Rich Boost Their Share of U.S. Wealth : Affluence: In 1986, the holdings of 3.3 million people added up to more than the GNP. The IRS attributes the sharp rise in the number of rich people to a healthy economy and major tax law changes.

L.A. Times Archives

Aug. 23, 1990 12 AM PT

From Associated Press

WASHINGTON —

Nearly 28.5% of America’s personal wealth is in the hands of 3.3 million people whose holdings exceed the entire gross national product, the Internal Revenue Service reports.

The IRS says the richest 1.6% of U.S. adults--those with assets of $500,000 or more--had total holdings of $4.3 trillion and a combined net worth of $3.8 trillion in 1986, the latest year for which figures are available.

By comparison, the value of all goods and services produced in the United States in 1986--the GNP--was $4.1 trillion.

Four years earlier, 23% of personal wealth in the United States was held by 2.2 million people with a net worth of $2.1 trillion.

The IRS report suggests that the United States has well over 1 million millionaires. In 1986, the IRS estimated, 941,000 adults had a net worth of $1 million or more, almost twice the 475,000 reported in 1982 and five times the 180,000 in 1976. The number has surely climbed since then.

The report, based on estate-tax returns, tracks other findings that the number of wealthy people and their share of the pie grew sharply during the past decade. Those studies attributed the increase to an economy that grew for seven straight years and to major changes in tax law.

The IRS study estimates that the 3.3 million wealthiest Americans had an average net worth in 1986 of $1.13 million. The portion of women among the super-rich continued to grow; they accounted for nearly 43% of total assets and on the average owed less and had a greater net worth than men.

Past studies found the wealthy putting the biggest portion of their money into real estate, but now the No. 1 investment choice is corporate stock.

“Considering the relative performance of the real estate and stock markets between 1982 and 1986, this reversal was not unexpected,” wrote IRS analysts Marvin Schwartz and Barry Johnson.

“The Dow Jones industrial average more than doubled during this period, rising 103%, while the price index of new one-family houses sold rose a comparatively modest 14%,” the report noted.

More than one-quarter of the richest adults were in California (558,000) and New York (340,000). Texas, battered by declining oil prices, dropped from second to third place with 250,000; Florida had 238,000; Illinois, 148,500.

On a per-capita basis, the IRS said, Connecticut had the largest concentration of wealthy people, at 327 per 10,000 adults. California had 299 per 10,000. The national average was 198 per 10,000.

For statistical reasons, the IRS did not count the 25,100 people with net worths of $10 million or more when estimating the wealthy in each state, although they are included among the 3.3 million. They were worth nearly $538 billion, an average of $21.4 million each.

Average net worth of the rich ranged from $473,510 in North Dakota to $1.25 million in Oregon.

Other findings, reported in the latest IRS Statistics of Income Bulletin, include:

* More than 1.17 million of the very wealthy were under age 50 and had almost $1.1 trillion net worth. About the same number were between 50 and 64 but owed less and thus had a greater worth: $1.38 trillion. Those 65 and over among the very rich number 959,000 and were worth $1.3 trillion.

* Debt declines with age. The under-50 wealthy owed an average $266,000; the 50-64 group, $195,000; those 65 and older owed an average $72,000.

* Of the wealthiest, 2.4 million had equity of almost $60 billion in life insurance policies.

* The average net worth of women on the list was $1.17 million; the men averaged $1.11 million.

* Almost all the 3.3 million super rich had cash; it totaled $402 billion, an average of $123,740 per person.

* A total of 2.7 million owned corporate stock with total value of $1.3 trillion, an average of $482,650 each.

* More than 3 million owned real estate, with a total value of $1.24 trillion, or an average $408,300 apiece.

* About half the number--1.7 million--held bonds worth $388 billion. U.S. savings bonds valued at $8.5 billion were held by 360,000, an average of $23,660.

WHERE ASSETS ARE HELD

The IRS survey includes those with $500,000 or more in assets as of 1986, the most recent year in which complete data is available.

Los Angeles Times

Top wealth holders with net worth below $1 million

REAL ESTATE: 37.4%

CORPORATE STOCK: 19.5

OTHER ASSETS: 12.45

CASH: 12.35

BONDS: 5.75

NON-CORPORATE BUSINESS ASSETS: 5.1%

NOTES, MORTGAGES: 4.1%

LIFE INSURANCE: 2.5%