The Entrenchment of Wealth

Owning stock, as opposed to strictly dollar bills, is one of the most foolproof ways to grow one’s wealth in America. And the good news is that U.S. households own around half of the $50 trillion U.S. stock market. But the distribution of that wealth is grossly unequal. Eighty-nine percent of that stock is owned by the wealthiest 10% of households, an outsized share that’s been getting larger over time. (In 1990, it was 82%.)

How have the wealthiest Americans entrenched themselves? It’s because of policies that favor the already wealthy while diminishing opportunities for the lower and middle classes.

Consider the tax code: income gained from selling stock in a company is taxed at a lower rate than income gained from actually working at that business. A second transfer from poor to rich: a homeowner may deduct mortgage interest on a first and second home, while the less wealthy pay nondeductible rent. We’ve functionally decided money (and the money it makes) is more noble than sweat.

These transfers are pitched to the American public as how to get wealthy, when in reality, they describe how to stay wealthy. The messaging is propaganda brought to you by the 10% of people who own 89% of the stocks.

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Stock Ownership in the U.S. by Wealth

2021

Source: Federal Reserve Bank of St. Louis.