Inequality is up a lot in the US

Inequality in the US has risen a lot during the past few decades. This has sparked outrage among segments of the public, raised concern among economists and other social scientists, and revitalised America’s socialist movement.
Much of the debate has been driven by the work of three French economists — Thomas Piketty, Emmanuel Saez and Gabriel Zucman. The trio has put out a huge amount of impressive work, digging into historical archives and patching together a diverse array of modern data sources to graphically depict how income and wealth become more concentrated. They also helped design some of bolder Democratic tax plans.
But what if the three French economists have overstated their case? A number of other economists are beginning to question whether inequality has risen quite as much as Piketty, Saez and Zucman claim. Even the prettiest graph is only as good as the assumptions that underlie it and calculating inequality numbers requires a great many assumptions.
For wealth distribution, the big problem is that good data is hard to come by. Because Americans aren’t required to report their total wealth for tax purposes, this must be estimated. One way to estimate it is to look at reports such as the Survey of Consumer Finances, then try to guess how representative those surveys are. Another way is to look at the capital income of top earners and to try to estimate the value of the underlying assets that generate that income.
Both of these methods involve a lot of guesswork. For example, a 2016 paper by Saez and Zucman found that the top 1% of the wealth distribution held 28.1% of the national wealth in 1990 and that this increased to a whopping 41.8% by 2012. But some economists from the Federal Reserve found less concentration and a more moderate rate of increase:
In other words, most economists think that the top 1% hold about 30% of the wealth in country, but the French trio believes that it’s more than 40%. Everyone agrees that wealth is very concentrated at the top, and that this concentration has risen, but two numbers are different enough that they tell different stories about what happened during past few decades. The difference might change some people’s minds about whether a drastic, immediate overhaul of US economic system is necessary or whether inequality can be corrected without revolutionary change.
Income inequality is also hard to measure for different reasons. Income is reported on taxes, though economists have to guess how much evasion is going on.
A lot of income is earned on paper by corporations, and there’s the question of how much of that actually belongs to the owners of those corporations.
Ideology also makes it harder to evaluate the competing claims. If you believe the story that leading American economists are bought and paid for by plutocrats, then you’ll be inclined to trust the French trio; if you think that most economists are generally trying their best to get at the truth, or that the French team is as biased as others, then you’ll probably assume that the truth is somewhere between the two extremes.
—Bloomberg