In 2007, "the top 1 percent of all income earners in the United States made 23.5 percent of all income," which is "more than the entire bottom 50 percent."
On Nov. 30, 2010, Sen. Bernie Sanders, an Independent from Vermont, made a Senate floor speech about the gap between rich and poor in America. It soon went viral on the Internet. After receiving a number of requests from readers to fact-check it, we decided to do just that. We'll take a look at two of the claims Sanders made. In this item, we'll look at how Sanders characterizes the income earned by the top 1 percent of Americans. In a separate item, we'll look at whether Sanders is correct about the tax bill paid by oil giant ExxonMobil. Here's a portion of Sanders' speech, which came during Senate debate over extending tax cuts passed under President George W. Bush. Democrats and Republicans divided over whether the cuts should be extended for the wealthiest Americans. "Mr. President, in the year 2007, the top 1 percent of all income earners in the United States made 23.5 percent of all income," Sanders said. "The top 1 percent earned 23.5 percent of all income--more than the entire bottom 50 percent. That is apparently not enough. The percentage of income going to the top 1 percent has nearly tripled since the 1970s. In the mid-1970s, the top 1 percent earned about 8 percent of all income. In the 1980s, that figure jumped to 14 percent. In the late 1990s, that 1 percent earned about 19 percent." To keep matters simple, we'll stick to checking Sanders' claim that "the top 1 percent of all income earners in the United States made 23.5 percent of all income," which is "more than the entire bottom 50 percent." When we asked Sanders' office for a source, they pointed us to a study dated Aug. 5, 2009 by University of California (Berkeley) economist Emmanuel Saez, "Striking it Richer: The Evolution of Top Incomes in the United States (update with 2007 estimates)." We looked at the paper and found this line: The top 1 percent "has gone through enormous fluctuations along the course of the twentieth century, from about 18 percent (of income) before WWI, to a peak to almost 24 percent in the late 1920s, to only about 9 percent during the 1960s-1970s, and back to almost 23.5 percent by 2007." An accompanying chart confirmed the 23.5 percent figure for 2007. In a chart subsequently updated by Saez and forwarded to us by Sanders' office, the percentage of income earned by the top 1 percent actually fell modestly by 2008, to just under 21 percent. Still, Sanders was specific in his speech about referring to 2007, and the number he cited was calculated by a credentialed academic economist specializing in income and wealth statistics -- a pretty credible source, in our view. So the number looked pretty solid to us. Still, we've looked at a similar question before, so we were aware that various economists have attempted to grapple with this question. In the interest of making extra certain that Sanders was right, we decided to see whether the results in the Saez study mirrored those published elsewhere. One paper we found is by Arthur B. Kennickell, assistant director of the Federal Reserve Board's Division of Research and Statistics. This paper, published Jan. 7, 2009, found that the top 1 percent's share of income was 21.4 percent in 2007 -- slightly lower than the 23.5 percent that Sanders cited but certainly in the ballpark. That's also higher than the 14.6 percent taken by the bottom 50 percent, which is consistent with what Sanders had said. Another study, published in 2010 by Adrian Dungan and Kyle Mudry of the Internal Revenue Service's Individual Returns Analysis Section, found the top 1 percent taking 22.8 percent of income. Once again, this is slightly lower than what Sanders quoted, but in the same vicinity. That was also well over the 12.3 percent earned by the bottom 50 percent, which is once again consistent with what Sanders said. The differences from study to study likely stem from two factors -- the source of the data (using information from tax returns rather than surveys of American families, for instance) and the definition of "income" (such as whether capital gains are included in the calculations). When we asked Kennickell whether there was some reason to prefer one study over another, he responded that they all have their own merits. "There are many definitions of income that may be appropriate for various purposes," he said. So, we're left with three studies that vary slightly but which all point in the same general direction -- showing the top 1 percent earning between 21.4 and 23.5 percent of the national income in 2007. The studies also show that this share exceeds what the entire bottom 50 percent of the United States earns. So we rate Sanders' statement True.
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