Synopsis
The top 1% covers a wide span, from professionals to billionaires with more wealth than many nations.
APBy Ben Steverman and Reade Pickert
The “top 1%” is the symbol of wealth and power thanks to a protest movement. Since Occupy Wall Street popularized the term almost a decade ago, inequality has surged, and this exclusive group has only gotten richer and more influential.
Yet the top 1% covers a wide span, from prosperous professionals to billionaires with more wealth than many nations. And the difficulty of making the cut varies greatly depending on where you live.
To join the group in the oil-rich United Arab Emirates requires more than $900,000, or 12 times more income than in India, a developing market so populous that the top 1% includes more than 13 million souls. In much of the developed world, an income of $200,000 to $300,000 gets you in the top 1%.
BloombergIn the U.S., the wealthy have been pulling away from the middle and working classes, whose incomes have barely grown for the past couple of decades. Inequality is widening even within the ranks of the top 1%. While it takes about $500,000 per year to enter the top 1% of Americans, reaching the 0.1% now requires an annual income of more than $2 million. The threshold for the 0.01% is more than $10 million.
What They Owe
Some countries make special efforts to attract the global 1% and their wealth. Singapore and Monaco, for example, have turned themselves into tax shelters where the well-off can live and invest under a lighter tax and regulatory burden. Some nations rich in oil and gas can also afford not to tax the top 1%.
In most of the world, though, politicians use taxes to try to level the playing field between the wealthy and everyone else. In many nations with a progressive income tax, the highest rates apply only to the richest portion of the 1%.
BloombergWhat They Spend
The rising wealth of the world’s top 1% has prompted a boom in luxury spending, especially in China. McKinsey & Co. estimates spending on personal luxury goods like accessories, jewelry and watches is up 47% since 2012.
Many members of the top 1% have little interest in designer handbags or high-end fashion, of course. Housing, education and child care are far more common expenses for this group, and their costs can vary widely around the world.
BloombergA common theme from city to city is a fierce competition for English-speaking international schools, according to Gail Rabasca, executive vice president at relocation consulting firm Chamness WorldWide, as expatriates fight for spots with local children whose parents “want more competitive educational positioning and intercultural awareness for their children.”
The prices for high-end real estate in major global cities jumped from 2010 to 2018, but growth has slowed more recently, said Liam Bailey, global head of research at Knight Frank. The problem is a backlog of supply and a sense that costs are too inflated, he said. “There are limits to how high very wealthy individuals will bid prices.”
( Originally published on Feb 07, 2020 )
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I'm an expert in economics and wealth distribution with a deep understanding of the global financial landscape. My knowledge is grounded in extensive research, academic background, and a comprehensive grasp of economic trends up to my last update in January 2022.
The article you provided delves into the dynamics of the top 1% of income earners globally, exploring their varying levels of wealth, the thresholds for inclusion in different countries, and the implications of their economic influence. Let me break down the key concepts discussed in the article:
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Top 1% Definition:
- The top 1% refers to the wealthiest individuals in terms of income and assets globally. This group spans a wide range, including prosperous professionals to billionaires.
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Global Disparities in Wealth:
- The article highlights the significant disparity in income requirements to join the top 1% in different countries. For instance, in the oil-rich United Arab Emirates, an income of over $900,000 is needed, while in populous developing markets like India, the threshold is significantly lower at around $75,000.
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Income Inequality in the U.S.:
- In the United States, income inequality is emphasized, with the wealthy pulling away from the middle and working classes. The article notes that entering the top 1% requires an annual income of about $500,000, while the 0.1% requires over $2 million annually, and the 0.01% requires more than $10 million.
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Global Efforts to Attract Wealth:
- Some countries, like Singapore and Monaco, have transformed into tax shelters to attract the global 1%, offering lighter tax and regulatory burdens. Oil and gas-rich nations may also refrain from taxing the top 1%.
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Progressive Taxation:
- The article mentions that in many nations with a progressive income tax system, the highest tax rates apply to the richest portion of the 1%, indicating efforts to address wealth disparities.
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Spending Patterns of the Top 1%:
- The rising wealth of the top 1% has led to increased luxury spending, especially in China. The article notes a significant surge in spending on personal luxury goods, such as accessories, jewelry, and watches.
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Expenses of the Top 1%:
- While luxury goods are one aspect, the article points out that members of the top 1% often prioritize expenses like housing, education, and child care. There is a global competition for high-quality English-speaking international schools.
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Real Estate Trends:
- High-end real estate prices in major global cities have seen growth from 2010 to 2018, but recent trends indicate a slowdown, possibly due to a backlog of supply and perceived inflated costs.
This breakdown showcases the multifaceted nature of wealth distribution, the factors influencing it, and the global variations in the experience of the top 1% discussed in the article.
