Death and Taxes: Inevitable for All?
Considering being very rich? It has a lot of advantages. Even those two things said to be inevitable – death and taxes – can be stalled, if not evaded altogether.
Economists Emmanuel Saez and Gabriel Zucman published a paper this month documenting that widening inequality is not just a matter of annual income. Inequality of wealth – counting assets like investments and homes – has also been growing for the past thirty years. They show a stunning growth in the proportion of wealth owned by the richest 160,700 families in the U.S. (the top one-tenth of one percent), from 7 percent of all wealth in 1978 to 22 percent in 2012. Well, wow.
But what caught my attention were some graphs[i] at the back of the paper, which showed that over time the richest 1 percent of people aged 65 to 79 were less and less likely to die than their age group as a whole. In the period from 1979 to 1984, 65 – 79 year old men and women in the wealthiest 1 percent had a mortality rate that was 90 percent of the death rate for everyone that age. But by 2004-2008, men this age in the richest 1 percent had a death rate of only 60 percent of all men in that age range. Wealthy women didn’t do quite that well – their death rate dropped to about 70 percent of all women aged 65-79.
So the wealthy 1 percent – 1.6 million families with average wealth of $13.8 million each in 2012 – have a good shot at living longer. You may have heard of “death zones:” low-income neighborhoods with very high mortality rates. In New York City, for example, life expectancy in the poorest neighborhoods was 8 years shorter than in the richest ones in 2001. The richest 1 percent live in life zones, it seems.
And while we can’t find evidence that the wealthy 1’s have put death off entirely, they have been making some progress in halting the inevitability of taxes. Switching to a look at high incomes (leaving out accumulated wealth for the moment), the richest 1 percent of households paid on average 37 percent of their income in federal taxes in 1979, down to 29.5 percent in 2007, and down further to just under 25 percent in 2014. This year, the top 1 percent of households had an average annual income of more than $1.5 million. But some have been able to beat the inevitability of taxes entirely. Of those making over $1 million in 2009, there were 1,470 families who paid no federal taxes at all.
While the richest 1 percent were poking holes in death and tax inevitability, average folks were taking losses or treading water. Lecia Imbery cites Fed Chair Janet Yellen in another post last week as showing widening inequality, with a big increase in net worth (wealth) among the richest, and a precipitous drop in average net worth for the bottom 50 percent from 1989 to 2013 (from about $20,000 to about $12,000).
The significance of all this? The increasing concentration of wealth and income has given the rich ready access to health care improvements, without the stresses, polluted environments, poor nutrition, and violence that can shorten lives. On the other hand, people with low incomes, living right in the middle of all those bad things, die younger. As times have gotten harder for people with low incomes, mortality rates are actually worsening for some groups. White women who have not finished high school saw their life expectancy drop a startling 5 years over the period of 1990 through 2008. Their average age at death plunged to 73.5 years (compared to 83.9 years for college-educated white women). Researchers are not sure why, but there was a surge of drug abuse deaths over that period among low-income white women and a reduction in the number with health insurance. It is also true that over time, fewer and fewer people can escape poverty and its attendant ills without more education.
Maybe the Affordable Care Act will help to turn around these early deaths, as well as contribute to ending the other “death zones” in poor communities. But that’s the point: government-funded health care, along with education and other investments in communities, is necessary to give everyone a chance to succeed. But because the richest among us don’t pay a fair share of taxes, there are fewer federal dollars to invest. Concentrating so much wealth in so few hands while recouping a smaller share through the tax code is great for the bank accounts and lifespans of the richest 1 percent, but their gain is our loss.
[i]This graph, from Saez and Zucman’s paper, shows that the richest 1 percent of men 65-79 started out with a death rate about 90 percent of all men that age, and ended up only 60 percent as likely to die as all the other men that age. The red line labeled “Kopczuk-Saez” refers to white college grads of any income level compared with the total population in the 1980’s. Their death rates stayed about the same.