U.S. Income Inequality is Destroying the USA for the rich & Poor

During the 1970 period 15% of American’s lived in either poor or affluent developments. When we look at the data for 2007 a full 35% lived in one of the two neighborhood types. Between the 2000 and 2007 period there was a surge of Income Segregation for black and Hispanic family units while this was not as rapid as the 1970 to present era it was dramatic. This recent phenomenon Income Segregation has been only increasing in the last four decades crossing all racial boundaries without regard or concern it is just a merciless drum. There are those With alongside those Without and in the end we will all suffer for it as it will only greatly contribute to the decline of the United States of America.

While for some, those not having to share their affluent schools and social systems with others this may look promising to them. However it does not look promising for our or other countries poorer citizens or for the USA as a whole in the long run.

Also funding attitudes may change as further segregation continues with the affluent less likely wanting to fund programs that were funded in more segregated communities of times past.

The Brookings institution found that those American’s living in Extreme poverty rose by 1/3 from 2000 to the latter half of the decade. Those in the suburbs did not fare well either as there was a 53% increase in those living in poverty from 2000-2010.

Even those of the affluent classes are showing growing concern for this phenomenon as it will continue to be detrimental to the United States as a whole until it is addressed, yet this is mostly seen in Economists who really have a grasp of the big-picture. In a September 2011 study done by the International Monetary Fund it found that greater income equality positively correlates with a nation’s economic growth.

We are constantly told by our elected officials in Washington that the U.S. must reduce environmental regulation and reduce taxes. This in a country where the effective corporate/business tax rate is 17% not 35% as the thirty-five percent figure does not take into account all of the tax loopholes used by those corporations that do pay taxes. Many corporations pay little if any taxes via the use of offshore tax-havens, the figures estimated to be in the trillion dollar range. The top 1% has seen their income increase by 270% versus 19% for the bottom tier of Americans from 1979-2007.

CBO 2007 data

In the CBO report it was also found that between 2005-2007 that the after tax income of the top 20% of the U.S. population exceeded the remaining after-tax income for the rest of the nation. It was also found that the top 1%’s share of total market income increased from 50-60% while all other income ranges saw a decline.

Two factors were cited as the reason for this inequality one being an increase of each individual source of income; labor, business income, capital gains, capital income etc. The report noted that these sources of income were less evenly distributed in 2007 than in the 1979 period. For instance labor income has been more evenly distributed versus capital and business income with even more of a disparity in regards to capital gains. For the period 1979-2007 the share of income derived from capital gains and business income showed increases while labor income decreased furthering the economic divide which contributed to the greater distribution of wealth inequality in America.

Again our Washington government officials tell us that entitlement programs which benefit the under-classes must be cut while the taxes and regulations which favor the rich must be eliminated or reduced to tackle our $14 trillion dollar deficit.

This chart to the left shows a different picture where the Bush-Era tax cuts which primarily benefited the wealthy are in fact the driving force.

While the current Washington Republican stance that reducing taxes, environmental regulations and reducing or returning banking/investment regulations to per-recession levels totally contradicts the opinions of the World’s leading economists.

The International Monetary Funds 2007 report finds that Income Equality Positively correlates to Stronger economic growth. It was found that a mere 10% decrease in inequality increased the expected duration of economic growth by a full 50%. The comprehensive study using data collected between 1950-2006 found countries with more income equality stayed in or fell into deeper recessions. It was also found that countries with a more equal distribution of wealth, that their economic growth lasted much longer.

It was also found that income equality was of more importance  and corresponded more strongly to sustained economic growth than other economic factors. Restoring or attempting to address income inequality was further shown to be of a much greater importance than the lowering of debt levels.

The study authors stated, “Sustainable economic reform, is possible only when its benefits are widely shared.” The breadth of income inequality in the United States now more closely resembles the economies of Iran and Russia versus other developed countries.

Economists have attempted to explain that stagnant(not rising) wages for the last four decades as a part of the widening income inequality while the upper class have been those who have seen benefits increase over the more the forty year period.

Nobel Prize winning economist Joseph Stiglitz stated, “An economy in which most citizens are doing worse year after year — an economy like America’s — is not likely to do well over the long haul,” in an article he wrote for Vanity Fair.

So as the hard numbers from the most recent data point out along with a Worldwide consensus of economists.

Our Republican Washington legislators and followers of Grover Norquist have all gotten it Very Wrong.

Or is the reality that our politicians are really just bought and paid for by the top 1% who are only interested in one thing Money$$$ and the rest of the United States of America can go straight to hell.

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