It’s a common misconception that everyone in the top 1 percent is making millions. You may have friends or neighbors whose incomes put them in this category.
So just how much do you have to earn to be part of the elite 1 percent?
That depends on whose figures you use.
According to 2009 tax year filing data from the IRS, an adjusted gross income, or AGI, of $343,927 or more will put you in the top 1 percent of taxpayers. (The 2009 figures are the latest the IRS has tallied, and filing for tax year 2010 returns didn’t officially close until Oct. 17.)
That amount is per return, not per taxpayer. So both a single filer and a married couple each with a household income of $343,927 would be classified as a top earner.
For many people, making more than $340,000 a year would feel rich. But for residents of high-cost areas such as New York or California, that amount, especially for dual-income families, is not unusual.
And the Big Apple is home to a lot of executives, doctors, lawyers, managers and supervisors who work outside of finance and account for many of the high incomes in the area.
Some other calculations require higher incomes before a person can be classified as being part of the top 1 percent.
Based on the numbers from the Tax Policy Center in Washington, D.C., $503,086 is the cutoff for the top 1 percent of earners in 2009. Their economic simulation model projects $516,633 as the cutoff for the top earners in 2010 and $532,612 for 2011.
The TPC’s figures are larger because they look at income regardless of the source, not just adjusted gross income.
Though not all sources agree on what kind of income it takes to be a part of the top 1 percent, most income analysts agree that every income level has been affected by the recession.
Median income in the U.S. declined 7 percent from 2000 to 2010, according to the U.S. Census. And the outlook for recouping lost earnings doesn’t look good. Economists expect inflation-adjusted incomes to rise only 5 percent over the next decade.
Regardless of where we draw the line in the sand between the top 1 percent and the 99 percent, the Economic Policy Institute reports that the wealthiest 1 percent of U.S. households had a net worth 225 times greater than the typical median household’s net worth. And that disparity is the highest ratio on record.