Income Inequality : A Growing Problem

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Income equality is a growing problem and is causing significant problems. The income gap between the rich and poor has been increasing and just recently surpassed levels that our nation has not seen since 1928. There have been studies showing the correlations between inequality and both health and happiness. This reaction paper discusses three articles with different perspectives on income inequality: Income Inequality Is What 's Destroying America (Gilani), U.S. Income Inequality, on Rise for Decades, is Now Highest Since 1928 (Desilver), and How Inequality Hollows Out the Soul (Wilkinsin, Pickett). According to Desilver, the average income of the top 1% of Americans currently is higher than any levels we have seen since 1928. Income inequality has grown from around 1970. From then to the present, the bottom 99% income has stayed relatively level, while the top 1% income has grown exponentially. Emmanuel Saez analyzed tax-return data and reached many conclusions about income distribution. In 1928, the bottom 90% received 50.7% of all pretax income, and the top 1% received 23.9% of the pretax income. During the Great Depression, the top 1% received only 11.3%. Around 1974, the income of the top 1% began growing rapidly, while the bottom 90% stayed relatively the same. The top 1% currently receives almost 22.5% of all pretax income and the bottom 90% has decreased to receive only 49.6% of all pretax income. This is the first time the rates have been lower than 50%. A majority of Americans are aware of this situation and many believe it is a problem. Over 61% of Americans say that policies in the United States favor the wealthy and 74% describe the gap as a big or moderately big problem. Of high-income earners, 52% agree that the ... ... middle of paper ... ...of controversial loopholes are mortgage interest deduction and charitable donation deduction. Mortgage interest deduction means the tax individual pay, goes towards paying for other people’s home mortgage. The charitable donation deduction allows the rich to give more and in return, receive a financial reward. There are many other loopholes primarily to give people who are well off, a bigger advantage than they already have. These three articles all touch upon income inequality. The three articles together give me different perspectives of looking at the topic. In the United States, income inequality has become greater and now has become a new high, with the bottom 90% receiving less than 50% of all pretax income. A suggestion was to create a fair tax, meaning provide progressive flat tax. I feel the best way to solve this problem would be to omit all the loopholes.
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