Why is there uneven distribution of
wealth? Why is it inevitable that such variation will occur in society, as it
is presently constituted? What is the role, if any, in orchestrating government
redistribution of wealth?
The United States holds about 63.5
trillion dollars in total private wealth, the most of any country. The U.S.
also has the largest wealth inequality gap of other countries that have been
studied (Sherman,2015). The definition of wealth is the value of everything a
person or family owns: real estate, stocks and bonds, minus any debt, and
including income. The wealth disparity between the top 1% (net worth
$16,439,400) and the bottom 40% (-$10,600) is striking. In the U.S. 20% of the
top households own 89% of wealth; leaving only 11% of wealth for the bottom 80%
(wage and salary workers); and 42.1% of the wealth is controlled by the top 1%
(Wolff, 2012; Domhoff, 2013).
The unequal distribution of wealth has plagued this country from its very founding with class divisions created through racist, classist, and sexist policies. Only highborn white men were allowed to own property for hundreds of years. Over 400 years of slavery, segregation, and institutional discrimination in both the labor and housing markets built the wealth gap that we see and experience
today.
The Corporation For Economic Development (DFED) did a study on the racial wealth-gap. In a 30-year period which included Reganomics (Trickle-Down Economics), NAFTA, the bursting of both the dot.com and mortgage bubbles, they discovered that the average white families increased their wealth by 84%, three times more than black families experienced and 1.2 times that of Latinx families. If this trend continues in the next 30 years, the average white families net worth will grow $18,000 per year. It would take 228 years for a black family to accumulate the same amount of wealth as whites have now if current policies remain the same (Davidson, 2016; Holland, 2016).
The Corporation For Economic Development (DFED) did a study on the racial wealth-gap. In a 30-year period which included Reganomics (Trickle-Down Economics), NAFTA, the bursting of both the dot.com and mortgage bubbles, they discovered that the average white families increased their wealth by 84%, three times more than black families experienced and 1.2 times that of Latinx families. If this trend continues in the next 30 years, the average white families net worth will grow $18,000 per year. It would take 228 years for a black family to accumulate the same amount of wealth as whites have now if current policies remain the same (Davidson, 2016; Holland, 2016).
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| http://i.imgur.com/7oJGBnm.png |
Historically, government policies have
created the racial wealth gap, with the creation of a free market economy
(capitalism). In addition, our current policies are widening the wealth gap
(Holland, 2016).
The government can provide monetary
policies or government interventions to close the wealth gap, but I don’t
necessarily believe that redistribution of wealth is feasible or even
necessary. There is a notion that taxing the wealthy more on their income tax
and lowering it on the middle class and poor will help redistribute the wealth,
that would be progressive taxation. Currently, we have a regressive tax system
that seems to lower taxes on the wealthy and squeeze the middle class and poor
households (Britannica, 2016).
However, most wealthy people make their
money through investments, dividends, and through their business holdings that
are taxed at regressive rates. Even if we changed income taxes to be
progressive or proportional it still will benefit the wealthy, because of
inflation and stagnant wages. If we would raise taxes it should be on capital
gains taxes (Chen, 2011).
For true wealth distribution, we would
need to end racism and raise capital gains taxes. It is the responsibility of
the government to close the wealth inequality since it’s created it in the
first place.
References
Chen, E. (2011). Our
Progressively Regressive Tax System. Retrieved September 16, 2016 from http://www.science20.com/alchemist/our_progressively_regressive_tax_system
Davidson, K. (2016).
It Would Take 228 Years for Black Families to Amass Wealth of White Families,
Analysis Says. Retrieved September 16, 2016 from http://blogs.wsj.com/economics/2016/08/09/it-would-take-228-years-for-black-families-to-amass-wealth-of-white-families-analysis-says/
Domhoff, W.G. (2013).
Wealth, Income, and Power. Retrieved September 16, 2016 from http://www2.ucsc.edu/whorulesamerica/power/wealth.html
Holland, J. (2016).
The Average Black Family Would Need 228 Years to Build the Wealth of a White
Family Today. https://www.google.com/search?q=precis&ie=utf-8&oe=utf-8&channel=fs&trackid=sp-006#q=black+families+work+20+years+to+have+wealth+of+white+families
Sherman, E. (2015). America is the
richest, and most unequal, country. Retrieved September 16, 2016 from http://fortune.com/2015/09/30/america-wealth-inequality/
Taxation.
Encyclopedia Britannica. (n.d.). Proportional, progressive, and regressive
taxes. Retrieved September 16, 2016 from https://www.britannica.com/topic/taxation/Proportional-progressive-and-regressive-taxes
Wolff, E. N.
(2012). The Asset Price Meltdown and
the Wealth of the Middle Class. New York: New York University.
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