Wealth and Income Distributions: Power Indicators in the US

770 Words2 Pages
bulb-icon

Recommended: Inequality. org wealth inequality in the united states

This document presents details on the wealth and income distributions in the United States, and explains how we use these two distributions as power indicators. The most striking numbers on income inequality will come last, showing the dramatic change in the ratio of the average CEO's paycheck to that of the average factory worker over the past 40 years.

First, though, some definitions. Generally speaking, wealth is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into …show more content…

But it is also important to realize that the lower half of that top 1% has far less than those in the top half; in fact, both wealth and income are super-concentrated in the top 0.1%, which is just one in a thousand. (To get an idea of the differences, take a look at an insider account by a long-time investment manager who works for the well-to-do and very rich. It nicely explains what the different levels have -- and how they got it. Also, David Cay Johnston (2011) has written a column about the differences among the top 1%, based on 2009 IRS …show more content…

It's also the case that the infamous housing bubble of the first eight years of the 21st century inflated some of the wealth numbers.

There's also some general information available on median income and percentage of people below the poverty line in 2010. As might be expected, most of the new information shows declines; in fact, a report from the Center for Economic and Policy Research (2011) concludes that the decade from 2000 to 2010 was a "lost decade" for most Americans.

One final general point before turning to the specifics. People who have looked at this document in the past often asked whether progressive taxation reduces some of the income inequality that exists before taxes are paid. The answer: not by much, if we count all of the taxes that people pay, from sales taxes to property taxes to payroll taxes (in other words, not just income taxes). And the top 1% of income earners actually pay a smaller percentage of their incomes to taxes than the 9% just below them. These findings are discussed in detail near the end of this

Show More
Related

  • Transience In The Great Gatsby

    816 Words  | 2 Pages

    In the 1920s, a home was considered having wealth. Imagine all of the stress we will lose if we did not have to worry about things

    Read More

  • Wealth Inequality in the US with Sociological Viewpoints

    1100 Words  | 3 Pages

    3. What are the effects of this wealth inequality in the US and what causes it, as well as some possible solutions and their ramifications, will all be discussed and answered below. There has always been a wealth gap between the richest and poorest in society. However, in the past decade, the wealth gap between the richest and poorest citizens in the US has been growing rapidly. In the 70s and 80s, the wealth and income growth rate for both poor and rich people were similar, however, between the years 2009 and 2012 the top 1% income increased 31% while for the bottom 20%, their income actually dropped and for the vast majority of Americans, the average yearly income only increased by 0.4% [4].

    Read More

  • Economic Inequality - Taking Sides Article

    724 Words  | 2 Pages

    One of the studies that he included is on the percent of household income going to the richest one percent. In this study it showed that in 1979 7.5% of household income went to the top one percent, and in 1997 it jumped to 13.6%. Another fact from the article is a study conducted by Lars Osberg from Dalhousie University. It found that the poor in America worked more hours than their poor counterparts in Canada, Britain, Sweden, France, and Germany. The third fact that I think is relatively important is that since 1979, the tuition at America's public colleges has risen faster than most parents' income.

    Read More

  • Wealth Inequality In America

    2137 Words  | 5 Pages

    While the bottom 80% is making no more than $118,000 a year, which is the 80th percentile, and have a median annual income of $48,000. The 1% makes up of around 750,000 of the 150 million families in the United States. Therefor the one percent ends up taking of 25% of all income generated by the United States economy. That is an increase of three times since the Ronald Reagan Era when the one percent only received 8% of the total income in 1979. The last time the one percent owned this much of the income total was in 1928, which was right around the time of the great

    Read More

  • Income Inequality in the United States

    795 Words  | 2 Pages

    The highest earning fifth of U.S. families earned 59.1% of all income, while the richest earned 88.9% of all wealth. A big gap between the rich and poor is often associated with low social mobility, which contradicts the American ideal of equal opportunity. Levels of income inequality are higher than they have been in almost a century, the top one percent has a share of the national income of over 20 percent (Wilhelm). There are a variety of factors that influence income inequality, a few of which will be discussed in this paper. Rising income inequality is caused by differences in life expectancy, rapidly increases in the incomes of the top 5 percent, social trends, and shifts in the global economy.

    Read More

  • Inequality in America

    562 Words  | 2 Pages

    In the United States there are four social classes : the upper class, the middle class, the working class, and the lower class. Of these four classes the most inequality exists between the upper class and the lower class. This inequality can be seen in the incomes that the two classes earn. During the period 1979 through the present , the growth in income has disproportionately grown.The bottom sixty percent of the US population actually saw their real income decrease in 1990 dollars. The next 20% saw medium gains. The top twenty percent saw their income increase 18%. The wealthiest one percent saw their incomes rise drastically over 80%. As reported in the 1997 Center on Budget's analysis , the wealthiest one percent of Americans ( 2.6 million people) received as much after-tax income in 1994 as the bottom 35 percent of the population combined (88 million people). But in 1977 the bottom 35 percent had about twice as much after tax income as the top one percent. These statistics further show the disproportional income growth among the social classes. The gr...

    Read More

  • Income Inequality in the United States

    3100 Words  | 7 Pages

    Scarborough, Joe. “Top 1% Took 95% of Gains Since 2009.” Tampa Bay Times. January 21, 2014. Web. March 11, 2014. In this article the authors shows how income inequality has been changing over the time. He also tries to emphasize how large this gap has become by comparing income and taxation of the top 1% with the rest of the nation.

    Read More

  • The Gilded Age-History Repeating Itself?

    1739 Words  | 4 Pages

    Income inequality is one of the biggest indicators of the Gilded Age. During the Gilded Age there were huge disparities between the rich and poor which were often fueled by corruption. It was a time that was characterized by ruthless pursuit of profit, conspicuous consumption, government corruption, and vulgarity in taste and manners. With the American myth of the self-made man being wide-spread, it became socially acceptable to look down on the poor as unworthy because the elite society held that an earnest person could “pull themselves up by the bootstraps” if they were experiencing hard times (Nash 549). Income inequality was a defining factor of the Gilded Age, and compares similarly to the income inequality of today. Those who are within the top 1 percent in terms of wealth in the United States in the current era also have a large amount of control over the wealth in the United States. The 400 wealthiest Americans now own more than all of the rest of Americans (150 million) put together (Schulz 1). It has been found that almost two thirds of United States net private assets are concentrated in the hands of five percent of Americans (Schulz 1). Income distribution today is actually more uneven then during the first Gilded Age (Wagner

    Read More

  • The Cycle of Poverty

    1204 Words  | 3 Pages

    Inequality exist and is high in America because the amount of income and wealth that is distributed through power. In America the income distribution is very inequality and the value of a person wealth is based on their income with their debts subtracted. “As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers)” (Domhoff, 2011). In contrary the poor do not get ahead and the rich get more. Americans are judged and placed in class categories through their home ownership which translates to wealth. Americans social class is often associated with their assets and wealth. “People seek to own property, to have high incomes, to have interesting and safe jobs, to enjoy the finest in travel and leisure, and to live long and healthy lives” (Domhoff, 2011). Power indicates how these “values” are not distributed equally in American society. Huge gains for the rich include cuts in capital gains and dividends and when tax rates decrease for the tiny percent of Americans income is redistributed. Taxes directly affect the wealth and income of Americans every year.

    Read More

  • Income Inequality

    939 Words  | 2 Pages

    Income inequality has affected American citizens ever since the American Dream came to existence. The American Dream is centered around the concept of working hard and earning enough money to support a family, own a home, send children to college, and invest for retirement. Economic gains in income are one of the only possible ways to achieve enough wealth to fulfill the dream. Unfortunately, many people cannot achieve this dream due to low income. Income inequality refers to the uneven distribution of income and wealth between the social classes of American citizens. The United States has often experienced a rise in inequality as the rich become richer and the poor become poorer, increasing the unstable gap between the two classes. The income gap in America has been increasing steadily since the late 1970’s, and has now reached historic highs not seen since the 1920’s (Desilver). UC Berkeley economics professor, Emmanuel Saez conducted extensive research on past and present income inequality statistics and published them in his report “Striking it Richer.” Saez claims that changes in technology, tax policies, labor unions, corporate benefits, and social norms have caused income inequality. He stands to advocate a change in American economic policies that will help close this inequality gap and considers institutional and tax reforms that should be developed to counter it. Although Saez’s provides legitimate causes of income inequality, I highly disagree with the thought of making changes to end income inequality. In any diverse economic environment, income inequality will exist due to the rise of some economically successful people and the further development of factors that push people into poverty. I believe income inequality e...

    Read More

  • The American Dream And The Decline Of The American Dream

    921 Words  | 2 Pages

    Meanwhile, the wealthiest 1 percent took in 19 percent of America’s income in 2012—their highest share since 1928 (McClelland 551). Noting that 1928 was one year before the Great Depression, similar levels of income inequality should be cause for concern. In addition, between 1970 and today, the share of the nation’s income that went to the middle class—households

    Read More

  • The Millionaire Next Door

    1272 Words  | 3 Pages

    ...oice that it is more advantageous to their financial well being to accumulate wealth instead of material belongings. Frugality, planning, living below your means and a smart investment strategy are paramount to accumulating wealth

    Read More

  • The Rich Are Different From The Poor Analysis

    1284 Words  | 3 Pages

    The last reason the rich are different than the majority is because the rich actually spend their money differently than those who are not. Of course the rich and the not so rich have to spend their money on the necessities such as food, water, shelter, and etc. but rich people just spend on a much larger scale and they will focus more on the quality of what they are purchasing, especially when it

    Read More

  • Essay On Income Inequality

    1524 Words  | 4 Pages

    Income inequality continues to increase in today’s world, especially in the United States. Income inequality means the unequal distribution between individuals’ assets, wealth, or income. In the Twilight of the Elites, Christopher Hayes, a liberal journalist, states the inequality gap between the rich and the poor are increasing widening, and there need to have things done - tax the rich, provide better education - in order to shortening the inequality gap. America is a meritocratic country, which means that everybody has equal opportunity to be successful regardless of their class privileges or wealth. However, equality of opportunity does not equal equality of outcomes. People are having more opportunities to find a better job, but their incomes are a lot less compared to the top ten percent rich people. In this way, the poor people will never climb up the ladder to high status and become millionaires. Therefore, the government needs to increase all the tax rates on rich people in order to reduce income inequality.

    Read More

  • Wealth and Poverty in the World

    2313 Words  | 5 Pages

    In the world today there is a lot of poverty. There is a great divide

    Read More

More about Wealth and Income Distributions: Power Indicators in the US

Open Document