The rich just keep getting richer — not only by gobbling up more income, but also by paying less in taxes. That means less support for the poor, who are getting increasingly poorer relative to the top one percent.
One chart in a new study of income inequality in developed nations, published by the National Bureau of Economic Research, puts this in stark relief. It shows that the more top tax rates are cut, the greater the share of national income that is mopped up by the wealthiest citizens.
And of course perhaps no country illustrates this better than the United States, which is at the extremes of income inequality and tax cuts for the wealthy… The only other nation that even comes close is the United Kingdom, which was hijacked by “trickle-down economics” at about the same time as the U.S., back in the 1980s under Reagan and Thatcher…
Slashing top tax rates has had none of the positive effects on economic growth that the supply-side economists promised us, the NBER paper points out. Instead, it has just worsened income inequality.
There are other factors driving income disparity, including a rise in investment income (think stock dividends) compared to earned income (think wages). The recently soaring stock market, helped along by the Federal Reserve, is only pushing investment income higher. Wage income, in contrast, has been stagnant — making income inequality even worse.
Adapted chosen excerpts by Job Market Monitor
Infographics on the distribution of wealth in America, highlighting both the inequality and the difference between our perception of inequality and the actual numbers. The reality is often not what we think it is. via Wealth Inequality in America – YouTube.
Since too much inequality can foment revolt and instability, the CIA regularly updates statistics on income distribution for countries around the world, including the U.S. Between 1997 and 2007, inequality in the U.S. grew by almost 10 percent, making it more unequal than Russia, infamous for its powerful oligarchs. The U.S. is not faring well … Continue reading »
Tax and benefit systems play a major role in reducing market-driven inequality, but have become less effective at redistributing income since the mid-1990s. The main reason lies on the benefits side: benefits levels fell in nearly all OECD countries, eligibility rules were tightened to contain spending on social protection, and transfers to the poorest failed … Continue reading »