Month: April 2017 (Page 2 of 4)

The unequal distribution of wealth in America has been a controversial issue for decades now and is one of the most significant problems that our generation must face. Over the years, it has been observed that the wealth of those at the bottom have experienced little to no growth while the wealth of those at the top has risen dramatically. Have the wealthy CEOs and rich individuals simply been working that many times harder or is there something else at play here? The Occupy Wall Street Movement, which happened a few years back in 2011, sought to not only take action against income and wealth inequality but also against the corruption and enormous influence that large corporations have on our government. Ultimately, our government is unable to pass comprehensive laws regarding these issues due to the might of Wall Street and the billionaire class.

This has led to several weaknesses in different aspects of our government that the wealthy can take advantage of. The Panama Papers, which were released one year ago, exposed the methods by which the very wealthy elite could conveniently store away billions of dollars that would go uncollected by our flawed tax system. This corruption has gone on for far too long but a strong, effective solution to these problems has not yet been adopted. One such proposal by the French economist Thomas Piketty suggests a global tax on all forums of wealth and assets (trusts, partnerships, and stocks) but this idea has drawn controversy because it would lead to having more rich individuals who would spend money a lot more money on themselves rather than investing and helping others. Another proposal, this time by Professor Jacob Hacker of Yale University, suggests raising the top tax rate on the very rich to 45% if their income is between one and ten million or 49% if their annual income is over one billion. This idea would probably cause many large companies to minimize their enormously high pay packages for those at the top of the company. In my opinion, while these might not exactly be the best solutions to the wealth inequality problem in America, it might be a step in the right direction. It’s better to take action than to sit around and do nothing while people keep suffering.

Wealth and inequality has always been a controversial topic within the Unites States, especially with the past election, it being Presidential candidate Bernie Sanders’ main campaign focus. The popularity and support he received attests that this is felt by many. However, it is important to mention that Bernie Sanders was a socialist and the concept of creating a country with little to no wealth disparity is a socialist idea. The United States is a capitalist democracy, not a socialist country. Thus, it is inherent that there will be inequality in wealth.

America is known for its economic fundamental principles of a free trade economy and capitalism which in essence means that the government does not interfere in the economy rather allows economic freedom and consumer choice. In the economic sphere, capitalism encourages economic growth.  Thus, the claim that income inequality prevents economic growth is not valid. Many socialist and communist countries such as the former Soviet Union who promoted income equality and the termination of social classes based on wealth, were able to disband income inequality but were thrown into poverty. Therefore, to correlate income inequality and poverty is inaccurate.

Moreover, to suggest that we should increase the income tax on the rich in order to distribute to the poor goes against our countries capitalist principles. Not only do they pay more tax as it is now, it simply goes against what our country was build on and would turn America into more of a socialist country. I personally believe that instead of just taking more money away from those who are wealthier, there are other methods to help reduce poverty and lessen the income gap by helping those who are in a lower income bracket to earn more by creating more educational opportunities, employment workshops and training etc. We should be directing our efforts on how to increase the wealth of the poor in order to prevent the cycle from repeating itself than simply distributing the wealth of the rich simply because it is an easier option.

Upon reading this week’s chapters regarding the topic of homelessness, it struck me how many different factors besides poverty is a cause of homelessness; insufficient resources, discrimination, and unaffordable housing all contribute to the issue of homelessness. Thus, solving the issue of homelessness is a more complex process that needs to address the various contributing factors.

The “Housing the Homeless” and “Opening Doors” approach which avoids shelters and instead provides housing for those who have lost their homes is only beneficial to a portion of the homeless population, mostly those who struggle financially and economically. However, this doesn’t address the problem for those who are homeless due to other factors such as lack of education, mental illness etc. For these people, in order to help them keep their homes, we need to address the root of the problem to prevent a repeated cycle of homelessness.

Similarly, combating discrimination in housing is another example of getting to the root of the problem. Not only to people of color and different race face discrimination, but this is also a severe issue for disabled people as well. As a result, minorities and the disabled are forced to settle in poor neighborhoods and are unable to receive the same comforts, security, and opportunities.

Overall, the issue of homelessness is complex and multifaceted and needs to be addressed from all facets in order to be fully solved. A more active role by the government and our public officials to enforce policies, provide rehabilitation, job training etc. is needed to reduce homelessness and to ensure that every person is able to have a place they can call home.

The conversation of income equality is a tough one to have because, we know that there is a problem with the distribution of wealth, but there is no clear way to decide how wealth should be distributed without there being opposition from those who are wealthy. Throughout the reading I noticed arguments that the wealth gap has stayed the same throughout the years, when considering the advancements, and modernization that differed between the poor in the 1920s and the poor now, such as access to indoor plumbing, or a refrigerator. I feel that the argument differs from what every other economist and historian argues because they state that as the world advanced, and capitalism became more prevalent, the wealth gap has increased dramatically. I wonder if the wealth gap is really larger now, or if it is the same based off of the new factors.

The question that has been ongoing is how do we make the wealth gap shorter. The wealth gap became so vast in the fist place due to the 1970s Reaganomics. The tax cuts that were created ended up benefiting the wealthy and business owners, while the working class got stuck with the higher taxes. The policy that President Obama developed taxed the wealthy 39.6% of their income, yet with so many loopholes attached to it, it makes it easier for businesses  to count some incomes as capital gains, meaning they are not getting taxed. Although, there is a policy in place that’s wants to tax the wealthy, it does not help to shorten the wealth gap because there are other situations such as offshore accounts. With offshore accounts, big businesses can keep their money tax free and unregulated, meaning the money that they are making is not going back to the economy.

Another question that I have about the increased taxes for the wealthy is will the money go back to improving the welfare system, and give benefits to those who are in the lower class, or will it go to other programs and government policies. What I also want to know is how will we improve the welfare system so that we can help people get off off their feet, and get out of the lower class? My other question is how are we going to help elevate the middle class. Some people and families who are in the middle class are barely surviving because of income, rent, and other monetary factors. We need a plan that is also going to help them, and make them feel less economically burdened. I think that we can create a welfare system like places in Scandinavia, but we have to do it in a way that will fit our population. The only problem is when creating policies that are used to combat the wealth gap,  someone is either going to lose, or the wealthy will try to combat it because it means the government is interfering too much in business practices.

You might still remember the Occupy Wall Street Movement back in 2011. The movement centered on the economic inequality in American as CQ Reader’s Chapter 10 has explored as well. As the world becomes more globalized, many jobs can be done in various countries separately. This also has a profound effect on wages of typical workers. Economic Policy Institute found that, “Since the 1970s, wages for the bottom 70 percent of earners barely grew even as corporate profits rose and as income for the top 1 percent increased 156 percent…” This is not a good news for low and middle class. People struggled to meet the monthly end, while the rich are spending time on the sunny beach enjoying life. So what makes America so unequal and how can we change that?

Historically, people with the most power tend to be richer than others. They hold down money and land from previous generations and make investment on top of it. They grow money with money with different investments or simply interests in the banks. CQ Reader states that, “According to Forbes’ global billionaires list, the top wealth holders have seen their holdings rise at 6 to 7 percent per year from 1987 to 2013.” The wealth holders are not just only working on high paying job, but their money can increase by sitting there. The wide gap in wealth eventually lead to further inequality in economy across all classes. More wealth for a family means the children can afford to go to well-funded public or private schools. With the top education, they can make into prestigious universities and head into international firms. On the other hand, middle or lower class are struggling to pay every bills. Their children might not be able to receive the best education. Often time, some kids need to work during school time to support their families. They are less likely to receive college education than the rich kids. The domino effect affects many generation and lead us to the situation today. As the cycle continues, the rich invests into the economy where the middle and lower class have no access too. The trickle-down theory does not work when the lower class’s wage is staggering. People does not receive the same benefit as the rich does.

I personally believe a huge part of inequality in this country has to do with the old tax system. The tax system has not been updated for centuries. The income brackets are not up to current income situation. The top 1 percent sometimes pay less tax than the middle class because they have various ways to avoid tax or transfer the money oversea to these tax haven. The middle class is struggling to nature their families while paying all the taxes. The country is built upon the strong middle class; we cannot let the middle class to disappear. However, the rich has the money to pay to the government to help out different programs. Some economists argue the economy will be worse if the rich gets tax more. I completely disagree on this. It might be true that the rich invest the most into the current economy and ask for more service. But the real question is how much does these get pass onto the normal people? Are we benefitting from their investments other than getting jobs that are paid in minimum wage? A country cannot be prosperity with a small amount of people. The middle class is the real source of better economy.

Chapter 10 in the CQ reader discusses wealth and inequality. Income inequality is an issue that I believe will be debated about until humans go extinct. And I only said debated. Will it be addressed and combatted? It has been, but the gap in income between the affluent and the poor is widening. So will income inequality be combatted effectively? I’m not sure.

I agree that there does need to be income inequality for the economy to thrive, but not an enormous gap we have now and will continue to have. Yes, economic growth is thriving, but the people that aren’t the wealthiest 1% are struggling. The price of everything is increasing and income isn’t increasing at the rate it should for the people that need it to. The rich’s consumption increases and the middle- and working-class’s consumption decreases. And it will continue to decrease if middle-class stores and restaurants decrease as well.

Education inequality is a factor that adds to income inequality. The rich are provided with the necessary tools to succeed and have the money to do so. The middle and working classes aren’t provided with the same opportunities as the rich. Mayor de Blasio passed the Fair Student Funding and it is helping certain schools, but other schools aren’t eligible or don’t receive adequate funding from the program. Personal responsibilities and choices do increase chances for social mobility. But the same opportunities must be provided for those born in the bottom 5% that are provided for others. Otherwise upward social mobility rates will not increase.

Increasing tax on the rich is too much to ask for. Because if I made $1 billion and I’m taxed 49% of that, I wouldn’t know how to live on only $500 million. And I definitely would have lost my desire to make more money.

We have a champagne class distribution of wealth, and the middle class is diminishing. Soon we’ll have only two distinct sections: the rich and the poor.

Taxes. The scariest T word in this day and age. Well, maybe the second. No one enjoys seeing their paycheck reduced by federal and state taxes, but we need the money in order for our country to properly function. We need to pay for things such as infrastructure and police officers. But we also have a responsibility to take care of the members of our society. The biggest question in this day and age, and most recent election, is: do the rich pay enough taxes?

In his State of the Union address, President Obama said, “… If you truly believe you could work full-time and support a family on less than $15,000 a year, go try.” President Obama has an excellent point. Families cannot survive in this country on minimum wage salaries. It is nearly impossible, especially once taxes are taken out. According to the Congressional Budget Office, in 2013, the United States provides families earning $25,400 a year with $9,600 in government benefits. These benefits are vital for the survival of these families.

These benefits are paid for with taxpayer money. Ron Haskins states, “After all, we’re spending $1 trillion between the federal government and the states on benefit programs, and our tax system is hugely progressive: The upper 20 percent pay over 90 percent of federal income taxes.” According to Curtis Dubay, “… the top 1 percent of households earned just under 15 percent of all income in 2010… they paid 39 percent of all federal income taxes – and more than 24 percent of all federal taxes that year.” The rich currently pay a majority of the taxes in this country already. I agree that they make ridiculous amounts of money, but have they paid their fair share?

Both sides cannot agree on a solution to this problem, but they can agree that there is a serious problem. The more benefits the government gives out; the more tax money is needed to cover the cost of these benefits. That much both sides can agree on. Further delving into the break down of the benefits given out can help us see the ways in which our money is being spent. Do the richest of this country pay their fair share of taxes? Perhaps. They make abnormal amounts of money, and they should pay taxes according to that. The poorest of the country should be required to pay according to what they can. When it comes to giving benefits to the poor, I wonder if there are additional ways to help them when it comes to education and the skills needed to find better jobs. At the end of the day, it boils down to political preference. Liberals wants more political intervention, which comes with a big price and conservatives prefer less political intervention. Who pays for it all is another story.

The United States is a democratic society in which every person has an opportunity to grow, invest, and become rich. However, Sarah Glazer in her chapter “Wealth and Inequality” suggests that these opportunities appear to be occurring less often nowadays as the income gap between the rich and poor is growing exponentially. According to Thomas Piketty, a professor of economics, there is an increasing economic inequality in American society today, such that invested money is growing much more than income driven money; so the rich who own the investment money are growing wealthier, while the rest of America, who are trying to make their stagnant income keep up with their daily living expenses, is becoming more destitute. Emmanuel Saez, professor of economics at the University of California, Berkeley says that the richest ten percent of Americans make up half the income in the United States.   Moreover, the top one percent richest had an income rise of 31 percent after the most recent recession, compared to the other 99 percent of society that had an income gain of less than one percent. Thus the rich are getting richer and the poor are getting poorer. This reflects a lack of opportunity for those who are starting out with less- a finding that is incongruent with the values of our democratic society.

Professor Hacker of Yale University says that the middle class has not grown because of government policies that protect the rich. This would suggest that one way to remove such injustice is to tax the rich of society such that they pay their fair share of income tax. I am not advocating that their tax rate should go up to a very high level so that it discourages income growth, but rather that the rich should pay the full tax dollar amount associated with their tax rate. The government should ensure that there are specific fair tax rates for every income level and there should be no loopholes or tax breaks that enable one to avoid paying or reducing the rate of one’s taxes. Many of the rich, although taxed at a higher bracket than the poor, end up paying fewer taxes than low and middle income families because they either hide their income altogether or use deductions and loopholes that either help them avoid paying any taxes or reduce their tax rates to a much lower level. In contrast, those who have less income don’t have the advantage of having investment money that enables them to reduce the amount of taxes they pay. I would propose a fair tax system, one with income-driven tax rates, that ensures that people fully pay their taxes; there should be no tax deductions allowed because they provide a much greater advantage to the rich who often shelter their money and thereby pay fewer taxes. This appears to me to be a more democratic policy which taxes everyone fairly based on income and does not allow the rich to unfairly avoid paying their due.