Income inequality is one of the biggest issues in the United States, but there doesn’t seem to be a clear way to deal with it. The gap between the ultra wealthy and everybody else is both shameful and shocking. How did this happen and how do we fix it? The first step is acknowledging that income inequality is a real problem and not an issue of hardworkers vs moochers as many people have made it out to be. We’ve been ingrained with the idea that hard work brings us out of poverty for so long that many people don’t even question it, but is this true? Some of the people I know who work the hardest, make the least. The old myth that all you have to do is work hard has made it difficult to address the injustice of wealth distribution in the United States.
Should we tax the wealthy? The recommendation I see the most is enforcing a wealth tax on the richest Americans, but this suggestion comes with a lot of criticism. In a country where the richest one percent of the population owns 35% of the wealth, it would make sense that a higher tax on these top earners would help the lower and middle class. The rich also have clever ways to avoid paying taxes and even fall into lower tax brackets than many middle class citizens. This is done through schemes like unearned income, tax deductions, estate taxes, and various loopholes. How do we close these loopholes and address these inconsistencies? There have been various methods proposed through Congress including a minimum tax rate of 30% (The Buffet Rule) and eliminating these loopholes such as the investment income and the payroll tax which exempt unearned income, inheritances, and deductions from federal taxes.
There are many criticisms of a wealth tax. Some claim it will destroy capitalism and hurt the economy. Others say it will reduce incentives for entrepreneurs and kill innovation. I’m biased, so it’s hard for me to take this kind of fear mongering seriously, but I’m also not an economist, and I’m not going to pretend like I’m an expert on the subject. Harder still is the fact that nearly any article I find on the subject is also biased and either very much in favor of a wealth tax or incredibly opposed to it, and even the most centrist articles I find online have strong opinions on the subject.
It seems everybody’s got a hidden agenda. The people I know who are skeptical of any solutions proposed by Democrats have every reason to be concerned. It seems any policy put in place or any suggestion made in Congress has some sort of hidden agenda that directly benefits its creator, so how can you know who’s on your side and who’s presenting an idea in favor of the working class when it’s riddled with policies that benefit crooked politicians? It’s enough to make me want to pull my hair out. For a person with a limited understanding of economics and taxes, it feels impossible to find any kind of straightforward, unbiased explanation of the system, why it’s broken, and how we can fix it. I’m able to acknowledge that most of these articles I’ve read are garbage. But what about the people who don’t bother to read and analyze an article critically and believe whatever confirms their preconceived ideas? It’s going to be a tough road to address these issues.
Why are people desperately clinging to systems that have failed us? One of the arguments I see against taxing the wealthy is that it discourages them from making investments and thus creating jobs that will ultimately “trickle down” to the middle class. I can’t help but scoff at these articles. How many decades need to go by before we figure out Reaganomics does not work? The gap between the ultra wealthy and the poor in the United States has been growing steadily for sometime now. According to a Federal Study in 2013 “the top 3 percent own 54.4 percent of America’s wealth, an increase of almost 45 percent since 1989 and the bottom 90 percent own only 24.7 percent of wealth, a drop of 33.2 percent over the same time period.” Sadder still is when I see the system’s worst victims defend this kind of inequality because they believe that kind of wealth was somehow “earned” and that if they just work hard, they’ll be rich too.
Could we enforce a wage cap? The reaction to this question is so funny to me. The people most offended by this idea make roughly 30K a year or less, and I’m not sure why the thought of limiting how much wealth a person can have is so upsetting to them. A billionaire couldn’t spend their wealth in their lifetime if they tried. What good does it serve society for it to be hoarded? Why can’t we limit the amount of money a CEO makes and properly “trickle down” that income to the employees that keep that company running. This is especially pressing for major corporations like Walmart and Amazon that pays their employees as little as possible while the owners are some of the wealthiest in the country. How is this not criminal? But again, I’m not an economist, so what do I know?
There’s always going to be inequality. This is something I’ve heard a lot of people say when opposing a wealth tax. I’m not sure exactly what point is being made here? There’s always going to be inequality, therefore, let’s just continue to watch the working class slip further into an unstainable lifestyle while the wealthiest buy their 3rd yacht? Nobody said we’re going to make everything equal. Nobody said we’re going to eliminate poverty by taxing the wealthy. The attitude that I’ve encountered from people who are opposed to any kind of change is to throw their hands up in the air and say “there’s nothing we can do, so let’s do nothing.” This attitude does not solve any issue. And the people I know who have this attitude are living comfortably on their salaries while refusing to acknowledge that many Americans are not.
Would increasing the minimum wage create inflation? One suggestion to address income inequality is to increase the minimum wage. The biggest fear I’ve heard associated with this idea is that it would create inflation. I don’t doubt this, but again, every article I read online either spreads this fear or diminishes it and I simply don’t know who to believe. Personally, I’d like to see the minimum wage (and other middle class wages) increased by limiting the amount of money top earners make. I don’t understand why we cater so much to the people at the top when it’s our teachers, nurses, staff workers, servers, cashiers, and other employees that keep this country running. I have so many unanswered questions and the more I research this issue, the less I feel like I know, but there are firm beliefs I hold that don’t require research.
1.) No employee should qualify for government assistance while working a full-time job. If they do, this is criminal, and the CEO should be held accountable.
2.) A country that allows children to starve while others buy an island is neither a humane nor progressive country.
3.) Until every citizen is housed, fed, and cared for, nobody should be allowed to hoard excess wealth.
4.) Poverty does not benefit society. Crime, violence, and just about every other social issue can be directly tied to a person’s socioeconomic status. If we want to live in a safe and healthy society, we must stop demonizing the poor, and start taking care of them.
5.) There is no shortage of food, housing, or wealth in the United States. There is plenty for everybody Why are people so disinclined to feed, house, and clothe the poor? We gain nothing from other people suffering. A person should not have to earn basic human rights. Especially not in the “greatest country in the world”
Now if you ask me the best way to achieve these goals, well, I’m still trying to figure that out and the Internet certainly isn’t helping.
Resources:
https://www.brookings.edu/policy2020/votervital/who-are-the-rich-and-how-might-we-tax-them-more/
https://www.marketwatch.com/story/why-raising-taxes-on-the-rich-isnt-so-crazy-2019-12-09
https://nsjonline.com/article/2020/12/hill-taxing-the-rich-doesnt-work/
https://www.manhattan-institute.org/issues-2020-taxing-the-rich-wont-fix-the-deficit
https://belonging.berkeley.edu/six-policies-reduce-economic-inequality
https://www.pewresearch.org/social-trends/2020/01/09/views-on-reducing-economic-inequality/
https://www.cnbc.com/2019/06/19/5-ways-to-fight-wealth-inequality.html
https://www.piie.com/microsites/how-fix-economic-inequality
https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp
https://www.epi.org/publication/minimum-wage-testimony-feb-2019/
Howdy! This blog post couldn’t be written much better! Looking through this article reminds me of my previous roommate! He constantly kept talking about this. I’ll send this article to him. Pretty sure he will have a great read. Many thanks for sharing!