual income earned by the richest 1 percent of the top
1 percent of tax units).15
Our data series here matches most closely what Piketty and Saez (2001) label as variant 3, a time series of average top
incomes and income shares that includes capital gains. In generating their variant 3 time series Piketty and Saez make
two key adjustments to top average incomes. We will now describe those adjustments.
From net to gross income and the yearly problem of deductions
After an estimate of top incomes was obtained via Pareto interpolation, Piketty and Saez adjusted average incomes
upward to account for net income deductions (1917 to 1943) and adjusted gross income adjustments (19442012).16
We followed Piketty and Saez and made the same adjustments uniformly across the states.
The IRS definition of income has varied over time. The IRS used the term net income until 1943, and adjusted gross
income (AGI) from 1944 on. In the net income definition, the various deductions taken into account (donations to
charity, mortgage interests paid, state and local taxes, etc.) were smaller over 19131943 than over 19442012. As a
result, income estimates from 1913 to 1943 had to be adjusted upward.
PAGE 24
To a lesser extent, incomes between 1944 and 2012 also had to be adjusted upward, as the term adjusted in AGI refers
to various income deductions (contributions to individual retirement accounts, moving expenses, self-employment pension plans, health savings accounts, etc.). As Piketty and Saez note (2004, 33, iii), AGI adjustments are small (about 1
percent of AGI, up to 4 percent in the mid-1980s), and their importance declines with income within the top decile.
The treatment of capital gains across states, 19341986
The second major adjustment to incomes made by Piketty and Saez to their variant 3 series were corrections to take
into account the exclusion of a portion of capital gains from net income from 1934 to 1986.
Replicating Piketty and Saezs capital gains adjustments uniformly across the states would, because of the concentration
of income by geography, understate top incomes in high-income states like New York and overstate top incomes in lowincome states like Mississippi. Unfortunately, state-level aggregates of capital gains income are not available at this time.
Instead, as a proxy we take each states deviation of top incomes from the U.S. average top income,17 and use this figure
to adjust up or down the coefficients Piketty and Saez employ to correct for the exclusion of a portion of capital gains
income from net income and AGI from 1934 to 1986.
Interpolation errors
Data users should exercise some caution in analyzing the full data series (provided online at go.epi.org/topincomes1917to2012). We have identified 19 instances where our Pareto interpolation generated an income threshold that was higher
than the next-higher income threshold. For example, in Wyoming in 2010 by Pareto interpolation we estimate the 90th
percentile income to be $123,834, but also by Pareto interpolation we estimate the income at the 95th percentile as
$119,168. Both estimates cannot be correct. The average incomes interpolated for groups between these thresholds will
also be affected by this error. Table A2 presents the percentiles affected in each state by this error as well as the year in
which the error occurred. Data users making comparisons over time should examine the entire time series for a state
before drawing conclusions about time trends from a single point-to-point comparison.
TA B L E A 2
States and percentiles affected by errors in Pareto interpolations used to generate income
thresholds, 19172011
States
P90>P95
P95>P99
Alaska
1948, 1949, 1950, 1955,

1982
1918, 1919, 1920, 1921, 1922,

1923
P99>P99.5 P99.5>P99.9 P99.9>P99.99

1932, 1933
Idaho
New
Mexico
West
Virginia
Wyoming
13
1960
1965
Total number of
errors
1
1
1951, 1952
2010
PAGE 25
Even when our estimates of each threshold are lower than the next-higher threshold (in other words, the 90th percentile
is lower than the 95th percentile, and so on), errors can still arise in our calculation of the average incomes that lie
between those percentiles. For example, in 2011 we estimate the average income between the 90th and 95th percentiles
in Alabama was $119,120, while estimating the 95th percentile income as $109,260. Table A3 summarizes the number
of such errors in our data set, excluding those that result from the errors reported in Table A2. Most of these errors
occur in the bottom half of the 10th percentile.18
TA B L E A 3
Percentiles affected by errors in the estimation of interfractile average incomes, 19172011

Errors
P90P95>P95
Number
221
P95P99>P99
P9999.5>P99.5
14
P99.599.9>P99.9
P99.999.99>P99.99
Note: This table does not include errors reported in Table A2.
Comparing imputed top incomes to actual top incomes

The methods discussed here to estimate top incomes from the data contained in Table A1 are not as precise as actually
having a database of all individual tax returns from which to calculate average incomes for the highest-income taxpayers.
The Pennsylvania Department of Revenue has generated and published more-precise top-income figures for Pennsylvania taxpayers filing their state tax returns in recent years. This allows us to compare the actual income data with the
results of estimates using our standard method (the standard method being our only option for generating estimates in
the other 49 states and for Pennsylvania in earlier years). It turns out that our methods underestimate the actual rise in
top incomes.
Table A4 presents, using two different methods, the share of all income held by the top 1 percent as well as the average
income of the top 1 percent for Pennsylvania. The first two columns present our projections based on IRS tax tables.
The second two columns present the actual data on top incomes published by the Pennsylvania Department of Revenue
for the years 2000 to 2011. Based on our projections using IRS data, top incomes in Pennsylvania grew by 8.3 percent between 2009 and 2011. Actually reported Pennsylvania Department of Revenue data show a rise of 9.3 percent.
Between 2000 and 2011, our estimate of the share of income held by the top 1 percent was 2.6 percentage points lower
than the actual figures. Likewise, from 2000 to 2011 our projection of the average income of the top 1 percent averaged
87 percent of the actual figures.
PAGE 26
TA B L E A 4
Comparing projections of top incomes in Pennsylvania with actual levels, 20002011

Projections based on Internal
Revenue Service data
Actual levels as reported by

the Pennsylvania Department
of Revenue
Percentage-point
difference
Projected
between actual
average
and projected
income of top
income share of 1% as share of
top 1%
actual
Year
Income share
of the top 1%
Average
income of the
top 1%
Income share
of the top 1%
Average
income of the
top 1%
2000
17.5%
$988,702
19.6%
$1,112,708
2.1
89%
2001
15.5%
$823,838
16.9%
$901,064
1.4
91%
2002
14.7%
$751,226
16.6%
$847,263
1.9
89%
2003
15.3%
$795,846
17.6%
$916,052
2.3
87%
2004
16.0%
$876,640
18.9%
$1,033,381
2.9
85%
2005
17.9%
$994,689
21.2%
$1,180,531
3.3
84%
2006
18.3%
$1,042,094
21.8%
$1,238,940
3.5
84%
2007
18.9%
$1,115,166
21.6%
$1,273,945
2.7
88%
2008
16.9%
$918,147
19.9%
$1,086,298
3.0
85%
2009
15.9%
$814,912
18.3%
$936,591
2.4
87%
2010
17.4%
$905,113
20.1%
$1,052,402
2.7
86%
2011
17.0%
$882,574
19.8%
$1,023,723
2.8
86%
2.6
87%
% change, 20092011
8.3%
9.3%
Average, 20002011

Source: Authors analysis of state-level tax data from Sommeiller (2006) extended to 2011 using state-level data from the Internal Revenue Service SOI Tax Stats (various years), Piketty and Saez (2012), and the Pennsylvania Department of Revenue (various years)
Calculating the 90th, 95th, and 99th percentiles for Pennsylvania

Listed in Table A5 are the calculations we use to interpolate the 90th, 95th, and 99th percentile incomes for Pennsylvania.19 For brevity we present only the equations for calculating the average incomes by fractiles in Table A6.
PAGE 27
TA B L E A 5
An example of Pareto interpolation for Pennsylvania in 2011

Row
#
Number of
returns (Ni)
Cumulative # of
returns (Ni*)
Adjusted gross
income (Yi)
Cumulative adjusted gross

income (Yi*)
<= 0
82,325
2,419,804
6,183,225
-4,608,529
348,612,835
6,100,900
28,102,112
353,221,364
25,000< 50,000
25,000
50,000< 75,000
50,000
1,458,749
3,681,096
52,856,101
325,119,252
859,952
2,222,347
52,954,678
75,000< 100,000
272,263,151
75,000
543,875
1,362,395
47,004,707
219,308,473
6
7
100,000< 200,000
100,000
633,858
818,520
84,200,638
172,303,766
200,000< 500,000
200,000
151,006
184,662
43,064,934
88,103,128
500,000<1,000,000
500,000
23,476
33,656
15,763,810
45,038,194
10
1,000,000 or more
1,000,000
10,180
10,180
29,274,384
29,274,384
11
Total
Income brackets
Lower bound (si)
No income
1<25,000
3
4
Row
#
(yi = Yi* / Ni*)
6,183,225
Pareto Coefficient
(bi= yi / si)
ai = (bi / (bi-1)
348,612,836
pi % = Ni* / N*
ki = si * [pi
power(1/ai)]
56,380
57,897
88,321
3.53
1.39
55.37
16,363
122,512
2.45
1.69
33.43
26,139
160,973
2.15
1.87
20.49
32,166
210,506
2.11
1.90
12.31
33,301
477,105
2.39
1.72
2.78
24,952
1,338,192
2.68
1.60
0.51
18,242
10
2,875,676
2.88
1.53
0.15
14,586
P90 = ki / [0.1
power 1/ai]
Min [ Abs(pi
5) ]
P95 = ki / [0.05
power 1/ai]
Min [ Abs(pi 1) ]
Row
Min [ Abs(pi 10) ]
#
91.77
2.31
2.22
0.49
81.77
86.77
90.77
45.37
50.37
54.37
23.43
28.43
32.43
10.49
15.49
19.49
2.31
7.22
2.22
9.49
4.49
0.49
10
9.85
4.85
0.85
$111,535
7.31
P99 = ki / [0.01 power 1/ai]
11.31
$142,150
1.78
$326,426
Note: Money amounts are in thousands of dollars. N* or tax units for Pennsylvania in 2011 is 6,648,369.
PAGE 28
TA B L E A 6
Formulas for estimating average incomes by fractile

P90100=bi * P90
P95100=bi * P95
P99100=bi * P99
P99.5100=bi * P99.5
P99.9100=bi * P99.9
P99.99100=bi * P99.99
P9095=2 (P90100) (P95100)
P9599=[ 5 (P95100) (P99100) ] / 4
P9999.5=2 (P99100) (P99.5100)
P99.599.9=[ 5 (P99.5100) (P99.9100) ] / 4
P99.999.99=[ 10 (P99.9100) (P99.99100) ] / 9
Comparison of Piketty and Saez to Sommeiller and Price

Table A7 presents the data from the tables in the main body of the report for the United States alongside the same
figures as reported by Piketty and Saez.
PAGE 29
TA B L E A 7
Comparison of Piketty and Saezs results with Sommeiller and Prices U.S. results
From Table 1. Income growth from 2009 to 2012, overall and for the top 1% and bottom 99%, U.S. and by state
and region
Overall
Top 1%
Bottom 99%
Share of total
growth (or loss)
captured by top 1%
Sommeiller and Price
6.3%
36.8%
-0.4%
105.5%
Piketty and Saez
6.0%
31.4%
0.4%
94.8%
Source
From Table 2. Ratio of top 1% income to bottom 99% income, U.S. and by state and region, 2012
bottom 99%

top 1%
Top-to-bottom ratio
$43,713
$1,303,198
29.8
Piketty and Saez
$44,071
$1,264,065
28.7
Source
From Table 3. Income threshold of top 1% and top .01%, and average income of top .01%, U.S. and by state and
region, 2012
1%
Source

.01%
Average income of top

.01%
$385,195
$9,912,787
$34,739,488
Piketty and Saez
$393,941
$10,256,235
$30,785,699
From Table 4. Income growth from 1979 to 2007, overall and for the top 1% and bottom 99%, U.S. and by state
and region
Overall
Top 1%
Bottom 99%
Share of total
growth (or loss)
captured by top 1%
36.9%
200.5%
18.9%
53.9%
Piketty and Saez
37.3%
224.0%
16.6%
59.8%
Source
From Table 5. Top 1% share of all income, U.S. and by state and region, 1928, 1979, 2007
Change in income share of the top
1% (percentage points)
Source
1928
1979
2007
19281979
19792007
23.4%
9.9%
21.8%
-13.4
11.8
Piketty and Saez
23.9%
9.0%
19.6%
-15.0
10.7

PAGE 30
Endnotes
1. Our estimate for the same period is 105.5 percent. See Table A7 for a side-by-side comparison of our results and those of Piketty
and Saez.
2. The top 1 percent nationally includes more than 1 percent of the population from the states with a big share of people with very
high incomes (e.g., New York State) and less than 1 percent of the population in states with a small share of people with very
high incomes.
3. There are trivial differences between our estimates of top incomes and top income shares for the United States as a whole, and
those calculated by Piketty and Saez. See Table A7 in the appendix for a comparison of results from the two sources.
4. Saezs latest estimate, which incorporates data from 2012, is that the top 1 percent captured 95 percent of all income growth over
20092012.
5. In 2012 a discrepancy emerged between IRS income tax data and Bureau of Economic Analysis (BEA) data on personal income
(minus transfers) in Wyoming. According to IRS data there was a surge in income concentrated among taxpayers with $1 million
or more in income in 2012. In 2011 this group of taxpayers accounted for 16 percent of all taxable income in Wyoming; in 2012
this group accounted for 46 percent of all income in the state. As a result, Wyomings share of all taxable income in the United
States rose from 0.22 percent to 0.32 percent. This rise in income was not captured by the BEAs personal income measure, as
Wyomings share of U.S. personal income (minus transfers) stayed at 0.22 percent in 2012. Because we allocate Piketty and Saezs
estimate of total income including capital gains to the states using BEA data on personal income (see the methodological
appendix), the discrepancy between the tax data and BEA data artificially understates the growth of income in Wyoming as a
whole. Consequently, we do not report overall income growth or income figures for the bottom 99 percent of Wyoming
taxpayers.
6. 2012 estimates for the United States are based on Emmanuel Saezs August 2013 Excel file, available online
at http://elsa.berkeley.edu/~saez/TabFig2012prel.xls. There are trivial differences between our estimates of top incomes and top
income shares for the United States as a whole, and those calculated by Piketty and Saez. See Table A7 in the appendix for a
comparison of results from the two sources.
7. The top 1 percent share in Alaska rose slightly between 1928 and 1979. The top 1 percent share in Alaska between 1928 and
1979 averaged 4.6 percent, compared with 12.3 percent in the United States.
8. Certain expansions in the following states were excluded from the analysis because overall income growth was negative while top
1 percent incomes grew and bottom 99 percent incomes fell: Alaska (19821990), Colorado (19821990), Delaware
(19751979), District of Columbia (19751979), Hawaii (19701973), Hawaii (19751979), Hawaii (19912000), Louisiana
(19821990), Michigan (20012007), Montana (19821990), Nevada (20092012), New Mexico (19821990), Oklahoma
(19821990), Texas (19821990), and Wyoming (19821990). The 19751979 economic expansion produced three additional
outliers in New York, Maryland, and Montana, where there were slight gains in overall income but declines in income for the
bottom 99 percent. As a result, the top 1 percent share of overall income growth was 1248 percent in New York, 301 percent in
Maryland, and 301 percent in Montana. These figures raised the average share of growth captured by the top 1 percent during
pre-1979 expansions from -6 percent to 203 percent in New York, from 7 percent to 56 percent in Maryland, and from 6
percent to 55 percent in Montana. We thus eliminated these three states from the analysis in Table 6. The expansion from 2009
to 2012 was dropped for Wyoming because we cant currently reliably calculate the change in overall income in Wyoming. Data
from the above states were all included in the calculation of trends by region.
PAGE 31
9. Sorting all incomes from the least to the highest, the 90th percentile income is greater than 90 percent of all incomes and less
than 10 percent. Similarly, the 99th percentile income is greater than 99 percent of all incomes and less than the top 1 percent.
10. See Piketty and Saez (2001, 3637) for discussion of why they choose to use tax units rather than individuals.
11. See Table A0, column six of http://elsa.berkeley.edu/~saez/TabFig2012prel.xls for total income (including capital gains), and see
column one for tax units.
12. The decennial censuses do not provide a count of households in Alaska and Hawaii before 1960. We used the number of
occupied dwelling units to estimate each states share of U.S. tax units from 1917 to 1959. Occupied dwelling units were
available for both states from the 1950 Census of Housing (General Characteristics, Part 7) for both Alaska and Hawaii; the
1940 Census of Population for Alaska in 1940; and the 1940 Census of Housing (General Characteristics, Part 7) for Hawaii in
1940, 1930, and 1920.
13. The BEA does not publish personal income data for Alaska and Hawaii prior to 1950. We estimate Alaskas and Hawaiis shares
of total income (including capital gains) from 1917 to 1949 based on their respective shares of U.S. total income (minus
transfers) in 1950.
14. See Atkinson and Piketty (2007) for a discussion of Pareto interpolation.
15. We use the Pareto interpolation method to move from a varying number of income groups (as displayed in Table A1) to a fixed
number of income fractiles, 17 in total: six top income thresholds (P90, P95, P99, P99.5, P99.9, and P99.99); six average
income levels (P90100, P95100, P99100, P99.5100, P99.9100, and P99.99100); and five average income levels for
intermediary fractiles (P90P95, P95P99, P9999.5, P99.599.9, and P99.999.99) by state from 1917 to 2012. A detailed
discussion of this technique can be found in Piketty (2001).
16. Emmanuel Saez graciously provided the precise adjustments that were made for net income deductions (19171943), adjusted
gross income adjustments (19442012), and capital gains (19341986).
17. Our adjustment is: (states i top income U.S. average top income) / U.S. average top income. For example, the average income
of the highest-earning 0.01 percent of families in Delaware in 1939 was almost 10 times (9.4) the national average. Saezs
coefficient correcting the inconsistencies of capital gains over time is equal to 1.091 for that fractile. Inflating Saezs coefficient
yields 1.194 = 1.091 * (1 + 9.4 / 100). We apply this adjustment to all percentiles between 1934 and 1986.
18. Analysis of microdata from the American Community Survey suggests that linear interpolation, when possible, may be a more
accurate way to estimate the 90th and 95th percentiles. One limitation of linear interpolation is that the 90th and 95th
percentiles must fall somewhere below the uppermost income bracket of the tax tables.
19. The differences between the figures for the P90, P95, and P99 reported in Table A7 and the final thresholds for Pennsylvania of
$112,671 (P90), $143,601 (P95), and $329,763 (P99) reflect upward adjustments to incomes to account for downward
adjustments to AGI for deductions such as IRAs, moving expenses, etc.
PAGE 32
References
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PAGE 34

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EARN REPORT

January 26, 2015

THE INCREASINGLY UNEQUAL

EA RN | J AN UARY 26, 2015

EA RN | J AN UARY 26, 2015

Unequal income growth in the economic recovery

EA RN | J AN UARY 26, 2015

Share of total growth

EA RN | J AN UARY 26, 2015

Average real income growth

Share of total growth

* Rank of the District of Columbia if it were ranked with the 50 states

EA RN | J AN UARY 26, 2015

Income inequality across the states in 2012

Average income of the top

Average income of the

EA RN | J AN UARY 26, 2015

Average income of the top

Average income of the

* Rank of the District of Columbia if it were ranked with the 50 states

Lopsided income growth from 1979 to 2007

Income threshold of top 1%

Income threshold of top

Average income of top .01%

EA RN | J AN UARY 26, 2015

Income threshold of top 1%

Income threshold of top

Average income of top .01%

* Rank of the District of Columbia if it were ranked with the 50 states

Inequality back at levels not seen since the late 1920s

Share of total growth

EA RN | J AN UARY 26, 2015

Average real income growth

Share of total growth

* Rank of the District of Columbia if it were ranked with the 50 states

EA RN | J AN UARY 26, 2015

FIGURE A VIEW INTERACTIVE on epi.org

United States (by Piketty and Saez)

EA RN | J AN UARY 26, 2015

EA RN | J AN UARY 26, 2015

Change in income share of the top 1%

* Rank of the District of Columbia if it were ranked with the 50 states

EA RN | J AN UARY 26, 2015

FIGURE B VIEW INTERACTIVE on epi.org

EA RN | J AN UARY 26, 2015

Average share of growth captured

Average share of growth captured

EA RN | J AN UARY 26, 2015

Rank (by share of

Average share of growth captured

Average share of growth captured

* Rank of the District of Columbia if it were ranked with the 50 states

EA RN | J AN UARY 26, 2015

EA RN | J AN UARY 26, 2015

About the authors

EA RN | J AN UARY 26, 2015

Adjusted gross income

Share of aggregate adjusted