Wealth Inequality in the United

States since 1913

Emmanuel Saez (UC Berkeley)
Gabriel Zucman (LSE)

October 2014
 Introduction

US Income inequality has increased sharply since the 1970s

Mixed existing evidence on wealth inequality changes

⇒ Is inequality increase driven solely by labor income?
We capitalize income tax return data to estimate new annual
series of US wealth concentration since 1913
Key result: Wealth inequality has surged but phenomenon is
concentrated mostly within the top .1% (=wealth above $20m)
 U-Shaped Wealth Concentration

Top 0.1% wealth share in the United States, 1913-2012

25%

20%
% of total household wealth

15%

10%

5%

0%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
This figure depicts the share of total household wealth held by the 0.1% richest families, as estimated by capitalizing income tax
returns. In 2012, the top 0.1% includes about 160,000 families with net wealth above $20.6 million. Source: Appendix Table B1.
 Surge in top wealth shares concentrated
in top 0.1%
Top wealth shares: decomposing the top 1%
14%

12%

Top 0.5%-0.1%
10%
% of total household wealth

8%

6%
Top 1%-0.5%
Top 0.1%-0.01%
4%
Top 0.01%
2%

0%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
 Outline of the talk

I.The capitalization method

II. The distribution of wealth

III. Robustness and comparison with existing estimates
IV. Decomposing wealth accumulation: income and saving rates
I- The capitalization method
 To obtain wealth, we divide capital
income by the rate of return
How the capitalization technique works:
Start from each capital income component reported on individual
tax returns
Compute aggregate rate of return for each asset class (using
Flow of Funds and aggregate tax data)
Multiply each individual capital income component by 1/rate of
return of corresponding asset class
Simple idea, but lot of care needed in reconciling tax with Flow
of Funds data
Key assumption: uniform return within asset class
⇒ Need detailed income components to obtain reliable results
 Aggregate income and wealth

Aggregate wealth
W = Total assets minus liabilities of households at market value

Excludes durables, unfunded DB pensions, non-profits

Source: Flow of Funds since 1945, Goldsmith, Wolff (1989),

Kopczuk and Saez (2004) before

Aggregate income
NIPA since 1929, Kuznets (1941) and King (1930) before 1929
returns

Family unit
Top 1% = Top 1% of all family units [as in Piketty and Saez]
defs
 A U-shaped wealth-income ratio

The composition of household wealth in the U.S., 1913-2013

500%

400%
% of national income

300% Pensions

Equities Currency, deposits and bonds

200%

Sole proprietorships
& partnerships
100%

Housing (net of mortgages)

0%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
Distributional data: income tax returns

Consistent, annual, high quality data since 1913:

Composition tabulations by size of income 1913-

IRS micro-files with oversampling of the top 1962-

Various additional IRS published stats (estates, IRAs, trusts,

foundations)

Detailed income categories:

Dividends, interest (+ tax exempt since 1987), rents,
unincorporated business profits (S corporations, partnerships,
sole prop.), royalties, realized capital gains, etc.

A lot of income “flows to” individual income tax returns

Mutual funds, S corporations, partnerships, holding companies,
trusts, etc.
 Concentration of reported capital income
has increased dramatically
The top 0.1% taxable capital income share
45%

40%

35%
% of taxable capital income

30%
Including capital gains
25%

20%

15% Excluding capital gains

10%

5%

0%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
 How we deal with non-taxable
components
Owner-occupied housing
Home values set proportional to property tax paid

Home mortgages set proportional to mortgage interest paid

We assume (based on SCF) that itemizers have 75% of home

wealth and 80% of home mortgages

Pensions
Pension wealth set proportional to pension distributions and
wages above 50th percentile

Consistent with SCF and with direct information on IRA wealth

from IRS (IRAs ≈ 30% of pension wealth)

⇓
Only matters for top 10% but irrelevant for top 1% and
above, because pensions and housing very small there
How we deal with avoidance and evasion

Tax avoidance:
Systematic reconciliation exercise with national accounts to
identify potential gaps in tax data kinc
E.g., trust income → imputations on the basis of distributions
(Retained trust income ≈ 2% of household capital income)
trusts charitable

Tax evasion:
Third-party reporting means all dividends and interest earned
through domestic banks are reported
Offshore wealth: If anything increases the trend in rising wealth
top wealth shares by about 2 points offshore
Is the return constant within asset class?

Two potential issues:

Maybe the very rich have higher equity/bond returns (e.g.,
better at spotting good investment opportunities) → level bias
Maybe this differential has increased since the 1970s (e.g., due to
financial globalization/innovation) → trend bias

⇓
Two checks show that return within asset class is flat and has
remained flat
 Check 1: No evidence that the wealthy
have higher returns within asset class
Returns by asset and wealth class, 2007
(matched tabulated estates and income tax data)
10.0%

9.0%

8.0%
Dividends + capital gains
7.0%

6.0%

5.0%

4.0% Dividends yield

3.0%

2.0% Interest yield

1.0%

0.0%
up to $3.5m $3.5m-$5m $5m-$10m $10m-$20m $20m+
Total net wealth at death
 The very rich did collect a lot of
dividends in the 1970s
Dividend yield by wealth class in 1976
(matched micro estate and income tax data)
8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%
P90-95 P95-99 P99-99.5 P99.5-99.9 P99.9-99.99 P99.99-100
Fractiles of the distribution of net wealth at death
 Check 2: The capitalization method
works for SCF and foundations

Capitalization method can be checked with joint income and

wealth micro-data:
1) SCF Data: provides individual micro-data for both wealth and
(tax return) income component by component since 1989
2) Foundation Data: publicly available IRS micro-data with
information on both market value wealth and income returns
We apply same rates of returns & capitalization technique as for
individual tax returns

⇓
By capitalizing income we are able to reproduce the correct
wealth distribution
 Capitalization method works for the SCF

Top household wealth shares: reported SCF wealth vs.

capitalized SCF incomes
% of household wealth excluding pensions and owner-

100%
Top 10%

80%

Wealth
occupied housing

60%
Top 1%

40%
Capitalized income

20%
Top 0.1%
0%
1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012
The figure compares direct SCF wealth shares to wealth shares estimated by capitalizing SCF income. Wealth excludes
pensions and owner-occupied net housing. Source: Appendix Table C1.
 Capitalization works for foundations

Top foundations wealth shares: reported wealth vs.

capitalized income
80%
Wealth
70%
Top 1%
% of foundation net wealth

60%

50% Capitalized income

40%
Top 0.1%

30%

20%
1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009
The figure compares top foundation wealth shares obtained by using balance sheet wealth data as reported to the IRS and
obained by capitalizing IRS-reported income. Source: Appendix Tables C11 and C13.
II- The US Wealth Distribution,
1913-2012
 Wealth in 2012 is very concentrated
Table 1: Thresholds and average wealth in top wealth groups, 2012

Wealth
Number of families Wealth threshold Average wealth Wealth share
group

A. Top Wealth Groups

Full Population 160,700,000 $343,000 100%
Top 10% 16,070,000 $660,000 $2,560,000 77.2%
Top 1% 1,607,000 $3,960,000 $13,840,000 41.8%
Top 0.1% 160,700 $20,600,000 $72,800,000 22.0%
Top .01% 16,070 $111,000,000 $371,000,000 11.2%

B. Intermediate Wealth Groups

Bottom 90% 144,600,000 $84,000 22.8%
Top 10-1% 14,463,000 $660,000 $1,310,000 35.4%
Top 1-0.1% 1,446,300 $3,960,000 $7,290,000 19.8%
Top 0.1-0.01% 144,600 $20,600,000 $39,700,000 10.8%
Top .01% 16,070 $111,000,000 $371,000,000 11.2%
 Wealth inequality is making a comeback

Main long-run trends in the distribution of wealth:

Long run U-shaped evolution for the very rich
(top 0.1%: >$20 million today)
Long run L-shaped evolution for the rich
(top 1% to 0.1%: between $4 million and 20 million today)
Long-run ∩-shaped for the middle-class
(top 50% to 90%: less than $650K today)
(Memo: Bottom 50% always owns ≈ 0 net wealth)
 Wealth has always been concentrated

Top 10% wealth share in the United States, 1917-2012

90%

85%
% of total household wealth

80%
Capitalized income

75%
SCF

70%

65%

60%
1917

1922

1927

1932

1937

1942

1947

1952

1957

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012
The figure depicts the share of total household wealth owned by the top 10%, obained by capitalizing income tax returns
versus in the Survey of Consumer Finances. The unit of analysis is the familly. Source: Appendix Tables B1 and C4.
 Top 1% has gained more than top 10%

Top 10-1% and 1% wealth shares, 1913-2012

55%

50%
Top 10% to 1%
45%
% of total household wealth

40%

35%
Top 1%
30%

25%

20%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
 Top 1% surge is due to the top 0.1%

Top 1-0.1% and top 0.1% wealth shares, 1913-2012

30%

25%
% of total household wealth

20% Top 1% to 0.1%

15%

10%

Top 0.1%
5%

0%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
 Top 0.01% share: × 4 in last 35 years
Composition of the top 0.01% wealth share, 1913-2012
12%

10%
% of total household wealth

8% Fixed income
claims
6%

4%

Equities
2%

Other
0%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
 The rise and fall of middle-class wealth

Composition of the bottom 90% wealth share

40%

35%

30%
% of total household wealth

25% Pensions
20%
Equities & fixed claims
15%
(net of non-mortgage debt)
Business assets
10%

5% Housing (net of mortgages)

0%
1917

1922

1927

1932

1937

1942

1947

1952

1957

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012
 Wealth is getting older, but at the very
top remains younger than in the ’60s-’70s
Share of wealth held by elderly households (65+)
60%  

50%   Top 0.1%

% of each group's total wealth

40%  

30%  
Total population

20%  
Bottom 90%

10%  

0%  
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
 Share of income and labor income of top
wealth holders has grown a lot
Share of income earned by top 0.1% wealth-holders

8%

7%
% of total pre-tax income

6%

5% National income

4%

3%

2%
Labor income
1%

0%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
This figure shows the share of total pre-tax national income and pre-tax labor income earned by top 0.1% wealth-holders. Labor
income includes employee compensation and the labor component of business income. Source: Appendix Tables B25 and B28.
III- Robustness and comparison
with existing estimates
 Findings are robust to different
methodological choices
Robustness checks:
Different treatment of capital gains
Capitalizing dividends only (Bill Gates world)

Capitalizing dividends plus capital gains (Warren Buffet world)

Capitalizing dividends plus capital gains for shares but not

ranking (the best of both worlds)

Allowing for bond yield rising with wealth

Different imputations for pension wealth

⇓
All show wealth inequalities rising fast at the very top, but
not below the top 0.1%
Results robust to alternative treatment of
pensions, capital gains, bond returns

Figure B27: Top 0.1% wealth share, all methods

25%
Top 0.1% Baseline

Top 0.1% KG capitalized

Top 0.1% KG not capitalized

20%
Top 0.1% pensions proportional to pension distributions

Top 0.1% higher bond return for the rich

15%

10%

5%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
 Link with previous studies using
alternative data

Forbes 400 rich list: large increase in wealth concentration

Surveys: SCF shows increase in top 10% but less in top 1%

SCF excludes Forbes 400 and under-estimates capital income
concentration increases since 1989

Estate tax multiplier: No increase in top 1% wealth share

since 1980s (Kopczuk-Saez 2004, SOI studies)
Estate tax multiplier method fails to take into account widening
mortality differential by wealth class

⇓
Our capitalization analysis can help SCF weights and estate
multiplier weights
 Our estimate for top 0.01% is consistent
with Forbes rankings
Forbes 400 (top .00025%) and top .01% Wealth Shares
3.5% 14%
Top 0.00025% share (% of total household wealth)

Top .01% share (% of total household wealth)

3.0% 12%

2.5% Top 0.00025%, Forbes magazine 10%

(left-hand scale)
2.0% 8%

1.5% 6%
Top 0.01%, capitalized income
(right-hand scale)
1.0% 4%

0.5% 2%

0.0% 0%
1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012
The figure depicts the top .00025% wealth share as estimated from the Forbes 400 list on the left axis. For comparison, the figure
reports our top 0.01% wealth share obtained by capitalizing income tax returns (on the right axis). Source: Appendix Table C3.
 Estate tax returns fail to capture rising
top wealth shares
Top 0.1% wealth share: comparison of estimates
25%

Capitalized income
20%
% of total household wealth

SCF
15% adjusted

10%

SCF
5% baseline
Estate multiplier

0%
1917

1922

1927

1932

1937

1942

1947

1952

1957

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012
The figure depicts the top 0.1% wealth share obained by capitalizing income, by using the Survey of Consumer Finances
(SCF baseline and adjusted), and by using estate tax data (Kopczuk and Saez, 2004). Source: Appendix C4 and C4b.
 SCF does not fully capture rising top
capital income share
Top 0.1% Capital Income Share in the SCF and Tax Data
45%
Tax data
40%

35%
% taxable capital income

30%

25%

20% SCF

15%

10%

5%

0%
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
The figure compares the top 0.1% capital income shares estimated with the SCF data vs. the income tax data. Capital
income includes realized capital gains, dividends, interest, net rents, and business profits. Source: Appendix Table C2.
Estate multiplier issue: mortality gradient
by wealth within top 10%
Relative Mortality by Age and Wealth Group, Men, 1999-2008

100%
Mortality (relative to full population)

80%

60%
top 10%
40% top 5%
top 1%
20%
Kopczuk-Saez

0%
30-49 50-64 65-79 80+
Age groups
The figure depicts the relative mortality rate by age and wealth group for men in 1999-2008. E.g., male top 1% wealth
holders aged 30-49 mortality rate is 40% of males aged 30-49 population wide. Kopczuk-Saez is based on the mortality
of white college goers relative to population in the 1980s. The graph shows that mortality decreases with wealth (even
within the top 10%) and that the wealth mortality advantage decreases with age. Source: Appendix Table C7.
Estate multiplier issue: mortality gradient
by wealth widens over time

Evolu&on  of  Mortality  Advantage,  Men,  Aged  65-­‐79  

Mortality (relative to full population)

100%

80%

top 10%
60% top 5%
top 1%
Kopczuk-Saez
40%
1979-­‐1984   1984-­‐1988   1989-­‐1993   1994-­‐1998   1999-­‐2003   2004-­‐2008  
The figure depicts the relative mortality rate for men aged 65-79 by wealth group and period. E.g., male top 1% wealth
holders aged 65-79 mortality rate is 90% of males aged 65-79 population wide in 1979-1984. Kopczuk-Saez is based on
the mortality of white college goers relative to population in the 1980s. The graph shows that the wealth mortality
advantage increases overtime and more so for the top 1% wealthiest. Source: Appendix Figure C7.
 IV- Decomposing Wealth Accumulation:
Saving Rates and Income Shares of Top
Wealth Holders
 Top 1% vs. bottom 90% wealth growth
Real average wealth of bottom 90% and top 1% families

14,000,000 140,000
Top 1% (left y-axis)

Bottom 90% real average wealth

12,000,000 120,000
Top 1% real average welath

Bottom 90% (right y-axis)

10,000,000 100,000

8,000,000 80,000

6,000,000 60,000

4,000,000 40,000

2,000,000 20,000

0 0
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
Real values are obtained by using the GDP deflator, 2010 dollars. Source: Appendix Tables B3.
 Wealth distribution Dynamics

Individual i wealth accumulation can always be written:

i
Wt+1 = (1 + qti ) · (Wti + sti · Yti )

where Wti is wealth, Yti is income, sti is net savings rate, 1 + qti is
pure price effect on assets in year t
We define synthetic savings rate stp for fractile p (e.g., top 1%):
p
Wt+1 = (1 + qtp ) · (Wtp + stp · Ytp )

where 1 + qtp is price effect for fractile p based on Wtp composition

p sp
⇒ long-run steady state: shW = shYp ·
s
p
where shW is fractile p share of wealth, shYp is fractile p share of
income, and s p /s is relative savings rate of fractile p
 Saving rates typically rise with wealth

Saving rates by wealth class (decennial averages)

55%
50%
45%
% of each group's total primary income

40%
Top 1%
35%
30%
25%
20% Top 10 to 1%
15%
10%
5%
0%
-5%
Bottom 90%
-10%
-15%
1917-19

1920-29

1930-39

1940-49

1950-59

1960-69

1970-79

1980-89

1990-99

2000-09

2010-12
 The bottom 90% massively dis-saved in
the decade preceding the crisis
Saving rate of the bottom 90%
15%

10%
% of bottom 90% primary income

5%

0%
1975 1980 1985 1990 1995 2000 2005 2010

-5%

-10%
Bottom 90% wealth share decline due to
(a) savings collapse, (b) income share fall

Share of income and wealth of bottom 90% wealth holders

70%
Income share
60%

50%
Simulated 1985-2012 wealth share (constant
40% 3% saving rate and constant income share)

30%

20% Simulated 1985-2012 wealth share

(constant 3% saving rate)
10%
Observed wealth share

0%
1917

1922

1927

1932

1937

1942

1947

1952

1957

1962

1967

1972

1977

1982

1987

1992

1997

2002

2007

2012
Since the 1980s the share of total household wealth owned by families in the bottom 90% of the wealth distribution has fallen
proportionally more than the share of total pre-tax national income earned by these families. Source: Appendix Tables B1, B25 and B33c.
Table 2: Rates of growth, saving and return by wealth group

Real growth Private saving

Real growth
rate of rate (personal Real rate of Total pre-tax
rate of wealth
income per + retained capital gains rate of return
per family
family earnings)

gwf gyf s = S/Y q r+q

1917-1929
All 1.8% 0.5% 10% 0.9% 9.0%
Bottom 90% -0.4% 0.0% 1% 0.2% 7.9%
Top 10% 2.3% 1.2% 23% 1.0% 9.2%
Top 1% 3.6% 1.4% 28% 1.5% 10.5%
1929-1986
All 1.5% 2.0% 12% -0.6% 6.6%
Bottom 90% 3.0% 2.3% 6% -0.2% 6.2%
Top 10% 1.0% 1.4% 24% -0.9% 6.8%
Top 1% 0.3% 0.5% 24% -1.1% 7.2%
1986-2012
All 1.9% 1.3% 9% 0.9% 7.5%
Bottom 90% 0.1% 0.7% 0% 1.3% 7.5%
Top 10% 2.7% 2.3% 22% 0.7% 7.5%
Top 1% 3.9% 3.4% 36% 0.9% 7.9%
 Effects of Savings and Income Inequality

Bottom 90%: Since mid-1980s, plummeting savings rate s p for

bottom 90% relative to aggregate s [due to surge in debt]
⇒ Decline in bottom 90% wealth share, and expected to continue

Top 1%: Since mid-1970s, surge in income share held by top

wealth holders and solid savings rate s p (relative to aggregate s)
⇒ Short-run: Large increase in top wealth shares, and expected to
continue
⇒ Long-run: Self-made wealth could become inherited wealth and
lead to the “patrimony society” of Piketty (2014)
 Policies to Reduce Wealth Inequality

Top 1%: Progressive taxation (income, wealth, inheritance) is a

proven historical tool to reduce income/wealth concentration
Progressive income and wealth tax reduce income and savings
incentives at the top
Estate taxation can prevent self-made wealth from becoming
inherited wealth
Bottom 90%: Collapse in savings due to surge in debt [due to
present bias for consumption? stagnating incomes? financial
de-regulation?]
⇒ Middle class income support + financial regulation
⇒ Need to encourage savings / discourage debt [= nudged savings +
borrow against yourself?]
Conclusion
 A first step toward DINA

We are constructing new, consistent series on the distribution of

wealth W and income Y = YK + YL fully consistent with flow of
funds and national accounts

Next step: construct a microfile with individual-level income

(pre-tax and post-tax) and wealth consistent with macro flow of
funds and national income accounts
= distributional national accounts (DINA), reconciling
macro growth and inequality studies
 Need for better wealth and savings data

Using additional data would enable us to refine our estimates:

E.g., matched property and individual income tax data

Modest additional administrative data collection effort could

have high value:
401(k) taccounts balance reporting (and not only IRAs)

Mortgage balances on forms 1098

Market value of portfolio securities on forms 1099

Purchases and sales of securities (to measure saving and

consumption)
⇒ Necessary to obtain fully accurate distributional national
accounts
Supplementary Slides
 Wealth categories definition

Equities: corporate equities, including S corporation equities,

and money market fund shares (treated as dividend-paying for
income tax purposes)
Fixed claims: currency, deposits, bonds, and other
interest-paying assets, net of non-mortgage debts
Business assets: sole proprietorships, farms (land and
equipment), partnerships, intellectual property products
Housing: owner- and tenant-occupied housing, net of mortgage
debt
Pensions: funded pension entitlements, life insurance reserves,
IRAs. Excludes social security and unfunded defined benefit
pensions
back
 Rates of returns on wealth around 7%
No long-run price effects
Figure A8: Yield and total return on U.S. private wealth
(decennial averages)
14%

12% Pure yield

10%

8%

6%

4%

2% Total return = pure yield + asset price effect

0%
1913-19

1920-29

1930-39

1940-49

1950-59

1960-69

1970-79

1980-89

1990-99

2000-09

2010-13
back
 What tax data miss

From reported to total capital income, 1920-2010

0.35

Retained earnings
0.3
% of factor-price national income

0.25

Non-filers
0.2 &
unreported sole Corporate income tax
prop. profits Income paid to pensions &
0.15
insurance

0.1 Imputed rents

0.05
Didivends, interest, rents & profits reported on tax returns
0
1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

back
 Most trusts generate income taxable at
the individual level
Wealth held in estates & trusts
12%

10%
% net household wealth

8%
Total estate & trust wealth
6%

4%

2%

Estate & trust wealth that does not generate distributable income
0%
1952 1962 1972 1982 1992 2002 2012

back
 Charitable giving follows top incomes ⇒
Surge in top incomes is real
Charitable  Giving  of  Top  1%  Incomes,  1962-­‐2012  
90%   25%  
Mean  charitable  giving  of  top  1%  incomes  /  

80%  

70%   20%  

Top  1%  income  share  

60%  
mean  income  

15%  
50%  

40%  
10%  
30%  
Mean  charitable  giving  of  top  1%  divided  by  mean  income  [leA  y-­‐axis]  
20%   5%  
Top  1%  Income  Share  [right  y-­‐axis]  
10%  

0%   0%  
1962  

1966  

1970  

1974  

1978  

1982  

1986  

1990  

1994  

1998  

2002  

2006  

2010  
Source: The figure depicts average charitable giving of top 1% inomes (normalized by average income per family) on the
left y-axis. For comparison, the figure reports the top 1% income share (on the right y-axis).

back
 Off-Shore Tax evasion, if anything, has
probably increased since the 1970s
U.S. equities held by tax haven firms and individuals
10%

8%
% of U.S. equity market capitalization

6%

4%

2%

0%
1940 1950 1960 1970 1980 1990 2000 2010
In 2012, 9% of the U.S. listed equity market capitalization was held by tax haven investors (hedge funds in the Caymans,
banks in Switzerland, individuals in Monaco, etc.). Source: Zucman (2014) using US Treasury International Capital data.

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 Total returns of foundations grow with
wealth but realized returns do not
Figure C4: Return on foundation wealth, 1990-2010 average
Returns including realized & unrealized gains

7%
Realized return
6%
Unrealized capital gains
5%

4%

3%

2%

1%

0%
1m-10m 10m-100m 100m-500m 500m-5bn 5bn+

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