There’s a wealth gap even between millionaires, and it says a lot about growing inequality

millionaires
The wealth gap even at the top shows just how bad wealth inequality is overall.

  • There’s a wealth gap among very high net worth individuals, per a new Wealth-X report.
  • Those worth $15 million to $30 million make up just 16% of that cohort, but account for double the wealth.
  • It shows just how concentrated wealth really is at the top, and how stark inequality is.
  • See more stories on Insider’s business page.

Even millionaires have a wealth gap.

One out of every 10 millionaires has a net worth between $5 to $30 million, which Wealth-X defines as “very high net worth” (VHNW) individuals in its annual report. But the wealth among this wealthy class is lopsided.

Two-thirds of the VHNW class (about 1.7 million people) comprise the cohort’s lowest wealth tier of $5 million to $10 million, per the report. But those in the upper two tiers – the $15 million to $20 million range and the $20 million to $30 million range – represent just 421,170 people, less than 16% of the VHNW population. And they hold twice as much wealth, or 32% of the total.

The VHNW class is collectively worth $26.8 trillion, accounting for a quarter of millionaires’ total global wealth of $105 trillion. Those worth $1 million to $5 million account for 40% of this total wealth, while those worth over $30 million account for 34%.

This means that across both the larger millionaire population and the VHNW cohort, vast amounts of wealth are held by an exclusive group.

The pandemic has widened wealth inequality

Pre-pandemic, wealth inequality was lurking underneath America’s surface. As Insider’s Andy Kiersz reported, there was a “two-track” economy: those who owned stocks, or were already firmly middle or high-income, were reaping the benefits of a booming economy. An increasing share of national income was going to the top 1%.

The pandemic has since exacerbated the economy’s uneven dynamics, reported Insider’s Juliana Kaplan. Inequality deepened with a K-shaped recovery, as the different tracks diverged.

The bottom of the K dragged downward, with lower-income individuals continuing to struggle with the economic fallout. The poor were financially vulnerable, with many on unemployment benefits or risking their health as an essential service worker. From June to November, about 7.8 million Americans fell below the poverty line.

Meanwhile, higher-income Americans were six times more likely to be able to work from home than lower-wage workers, according to research from the Economic Policy Institute. They were spending less and saving more, and the very richest have been growing their billions.

The wealth gap among VHNW millionaires, and millionaires overall, says a lot about the wealth gap among the rich and the poor. It shows just how concentrated wealth is at the very top.

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Millionaire New Yorkers are now set to pay the highest taxes in the country

wealthy new yorkers
The wealthiest New Yorkers might see their tax rates increase to the highest in the country.

New York City millionaires will soon be subject to the highest tax rate in the country.

Gov. Andrew Cuomo and state legislative leaders finalized a $212 billion budget proposal for 2022 on Tuesday that’s set to raise an extra $4.3 billion a year by raising income and corporate taxes, The New York Times’ Luis Ferré-Sadurní and Jesse McKinley reported. The proposal calls for two new personal income-tax brackets, set to expire by the end of 2027, per exclusive details given to the Times earlier this week.

Those earning between $5 million and $25 million will be taxed on 10.3% of their income. That increases to 10.9% for those earning more than $25 million. And individuals raking in over $1 million and couples bringing in over $2 million will see tax rates climb from 8.82% to 9.65%.

These tax rates hit especially hard for New York City’s highest earners. The city already has a top income-tax rate of 3.88%, which means they’ll now be shelling out between 13.5% and 14.8% in both state and city taxes. That exceeds the highest top marginal income tax rate in the country: 13.3% for top earners in California.

However, they may not be the highest taxed for long if Hawaii’s legislature passes a bill imposing a 16% tax on residents earning over $200,000.

New York is dealing with economic pain

Cuomo said in January he planned on raising taxes if the White House didn’t help the state recover from its $15 billion deficit, Insider’s Grace Dean reported. It’s the highest deficit in New York’s history, exceeding the previous high of $10 billion, which Cuomo said was “very, very hard” to manage.

In an address, Cuomo attributed New York’s deficit to the state being “assaulted by the federal government” in recent years as well as to the cost of COVID-19, which caused the state’s revenues to fall by $5.1 billion.

As the epicenter of the US’ first wave of COVID-19, New York City was slammed with small-business closures and saw many of its top-earning residents move to take advantage of lower taxes in other states. Urbanism expert Richard Florida told Insider the flight of the wealthy caused a lot of financial pain for superstar cities like New York.

Cuomo called for the federal government to provide New York with emergency pandemic relief. He said that if Washington gave the state only $6 billion in a “worst-case scenario,” he would hike taxes to cover the difference.

“We have a plan in place, a strength that we have not had before and I believe our future is bright, but Washington must act fairly if we are to emerge on the other side of this crisis,” he said.

While Democrats considered raising more than $7 billion in new revenue for the state, The Times reported, such discussions fell to the side when President Joe Biden’s $1.9 trillion stimulus package was approved, which included $12.9 billion in direct aid for New York state. It also included $5.6 billion for New York City, which Insider’s Juliana Kaplan reported might have saved catastrophic cuts to the city budget.

Cuomo has resisted raising taxes for years out of fear it would drive businesses and the wealthy to other states. If all of the wealthiest New Yorkers fled the city, they could take more than $133 billion with them. That’s how much the top 1% of New Yorkers earned in income in 2018, a report from Bloomberg found.

The Times attributed Cuomo’s change of mind to the economic fallout of the pandemic, a growing progressive influence in the legislature, and the governor’s own “waning influence.”

The budget proposal is finalized as Biden reportedly gets even more serious about taxing the wealthy. He’s said that Americans making over $400,000 will see a “small to significant” tax increase and high-earning Americans could see their top income-tax rate increase to 39%.

If Biden’s tax proposal is enacted now that Cuomo’s has been, that means some of the richest New York City dwellers could be paying out more than half of their earnings in taxes.

Read the original article on Business Insider

Millionaire New Yorkers could soon be paying the highest taxes in the country

wealthy new yorkers
The wealthiest New Yorkers might see their tax rates increase to the highest in the country.

New York City millionaires are about to fall under the highest tax rate in the country.

Gov. Andrew Cuomo and state legislative leaders are coming close to agreeing on a 2022 budget proposal that would create an extra $4.3 billion a year by raising income and corporate taxes, The New York Times’ Luis Ferré-Sadurní and Jesse McKinley reported. The proposal calls for two new personal income tax brackets set to expire by the end of 2027, per exclusive details given to the Times.

Those earning between $5 million and $25 million would be taxed on 10.3% of their income. That increases to 10.9% for those earning over $25 million. And individuals raking in over $1 million and couples bringing in over $2 million would see tax rates climb from 8.82% to 9.65%.

These tax rates hit especially hard for New York City’s highest earners. The city already has a top income tax rate of 3.88%. If the budget proposal is approved, they would be shelling out between 13.5% and 14.8% in both state and city taxes, per the Times. That exceeds the country’s current marginal income tax rate high: 13.3% for top earners in California.

New York is dealing with economic pain

Cuomo said in January he planned on raising taxes if the White House didn’t help the state recover from its $15 billion deficit, Insider’s Grace Dean reported. It’s the highest deficit in New York’s history, she wrote. The state’s biggest deficit prior to this was $10 billion, which Cuomo said was “very very hard” to manage.

In an address, Cuomo attributed New York’s deficit to the state being “assaulted by the federal government” over recent years as well as to the cost of COVID-19, which caused the state’s revenues to fall by $5.1 billion.

As the epicenter of the US’ first wave of COVID-19, New York City was slammed with small business closures and saw many of its top-earning residents move to take advantage of taxes in other states. Urbanism expert Richard Florida told Insider the flight of the wealthy caused a lot of financial pain for superstar cities like New York.

Cuomo called for the federal government to provide New York with emergency pandemic relief. He said that if Washington only gave the state $6 billion in a “worst-case scenario,” he would hike taxes to cover the difference.

“We have a plan in place, a strength that we have not had before and I believe our future is bright, but Washington must act fairly if we are to emerge on the other side of this crisis,” he said.

While Democrats considered raising more than $7 billion in new revenue for the state, the Times reported, such discussions fell to the side when President Joe Biden’s $1.9 trillion stimulus package was approved, which included $12.9 billion in direct aid for New York state. It also included $5.6 billion for New York City, which Insider’s Juliana Kaplan reported may have saved catastrophic cuts to the city budget.

Cuomo has resisted raising taxes for years out of fear it would drive businesses and the wealthy to other states. If all of the wealthiest New Yorkers fled the city, they could take more than $133 billion with them. That’s how much the top 1% of New Yorkers earned in income in 2018, a report from Bloomberg found.

The Times attributed Cuomo’s change of mind to the economic fallout of the pandemic, a growing progressive influence in the legislature, and the governor’s own “waning influence.”

The budget proposal is due to be finalized as Biden reportedly gets even more serious about taxing the wealthy. He’s said that Americans making over $400,000 will see a “small to significant” tax increase and high-earning Americans could see their top income-tax rate increase to 39%.

If both Biden and Cuomo’s tax proposals are enacted, that means the richest New York City dwellers could be paying out more than half of their earnings in taxes.

Read the original article on Business Insider

America’s wealthy are getting vaccinated faster than the poor, and a poorly designed system is partly to blame

vaccine worker
The wealthy are more likely to be vaccinated than the poor.

American inequality extends to vaccinations.

Communities of color, predominately Black communities, have been hardest hit by the pandemic. They’re also the least likely to be vaccinated.

Data indicates that the wealthiest zip codes across several states, from California and Colorado to New York and Florida, are more likely to be vaccinated than lower-income zip codes.

The wealthy have taken advantage of loopholes, using money and connections to jump the vaccine line, Insider’s Julia Naftulin and Allana Akhtar previously reported. They’ve been gaming the system, from calling up concierge doctors to gaining access to COVID-19 vaccination codes meant for communities of color.

But a wild-west rollout and socioeconomic technology gap are also at the heart of the problem in a poorly designed system advantaging the privileged. 

An unequitable rollout

In Florida, residents in affluent areas are getting vaccinated at a faster rate than lower-income neighborhoods, local news outlet WFLA reported. Consider Miami-Dade county, where the wealthiest zip codes are the most vaccinated, reported The Miami Herald

Some residents have criticized Florida Gov. Ron DeSantis for setting up special vaccine access in these wealthier areas. He recently set up a pop-up vaccine site in Lakewood Ranch, one of Florida’s richest neighborhoods with a median household income 75% to 85% higher than the county average, per WFLA, citing Census data.

DeSantis said in a press conference Wednesday that he chose Lakewood Ranch because of its elderly population. “We wanted to find communities that have high levels of seniors living in there, and this obviously has a high concentration,” he said. “You look at all these different communities, and there is a lot of senior citizens. If there were few senior citizens, then you wouldn’t have set up a pod here.”

It’s a similar case over in Los Angeles County. Dr. Paul Simon, chief science officer for the Los Angeles County Department of Public Health, told the Los Angeles Times that the county’s mass point-of-distribution sites have been successful in their goal to quickly distribute vaccines, but often don’t work well for poorer communities.

More residents in largely white and wealthy cities are vaccinated than the Black and Latino communities in lower-income areas, the LA Times reported. At least 25% of residents have received at least one vaccine dose in more affluent neighborhoods like Bel-Air and Beverly Hills, per LA County Department of Public Health data. It’s a sharp contrast from South LA and southeast LA county, home to working class cities such as Compton and Paramount, where at most 9% of the population is vaccinated.

A digital divide

The digital divide is also partly to blame. Vaccine appointments are a virtual task. Those without access to the internet can’t make an appointment, which is reportedly a difficult process to navigate even with access.

In Los Angeles, “websites have been flooded with folks trying to get an appointment,” Simon said. “And so those people who have the luxury of time can spend, literally in some cases, hours, I’m sad to say, working to try to get an appointment.”

Over in New York City, Mayor Bill De Blasio seconded this sentiment to Bloomberg. “Folks who have more privilege are best able to navigate this process,” he said. “Folks who have more confidence in the vaccine are going to go through more effort to get it.”

New York City is also seeing a disproportionate surge in vaccinations among wealthy neighborhoods, Bloomberg reported. De Blasio said there are 33 vaccination sites in “hard-hit” neighborhoods, accounting for 77% of total vaccination sites, but that the city needs to establish more.

He attributed the inequality partially to vaccine hesitancy. “Folks who have been doing very well in this society also have a high level of confidence in the vaccine,” he said.

In today’s modern world, less access to technology is generally equated with less access to education. And, right now, knowledge is power in getting vaccinated.

Read the original article on Business Insider

The elite’s favorite status symbols have become way more expensive over the past 20 years

wealthy person
The elite have turned towards investing in education and health as a means to flaunt their riches.

Showing off wealth is no longer the way to signify having wealth.

Flashing a Louis Vuitton handbag or a multimillion-dollar Bugatti have long been standard status symbols for the elite, but the ultrawealthy have increasingly turned to intangible investments such as security and health to discreetly flaunt their wealth instead. An unlikely reflection of this transformation is the recent history of inflation in the US economy.

Consider American Enterprise Institute’s famous inflation chart, which was once dubbed by Bloomberg as “The Chart of the Century” and has made the rounds on various media platforms throughout the years.

The latest iteration, featured below, shows 54.6% overall inflation over the last 21 years, which works out to an annualized compound growth rate of 2.2%, very close to the Federal Reserve’s stated inflation target.

But as you can see, some services and goods have become way more expensive than others.

AEI
Services have grown more likely to become more expensive over time than material goods.

 

Hospital services, college tuition, medical services, and housing have seen disproportionate upticks past the average 54.6% inflation. Their costs have outpaced the hike in average hourly wages, which have shot up by 82.5%, or 28% more than the average increase in consumer prices.

Meanwhile, consumer goods such as new cars, clothing, computer software, toys, and TVs have become more affordable.

In a nutshell, it seems that the cost of intangible services (with the notable exception of housing) has increased while the cost of material goods has decreased, mirroring the shift from conspicuous to inconspicuous consumption.

The rise of discreet wealth

Inconspicuous consumption is a growing trend among not only millionaires and billionaires, but “the aspirational class.”

Elizabeth Currid-Halkett coined the term in her 2017 book, “The Sum of Small Things: A Theory of the Aspirational Class,” as the opposite of “conspicuous consumption,” a term conceived by 19th-century economist Thorstein Veblen referring to the concept of using material items to signify social status.

In the US in particular, the top 1% have been spending less on material goods since 2007, Currid-Halkett wrote, citing data from the US Consumer Expenditure Survey. In an era where mass consumption means both the upper class and the middle class can own the same luxury brand, she explains, forgoing material goods for immaterial means is a way for the rich to differentiate themselves.

“This new elite cements its status through prizing knowledge and building cultural capital, not to mention the spending habits that go with it,” Currid-Halkett wrote, adding, “Eschewing an overt materialism, the rich are investing significantly more in education, retirement, and health – all of which are immaterial, yet cost many times more than any handbag a middle-income consumer might buy.”

That inconspicuous consumption often goes unnoticed by the middle class – but getting noticed by a fellow elite is the appeal of the discreet. Investing in things like education, health, and childcare – which have all become more expensive since 2000, per the AEI chart – “reproduces privilege” and “offers social mobility” in a way that flaunting luxury couldn’t, according to Currid-Halkett.

Discreet wealth is just one of many inflation factors

Now, this isn’t to say that discreet wealth is the sole cause of inflation in the US.

Mark Perry, the AEI economist behind the chart, notes in his blog post that economists have attributed several reasons to these trends: Price increases correlate with a greater degree of government involvement in a good or service (like health care) and prices decrease as the degree of international competition for goods increases (like toys).

Mass production has enabled manufactured goods to become more affordable. And college has become more expensive for many reasons, including increasing globalization, increases in financial aid, and ballooning student services.

But the fact that the inflation chart correlates with the rise in discreet wealth indicates the power of demand in driving up prices – and the spending power of the elite as wealth inequality worsens in developed economies.

The more the elite covet sending their kids to high-end preschools and Ivy League colleges, or spending millions to live within walking distance of the country’s best public elementary and secondary schools, or buying their kids boutique healthcare as a way to signify status, the more expensive those industries are going to become.

Call it discreet inflation. 

Read the original article on Business Insider

An author who surveyed over 10,000 millionaires found the qualities that make them successful hinge on a distinct behavior

rich man cigar
Many millionaires know that building wealth takes consistency.

  • Millionaires tend to have five characteristics in common, according to Chris Hogan, an author who studied more than 10,000 millionaires.
  • They take personal responsibility, practice intentionality, are goal-oriented, and work hard in order to build wealth.
  • Consistency in each of these areas, Hogan wrote, is what ties everything together.
  • Visit Business Insider’s homepage for more stories.

Millionaires have more than just seven-figure net worths in common – they also tend to share several of the same habits and attributes.

Many used resilience and perseverance to build their wealth, and once they got there, forewent a budget.

But millionaires also tend to share five of the same characteristics, according Chris Hogan, author of “Everyday Millionaires: How Ordinary People Built Extraordinary Wealth – and How You Can Too.” Along with the Dave Ramsey research team, Hogan studied 10,000 American millionaires (defined as those with a net worth of at least $1 million) for seven months, and he found certain attributes kept resurfacing.

“When you see these five attributes working in high gear, you’ll get a clear picture of what financial independence really looks like – and what it could look like for you,” Hogan wrote.

Here’s a closer look at each.

1. Millionaires take personal responsibility

Average millionaires take control of their money decisions, according to Hogan. “They know their success is up to them, and they own it,” he wrote.

Two millionaires he interviewed, Mike and Stephanie, particularly exemplified this – they diligently saved, avoided debt, worked with an investing professional, and committed to improving themselves and their earning potential. They’re now retired and have a net worth of $2.6 million.

The majority of millionaires in Hogan’s study deemed themselves optimistic and willing to try difficult things for new results – and more than 90% will quickly admit when they’re wrong and actively integrate feedback from other people.

“[Millionaires] don’t count on anyone else to make them rich, and they don’t blame anyone else if they fall short,” Hogan wrote. “They focus on things they can control and align their daily habits to the goals they’ve set for themselves.”

Read more: Most people believe 6 myths about millionaires, and it can keep them from building their own wealth

2. Millionaires practice intentionality

Hogan found that many millionaires live on less than they make and exercise discipline when it comes to budgeting. More than half of the millionaires he studied believed the main reason people don’t become millionaires is because they lack financial discipline.

“Millionaires don’t accidentally live on less than they make,” Hogan wrote. “They do it on purpose, because they have a plan. They’re deciding. Living without a budget, though, is the very definition of sliding into misfortune.”

This finding aligns with research by Sarah Stanley Fallaw, author and director of research for the Affluent Market Institute who also studied millionaires – her subjects stressed to her the freedom that comes with spending below their means.

According to Thomas C. Corley’s “Rich Habits” study, living off of 80% of your income or less “will leave you with an excess you can use to build wealth,” he wrote in a post for Business Insider.

3. Millionaires are goal-oriented

“They think ahead and refuse to be swept away by the current of life,” Hogan wrote. He found that 92% of the millionaires surveyed develop a long-term plan for their money, and 97% almost always achieve the goals they set for themselves.

They put in a long-term plan for financial independence, which “helps them avoid distractions and the ‘shiny object syndrome’ the general population suffers from because millionaires aren’t focused on what might make them happy today; they’re focused on their long-term wealth-building plan.”

Consider JP Livingston, who retired early at age 28 with a $2 million-plus nest egg. She lived frugally, tucking away 70% of her take-home pay – 40% in investments, 60% in savings. Even as her income increased each year, she didn’t succumb to lifestyle inflation. Instead, she stuck to her long-term plan and saved even more money.

Read more: An early retiree who interviewed 100 millionaires discovered nearly all of them got rich using the same 3-step strategy

4. Millionaires are hard workers

“They do what it takes even when what it takes isn’t easy,” he wrote. Of the millionaires Hogan studied, 93% said they became millionaires because of their hard work, rather than big salaries.

“Millionaires constantly work to better themselves,” he wrote. “They don’t settle for what they have and who they are today; instead they work to increase their education and their skill set to build more for tomorrow.”

And when it comes to work, rich people often take on jobs that they love – doing what they love and getting paid for it is what self-made millionaire Steve Siebold calls a smart strategy.

5. Millionaires know building wealth takes consistency

Consistency, Hogan wrote, is what ties everything together.

“You can take responsibility, you can be intentional, you can set goals, and you can work hard,” he wrote. “But, if you don’t do these things repeatedly – year after year, decade after decade – then you’ll never get the results you want.”

He added: “They know from experience that wealth-building is a long-term frame, and they’ve seen that sticking to the plan over decades leads to millions at retirement.” 

But being consistent requires two things, according to Hogan: Patience for a long-term view to help you stay focused through the years, and passion to find ways to get the job done.

Read the original article on Business Insider