Prescriptions for improving American income inequality

NEW YORK Contrary to promises that lower tax rates for the rich would raise all boats, the tide went out for most Americans over the past three decades as most of the wealth created by the US economy was absorbed by those at the top.

Households in the middle three bands or quintiles of US earners roughly equating to lower middle, middle and upper middle class all lost ground to the top fifth (20 percent). And the distance between the top and bottom 20 percent is pulling further and further apart. This even as Americans worked longer hours with greater productivity and as their wives joined the workforce en masse. Compounding the problem, American workers found themselves facing global rather than just local competitive pressures.

Indeed, the richer you are, the better the story of the past three decades has been.

The non-partisan Congressional Budget Office reports that the share of US national income going to the richest 1 percent of Americans has doubled since 1980, from 10 percent to 20 percent, about where it was in 1910.

For the super-rich, about 16,000 families with an average annual income of $24 million representing to 0.01 percent, has quadrupled, from just over 1 percent to almost 5 percent.

A Congressional Research Service report affirmed that view last year, stating that US income distribution appears to be among the most unequal of all major industrialized countries and the United States appears to be among the nations experiencing the greatest increases in measures of income dispersion.

Ranked against peer economies the worlds BRICS and other giants only in the developing markets of South Africa, Brazil and China was the economic playing field as unbalanced.

How did this happen?

And what can or should be done about it?

There is broad agreement on the first question of how three decades of robust US GDP growth and wealth creations wound up in the pockets of societys wealthiest people.

Read the original here:
Prescriptions for improving American income inequality