The Ranks of the Ultrawealthy Grow

The Wall Street Journal

One of the most exclusive clubs in the U.S. has picked up more members.

About 47,000 people had a net worth of $20 million or more in 2004, the latest available year, according to new estimates by the Internal Revenue Service. While that was up only slightly from 46,000 in 2001, it was up 62% from 29,000 in 1998.

The IRS also reported increases in the number of people with a net worth between $10 million and $20 million: 79,000 people qualified for this group in 2004, up from 77,000 in 2001 and 51,000 in 1998.

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California had the largest number of residents with a net worth of $1.5 million or more, with 428,000 in 2004. Florida came in second, with 199,000, followed by New York (168,000), Texas (108,000), Illinois (101,000), Pennsylvania (86,000) and Massachusetts (83,000).

This new peek inside the nation's upper crust comes from IRS data posted recently on the agency's Web site ( While nobody knows precisely how many millionaires or multimillionaires there are, the IRS figures are considered an important indicator since they're based on federal estate-tax returns, which include extensive details on assets and debts of wealthy people who have died. IRS analysts use data on these returns to estimate the wealth of the living.

The IRS numbers also provide additional insights into wealth in the U.S. beyond what has already been reported in several other studies. Among them was a Federal Reserve Board survey of consumer finances, which focuses on households and was published in 2006. The Fed and IRS data are helpful when read together, says James Poterba, professor of economics at Massachusetts Institute of Technology and president of the National Bureau of Economic Research, the nonprofit research organization best known for tracking the U.S. business cycle. Both sets of data "provide important information," Mr. Poterba says. "They appear to track broadly similar trends in wealth distribution -- but they provide somewhat different perspectives."

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Separate IRS data, released earlier this year, showed the nation's top 400 taxpayers by income reported total income of $85.6 billion on their federal income-tax returns for 2005 -- an average of nearly $214 million apiece. Just to make the cutoff to be eligible for this group of 400 required income of at least $100.3 million, up from $74.5 million for 2004. Joel Slemrod, professor of economics at the Ross School of Business of the University of Michigan, dubbed this group "the Fortunate 400."

Some of the IRS's new personal-wealth numbers aren't directly comparable with those in its previous studies because analysts used different net-worth ranges at the lower end. But the top three groups -- starting with a net worth of $5 million -- are the same in these and several previous IRS reports by the Statistics of Income Division. Among the findings in the latest report, which isn't adjusted for inflation:

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The total net worth of the 47,000 people in the $20 million-or-more category totaled $2.591 trillion in 2004. That was down from $2.756 trillion held by the top group in 2001 but up sharply from the approximately $1.5 trillion held by those in the top group in 1998.

About 231,000 people had a net worth between $5 million and $10 million in 2004. That was down slightly from 243,000 in 2001.

Of the total income for the $20 million or more group, the biggest single asset category by far was publicly traded stock ($719.28 billion). In second place was closely held stock.

The IRS figures underscore the importance of stock and other business assets for those in the highest echelons of the super rich, says Mr. Poterba of MIT and the National Bureau of Economic Research.

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