Beruflich Dokumente
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Rechelle Jimenez
Solis
Economics per.⅞
17 April 2018
Introduction to Inequality
The American definition of inequality is the “lack of equality or fair treatment in
is seen especially in the United States and shows a significant separation between the
top 1 percent and the bottom 99 percent. In 2015, the average income from the bottom
90 percent was around $34,000 and the top 0.1 percent made around $7 million (Saez).
According to this chart, the wealthy contribute the most to the United States income.
Income inequality is different people being paid different amounts of money. Income
inequality grows bigger when “[the] earnings are dispersed.” One way on how to
calculate income inequality is to take the tax records of the top contributors to the US
income and analyze how they differentiate from the bottom percent (Yglesias).
Although, income is not the only things that partake in the inequality in America. Wealth
inequality refers to the difference of what people acquire. That refers to things like “an
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owned personal residence and cash in savings accounts to investments in stocks and
bonds, real estate, and retirement accounts” excluding liabilities such as “a car loan,
credit card balance, student loan, mortgage, or any other bill yet to be paid” (“Wealth
Inequality”). In 2013, wealth inequality became greatly dispersed because the bottom 90
percent had the most debt and less mutual funds as the top 1 percent has the least debt
Income inequality has been a controversial topic which has liberals and conservatives
arguing about what should be done. In a “left” perspective, it is a belief that the 1
percent want the things to stay the same so they get a large amount of income from
“lowering tax rates on capital gains” and manipulating the system in which people
bought and paid to change the rules (Stiglitz). Generally, the solution would be to
redistribute the wealth to the people and to raise taxes on the people with higher
attributable to the choices and actions of the poor themselves” (Tanner). The
conservative approach is wanting to “ lift up the bottom, rather than to bring down the
top” (Garry).
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As most people expect, inequality is a problem that is not going away instantly.
In fact, it will always be around. Income inequality gap in the United States is vast
between the classes which cause people having a hard time making a life where they
are well off. As the gap is becoming wider, it will be harder for the younger generation
because they have a great chance of becoming poorer and poorer. As much as they
want to hide it, the rich do not want to be taxed higher simply just to sustain their current
wealth. They only need so much while the rest of America is falling behind on trying
living comfortably. Uplifting the young generation of the bottom percent while bringing
down the rich respectively is the way to solve inequality, or at least to mitigate it. A way
to lessen the gap is to tax the rich and use that money to make higher education more
Taxing the rich would substantially lessen the gap because it will uplift the
struggling middle and lower class. Lately, the top percent have become aggravated on
the topic of them being taxed. Tom Perkins, a venture capitalist, compared taxing the
rich to “Nazi persecution of the Jews in Germany.” The rich are protective of their
financial status and their size of the income pie. Although the wealthy appreciate the tax
loophole, closing it will “enable targeted tax measures such as the earned-income tax
credit to raise the incomes of the poor and middle class more than dollar for dollar by
incentivizing working and saving” (Berman). The logic is the more income you have, the
more you get taxed. The less income you have, the less you get taxed. The problem
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now is that the rich are being taxed less which means that money that could benefit the
lower class is kept among the ones who have more than what they necessarily need.
People argue that the taxing on the wealthy is unfair and that the new tax bill that
Trump passed was benefitting the middle and lower class. Trump’s Tax Cuts and Jobs
Act decreases “the corporate tax rate from 35 percent to 21 percent” and drops the top
percent rate will drop to 37 and it “cuts income tax rates” overall (Amadeo). By the
sound of the bill, it would seem that everyone is benefitted by the tax cutting. The
middle and lower classes would have a chance to have an increase in their income.
Unfortunately, the tax bill was technically only meant for big businesses getting big tax
cuts. The individual decrease in tax rate is only temporary so in “10 years half of all
American taxpayers will be paying more under the Republican bill than they are now”
(Jenkins). It may benefit the bottom 90 percent, but not for the long run. Eventually, the
average taxpayers will pay more than they should while the wealthy continues to have
their taxes come and money coming in; that is unfair. When the idea comes up on
wanting to tax the rich because of their bigger income, they become defensive hence
Perkins (as mentioned before) feeling victimized like the Jewish in the Holocaust.
Taxing the rich can definitely be beneficial in terms of lifting up the middle and lower
The tax money should go into fixing the education system so higher education
can be more accessible to people who can barely afford it now. As said before, the
economic gap is spreading farther and farther, and that can greatly affect younger
generations as they have a chance of becoming poorer and poorer. The fact that some
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of the schools have a weak curriculum and lack of quality teachers could lead students
to eventually drop out of college or not attend at all (Kraushaar). According to this
graph, 53 percent of dropouts are not making current payments towards their student
debt and 68 percent believed if they attained their degree, they could have paid their
debt faster (Brown). The government has been acting on education reforms that are
concerning the “educational gap” and wanting to build “an adequate public school
system” to go beyond what Congress has been talking about “speeches and the
where they had educational opportunities, there would be no struggle to get the higher
education just like the upper class. With more accessibility into college, the degree that
they earn can lead them to career can release from poverty, debt, and/or inequality.
Referencing Irwin’s article, the Gini coefficient (used to measure inequality) “decreases
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only to 0.55 from 0.57 in this scenario of drastic educational improvement” (Irwin). Irwin
claims that fixing education does fix the problem within the American middle to lower
classes, but does not reduce inequality as a whole “which is driven by the sharp upward
movement of the very top of the income distribution” (Irwin). This all depends on where
the money is coming from. If we tax the top percent at a reasonable amount depending
on their income, the money that would be given to the government can be dedicated to
fixing the education system. With the tax money, the government can dedicate to
the curriculum, providing classrooms with advanced technology, etc. Therefore, the
students can go through college without having the extreme stress in dropping out
and/or paying back debt. They will eventually find themselves a career with their
satisfied income that can make them spring out of poverty or any economic struggle.
Using the tax money to improve education will be two in one plan to significantly shrink
Conclusion
Respectively bringing down the wealthy by increasing their taxes can help bring
the middle class and lower classes by improving the education system and accessibility
of higher education to bring them out of their economic struggles. Realistically, income
inequality is widely dispersed and it will take a significant amount of time for the gap to
shrink especially with the current President recently decreasing the top percent’s taxes.
As time passes, the lower classes’ voices are getting louder and eventually the federal
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government has to listen. Their voices will be heard and they will no longer struggle; the
Works Cited
Amadeo, Kimberly. “How Trump's Tax Reform Plan Affects You.” The Balance, 16 Apr.
2018, www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968.
Berman, Jillian. “Raising Taxes On The Rich Would Reduce Income Inequality: Larry
www.huffingtonpost.com/2014/02/17/taxes-rich-larry-summers_n_4804285.html.
Brown, Mike. “College Dropouts and Student Debt.” LendEDU, 16 Jan. 2018,
lendedu.com/blog/college-dropouts-student-loan-debt/.
2014,
thebelltowers.com/2014/12/04/a-conservative-response-to-income-inequality/.
Irwin, Neil. “Why More Education Won't Fix Economic Inequality.” The New York Times,
www.nytimes.com/2015/04/01/upshot/why-more-education-wont-fix-economic-in
equality.html.
Jenkins, Nash. “GOP Tax Bill May Not Help Middle Class.” Time, Time, 19 Dec. 2017,
time.com/5068961/republicans-tax-bill-trump/.
Kraushaar, Josh. “The Proven Way to Fight Income Inequality: Education.” The Atlantic,
www.theatlantic.com/education/archive/2014/01/the-proven-way-to-fight-income-i
nequality-education/282875/.
inequality.org/facts/income-inequality/.
inequality.org/facts/wealth-inequality/.
Stiglitz, Joseph E., and Stephen Doyle. “Of the 1%, by the 1%, for the 1%.” The Hive,
www.vanityfair.com/news/2011/05/top-one-percent-201105.
www.cato.org/publications/commentary/inequality-myths.
www.vox.com/cards/income-inequality/what-is-income-inequality.