Bernie Sanders mostly correct on income, wealth inequality

THE MEDIA: Speech

WHO SAID IT: Bernie Sanders

TITLE: U.S. senator from Vermont

PARTY: Democratic

THE RACE: President of the United States

THE COMMENT: “We live in a nation which has more income and more wealth inequality than any other major country ... The top one-tenth of 1 percent own almost as much wealth as the bottom 90 percent ... In the last several years, 58 percent of all new income created has gone to the top 1 percent.”

THE FORUM: A rally in Phoenix July 18, 2015.

WHAT WE’RE LOOKING AT: Whether the United States has more income and wealth inequality than any other major country, with the top 0.1 percent of earners owning almost as much as the bottom 90 percent and 58 percent of new income going to the top 1 percent.

ANALYSIS: Wealth and income are separate terms in economics. Wealth is the combined measure of all household assets and debt, while income is a measure of household earnings.

The Organisation for Economic Co-operation and Development — a partnership of 34 countries with large economies, including the United States, Canada, United Kingdom and Israel — keeps statistics on gross domestic product and income inequality, among others.

The method OECD uses to measure income inequality is the Gini index, which analyzes statistical variance in the income of a population and gives a number between zero (complete equality) and one(complete inequality).

In 2012, the most recent year with available Gini scores for the majority of OECD nations, the U.S. had the highest inequality score for pre-tax income, at 0.487. After adjusting for taxes, the U.S. dropped to 0.39, ahead of Turkey and Mexico.

However, other groups have different methods of calculating Gini scores, leading to slightly altered rankings.

The World Bank’s most recent income Gini score for the U.S. was 0.411 in 2010. That was lower than the organization’s scores for China, Israel and Mexico.

A 2015 analysis of Internal Revenue Service data conducted by Emmanuel Saez, an economics professor at the University of California-Berkeley, found that from 2009 to 2014, the top 1 percent of U.S. households received 58 percent of new income generated.

Wealth inequality is more difficult to compare among countries because the bulk of available statistics are focused on income. According to the OECD database, the top 10 percent of earners held 64 percent of U.S. wealth in 2010, which was the highest among the member nations where the statistic was recorded. The U.S. also was the country with the highest share of wealth concentrated among the top 5 percent and 1 percent as well. The 2010 numbers are the most recent available comparative data.

While these figures indicate a high portion of wealth concentrated among the top earners, they don’t offer the same picture of inequality that comprehensive Gini scores would.

The most recent wealth Gini scores that AZ Fact Check was able to find were from a 2006 study of wealth distribution from researchers at the United Nations University World Institute for Development Economics Research, New York University and the University of Western Ontario that compiled statistics from the late 1990s and early 2000s. On this scale, the U.S. had a wealth Gini score of 0.801. Only Switzerland, Namibia and Zimbabwe were higher. The world Gini score was 0.892 and the lowest scoring country was Japan at 0.547. These numbers are old and may not be strictly applicable to the current world economy.

The top 0.1 percent’s wealth as a share of the U.S. total increased from 7 percent in 1978 to about 22 percent in 2012, which is slightly lower than the wealth of the bottom 90 percent, according to a 2014 report from the National Bureau of Economic Research.

BOTTOM LINE: Sanders said the U.S. has more income and more wealth inequality than any other major country.

Depending on the method of evaluating income and wealth inequality, the United States has either the highest rate of inequality or is among the top five.

Based on the Gini index provided by OECD, the United States ranked last in pre-tax income inequality in 2012. After adjusting for taxes, Mexico and Turkey had more income inequality. According to the World Bank, in 2010, the U.S. had less income inequality than China, Israel and Mexico.

When examining OECD numbers from 2010, the U.S. had the highest share of wealth held by the top 10, 5 and 1 percent of earners. From a 2006 study on global wealth, the U.S. had the world’s fourth-highest wealth Gini score, just behind fellow OECD member Switzerland.

Sanders said the top one-tenth of 1 percent own almost as much wealth as the bottom 90 percent. He also said that in recent years 58 percent of all new income created has gone to the top 1 percent.

Studies of income data demonstrate that, as of 2012, the top 0.1 percent of U.S. households owned slightly less wealth than the bottom 90 percent, and that between 2009 and 2014, the top 1 percent received 58 percent of the income growth.

THE FINDING: Three stars: Mostly true

Sources: Bernie Sanders speaks to supporters in Phoenix, July 18, comments at 4:10, 6:25 and 10:00; Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data, Emmanuel Saez and Gabriel Zucman, October 2014, National Bureau of Economic Research; U.S. wealth inequality - top 0.1% worth as much as the bottom 90%, The Guardian, Angela Monaghan, November 13, 2014; Striking it Richer: The Evolution of Top Incomes in the United States, Emmanuel Saez, University of California Berkeley, June 25, 2015; OECD Wealth distribution indexes; The World Distribution of Household Wealth, James B. Davies, Susanna Sandstrom, Anthony Shorrocks and Edward Wolff, December 5 2006, New York University; OECD Membership; World Bank Gini Index and Definition; OECD Income Distribution and Poverty indexes.