INEQUALITY IN AMERICA


 

Back in 1980, the bottom 50 percent of wage-earners in the United States earned about 21 percent of all income in the country — nearly twice as much as the share of income (11 percent) earned by the top 1 percent of Americans.

But today, according to a massive new study on global inequality, those numbers have nearly reversed: The bottom 50 percent take in only 13 percent of the income pie, while the top 1 percent grab over 20 percent of the country’s income.

That trend is even more remarkable when you set it against comparable numbers for wealthy nations in Western Europe. There, the bottom 50 percent earn nearly 22 percent of the income in those economies, while the top 1 percent take in just over 12 percent of the money.

Comparing the income distribution in America, to Europe, ncome distibution in Western Europe is similar to how things were in the United States nearly 40 years ago.

The 2018 World Inequality Report finds that the rise of income inequality in the United States is “largely due to massive educational inequalities, combined with a tax system that grew less progressive despite a surge in top labor compensation since the 1980s, and in top capital incomes in the 2000s.”

Since the 1970s the price of higher education has skyrocketed, putting the price of tuition out of reach for many low-income students. Over the same time, the tax code became more generous to the wealthiest Americans — the top marginal income-tax rate fell from 70 percent in 1980 to 39.6 percent in 2017, taxes on capital gains fell by more than half from the mid-1970s to the mid-2000s, and the estate tax has fallen as well.

Those changes have made it easier for high-income Americans to grab more and more of the income pie in any given year.  From 1980 to 2014, for instance, the bottom 20 percent of earners in the United States saw their after-tax income rise by just 4 percent, according to the World Inequality Report. By contrast, the top 10 percent saw their post-tax income more than double over the same period.

The 2018 World Inequality Report finds that the rise of income inequality in the United States is “largely due to massive educational inequalities, combined with a tax system that grew less progressive despite a surge in top labor compensation since the 1980s, and in top capital incomes in the 2000s.”

Since the 1970s the price of higher education has skyrocketed, putting the price of tuition out of reach for many low-income students. Over the same time, the tax code became more generous to the wealthiest Americans — the top marginal income-tax rate fell from 70 percent in 1980 to 39.6 percent in 2017, taxes on capital gains fell by more than half from the mid-1970s to the mid-2000s, and the estate tax has fallen as well.  Those changes have made it easier for high-income Americans to grab more and more of the income pie in any given year,

 

From 1980 to 2014, for instance, the bottom 20 percent of earners in the United States saw their after-tax income rise by just 4 percent, according to the World Inequality Report. By contrast, the top 10 percent saw their post-tax income more than double over the same period.

In conclusion, everyone but Trump and his richest friends gets screwed.

Suggestions:

  • Higher education must be made free to all those who qualify
  • Tax rates must revert to those of 1980…for a start
  • Exemptions that favor the rich must end.
  • The implementation of a “living wage” for all citizen must now be serious considered because millions of jobs will soon be lost (and never return) to robotic, AI, and smart algorithms.

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