Economic Inequality

Economic Inequality in the United States

In all democratic and free-market societies, economic inequality exists. Even in communist and socialist countries, the inequality gap exists. It’s only natural that there’s a gap between the rich and the poor in America. Even during the American Revolution, 45% of the wealth belonged to the top 10% of the population.[i] Economic inequality isn’t new to America, and it’s very likely that it’s something that may never be completely figured out. There are strategies that have been implemented to lower the gap, however it’s debated whether the strategies actually work. One strategy is raising taxes on the rich. The goal here is to help stabilize the country’s debt while narrowing the ceiling and ground of the rich and poor, respectively. Warren Buffet, one of the wealthiest men in America, is a staunch supporter of raising taxes on the rich. He argues that proportionally, the amount of taxes that the wealthy pay compared to the poor is unjust. Congressman Paul Ryan on the other hand, argues that raising taxes on the rich hurts job growth for the unemployed. He argues that if we took taxes from “millionaires and billionaires,” it would only run our government for “4 months.” It’s argued that if we raise taxes on the rich, it will regress job growth because the employers will have less of an incentive to work as hard, and less of an incentive to grow their businesses, meaning they will stop hiring. According to Ryan, by 2013 the highest tax bracket will be around 40%, while countries like Canada and Britain are in the 20% range, he argues that that’s the reason why jobs are going overseas. He goes on to say that as a free market, we shouldn’t raise taxes on a certain group of people, because it simply is not fair. According to inequality.org however, in 2007 23.5% of “the national income belonged to the top 1%.” That’s the largest percentage of the wealth’s money since 1928, one year before the Great Depression hit the United States. There’s no true answer as to how we can solve economic inequality. We can be like a European country and have extremely high taxes and many government supported benefits, or we could continue our practice of free market capitalism where the government is conceivably supposed to be laissez faire. According to a 2011 article in the WSJ, it stated that, “the share of income controlled by the top 1% grew to 20% from 12%.” The article went on to explain that during this growth, the taxes for the wealthy only grew from 24% to 28%, meaning “the top 1% share of income grew nearly five times faster than their share of taxes.” Clearly, there is economic inequality in America; the proverbial gap between the rich and the poor seems to be growing by the year, raising taxes may be the answer to lowering that gap, however it raising taxes would have their disadvantages as well.

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[i] From an AP US History ppt.