Surging stock market, Trump policies boost wealth for top 1%

Jun. 16—When SpaceX, Elon Musk's rocket and artificial intelligence company, began trading on the stock market last week, he became the world's first trillionaire.

The SpaceX IPO made the world's richest man even richer, grabbing headlines worldwide. But it is merely the most vivid illustration of a U.S. trend that has been accelerating since 2022.

The richest 1% of Americans held nearly a third of the country's total wealth at the end of 2025, the largest percentage the Federal Reserve Board has recorded since it started monitoring the numbers in 1989. In 1990, the share was 22.5%.

The latest percentage, 31.9%, is likely the largest since the end of World War II, possibly heralding a return to the extreme wealth inequality of the late 19th and early 20th centuries. And it is likely to balloon further as a result of President Donald Trump's tax cuts and other pro-business policies.

Today's top 1% consists of about 1.4 million households with at least $12 million in net worth, holding a total of $55.9 trillion in wealth. The bottom 50% consists of 67.7 million households with less than $264,000 in net worth.

Using different methods than the Fed, French economist Thomas Piketty has asserted that the richest 1% of Americans held nearly half the nation's wealth in 1928 and 1929, just before the Great Depression. Their share declined after that, during a period of high marginal income tax rates (the percentage of tax you pay on your last dollar of income) and widespread discomfort with astronomical pay for executives. Instead, corporations plowed their profits into expansion and higher wages for workers.

But the share of wealth held by the top 1% began rising again in the 1970s, according to the Piketty data.

Piketty, who theorizes that unfettered capitalism always leads to high concentration of wealth, told Stateline in an email that "there's nothing natural about this — it's all due to policies."

"If the super-rich capture the state and pay little tax, then it's easy to accumulate a lot, but history suggests that politics can revert quite quickly," Piketty wrote.

Another prominent economist who recently studied the wealth of California billionaires, Emmanuel Saez, described the current spike in the share of wealth held by the top 1% as driven primarily by the stock market boom. Saez is director of the Stone Center on Wealth and Income Inequality at the University of California, Berkeley.

New taxes proposed

In at least a dozen states, including Illinois, Minnesota, Rhode Island and Virginia, lawmakers have proposed new taxes for the wealthiest taxpayers. Some of the proposals would tax annual incomes above a certain threshold while others would tax capital assets, including high-value stocks and real estate.

In California, advocates in April announced they had gathered enough signatures for a November ballot initiative that would impose a one-time tax on billionaires. The state's billionaires held about $2.3 trillion in wealth as of June 10, assets that could generate almost $101 billion from the proposed tax.

This year, at least 12 billionaires left California. They include Lynsi Snider, who inherited the In-N-Out hamburger chain and moved to Tennessee, and car loan magnate Don Hankey, who moved to Nevada. However, moves into the state and new wealth created 23 new California billionaires this year. NVIDIA CEO Jensen Huang has vowed to stay in California despite a potential $8 billion one-time tax bill.

There are no state-level statistics on the top 1%, though Census Bureau estimates from 2022 show the states with the highest shares of households with more than $500,000 in net worth are Hawaii (48%), the District of Columbia (47%) and Washington state (43%). Hawaii also has the highest average net worth at more than $1 million, mostly because homeowners in that state have an average of $600,000 of equity in their homes. The states with the next highest average net worth are California ($792,000), and Massachusetts ($751,000).

Conservative and liberal experts agree that a soaring stock market and business profits have made it a good time for the wealthy, while middle-class and lower-income people are doing less well, especially as inflation gobbles up wage increases. There's also widespread agreement that Trump's tariffs (since struck down by the U.S. Supreme Court) disproportionately harmed lower-income and middle-class people, and that the tax cuts in the broad tax and spending measure Trump signed last summer (commonly known as the One Big Beautiful Bill Act) will disproportionately benefit the wealthy.

The combined effects of the tariffs and the tax and spending law will help households with the top 10% of incomes most and hurt 70% of households between now and 2034, according to a June 1 report from the Center on Budget and Policy Priorities, a left-leaning think tank that drew on information from the Budget Lab at Yale University.

Chuck Marr, the center's vice president for federal tax policy, pointed to the law's extension of a deep corporate income tax cut that dates from Trump's first administration.

"Trump's whole policy has really leaned into increasing this disparity," Marr said. "You've got AI coming and globalization has shifted income and wealth upward, and instead of pushing back against that, Trump and others have leaned into it."

Nevertheless, Kyle Pomerleau, a senior fellow at the conservative American Enterprise Institute, said the U.S. government's tax and spending policy is "still highly progressive in that low-income households receive benefits from the high-income households paying taxes."

"It's a little less so than it was prior to the passage of the (Trump tax and spending law) and the tariffs, but it's still the case. It hasn't changed the story that much," Pomerleau said.

Marr agreed that the federal tax system is basically progressive, in that it uses taxes on high income earners to pay for the needs of low-income residents. But tax collections are low in the United States compared with other wealthy countries: Of the 20 wealthiest nations, only Ireland collects less government revenue as a share of GDP.

"Compared to other countries, inequality is high because we redistribute so much less money," Marr said. "It's a progressive tax system but it doesn't raise a lot of money."

Inflation divide

The Federal Reserve's Beige Book, an accounting of national economic conditions released June 3, found a divide in how inflation, which has increased as a result of the war in Iran, has affected American spending.

"Higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as 'squeezing more life out of every dollar before deciding to spend it,' and low-income consumers showed greater financial strain," the report said.

The "squeezing" analogy for the middle class came from a roundtable discussion of hospitality executives in the Kansas City, Missouri, area in late May, said Jeremy Hill, a regional economist for the Federal Reserve Bank of Kansas City.

Hill said there was a gasp in the room when one high-end restaurant chain executive said the chain could raise prices at will and keep expanding, hampered only by a shortage of high-end chefs to staff locations. Meanwhile, hotels, bars and restaurants serving the middle class are struggling to get people to come in and spend.

"It's not that they (wealthy people) don't care about inflation. They're worried about what it might do to future demand or their own stocks," Hill said. "But today, it's not impacting the way they spend."

The stock market's recent run has contributed the most to the consolidation of wealth at the top. Rising real estate prices also have also added to wealth, especially for longtime homeowners.

"This has disproportionately helped those who already hold assets while the average American pays higher prices for everyday essentials," said E.J. Antoni, chief economist for the conservative Heritage Foundation. "In other words, Wall Street got rich while Main Street got inflation."

White Americans own outsized shares of assets such as stock and real estate, according to the federal statistics. White people are 57% of the population but own 82% of the assets, while Black and Hispanic people, who make up a combined 24% of the U.S. population, have less than 7% of assets. Asians are included in an "Other" category, which is about 9% of population and holds about 11.3% of the nation's total assets.

By generation, Baby Boomers born between 1946 and 1964 hold almost half of wealth, while Millennials and Gen X hold the lion's share of liabilities, such as mortgages and consumer debt, that detract from net worth. Millennials (born between 1981 and 1996) have about 42% of liabilities and Gen X (1965-1980) have 35%, compared with 22% for Baby Boomers.

It's not necessarily a bad thing for young people to be in debt as they build careers and pay off student loans, said Pomerleau, the American Enterprise Institute economist.

"Doctors with $450,000 in medical school debt might be in the bottom 10%, yes, but that person is going to be in the top 1% of wealth at some point in their lives," Pomerleau said.

"You enter the labor force with a net liability, but you save over time, that liability is paid down, you're paying off your mortgage, and that's when your wealth starts growing."

Stateline reporter Tim Henderson can be reached at [email protected].

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