Income Inequality In The United States

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GOVERNMENT POLICIES As income inequality worsens over the decades, it may appear that the government should involve itself in the matter; the federal government has historically interceded economically, most notably during the Great Depression. However, it can also be said that the government is in part sustaining the inequality crisis. Volscho and Kelly understand this idea through a more individualized level by analyzing the history of certain tax policies. Specific taxes like the capital gains tax and marginal income tax have decended since the mid-20th century, allowing wealthier citizens to retain more wealth for themselves and less revenue for the government to assist the majority of Americans. An article from the University of Maine's …show more content…
In order for the government to affect the redistribution of income to support the majority of people, it earns revenue through the collection of taxes; the taxes can then be allocated towards government services that are able to benefit the lower and middle classes like education and Social Security. The specific taxes that they referred to were the marginal income and capital gains taxes. Between the end of World War II and the 1980’s, the rates on these two taxes were relatively high, with income tax being rated between 28% and 91% and capital gains being taxed at 39% in the late 1970’s. However from the 1980’s onwards, the rates on these taxes decreased dramatically, with the top marginal income and capital gains taxes currently rated at 39.6% and 15%, respectively (Volscho and Kelly 2012: 682-683). Laws like the Economic Tax Recovery Act of 1981 set into motion the heavy decrease in the marginal income tax, allowing the top income earners to pay less taxes and contribute less towards the betterment of the 99% . The loosening of the previously high tax rates have a larger effect on the government as “the profits of most corporate businesses [accounting for 90% of all corporations] are taxed as individual” income as opposed to corporate income, saving the businesses money that could be helping more citizens (Volscho and Kelly 2012:682). With higher tax rates, top …show more content…
To test the validity of this presumption, a table was devised that contained information on the unionization percentage, median weekly earnings, average annual pay, median household income, number of quarterly establishment openings, and poverty rate as of 2009 for every state and also categorized by whether the state is a free-bargaining state or a right-to-work state. The comparisons between the various states do not necessarily agree with the presumptions; on average, the median weekly earnings, average annual pay, and median household income were higher in free-bargaining states than in right-to-work states by 13.4 percent, 14.1 percent, and 13.4 percent, respectively. While the number of quarterly establishment openings is larger for the right-to-work cohort than the free bargaining grouping, with 10.1 to 9.9 openings per 1,000 workers, it is important to note that the average poverty rate for the former, 15 percent, is higher than the latter at 12.8 percent, which can be inferred that the right-to-work laws are not having the positive economic impacts that it suggests. Lastly, the right-to-work states have a unionization rate of 6.6 percent while the free-bargaining states more than double the former with 15.1
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