What needs to be done to address income inequality?

“Income inequality isn’t new, but it’s the new economic issue of the campaign season. Presidential candidates in both parties are addressing it in speeches (though with different prescriptions to narrow the wealth gap). The question has entered into legislative debates in both Congress and the states, on issues ranging from tax cuts to raising the minimum wage, imposing conditions on government assistance dollars, or giving the president fast-track authority to negotiate an international trade pact. And struggling Americans are looking at the top earners and wondering: is the American Dream dead?,” writes Susan Milligan in U.S. News.

A Gallup poll released this week shows that Americans are feeling increasingly in economic retreat. Barely half (51 percent) now consider themselves as being part of the middle or upper classes, compared to an average of 61 percent during 2000-08. A full 48 percent say they are now in the working or lower classes.

Today’s Question: What needs to be done to address income inequality?

  • Gary F

    You mean besides finishing high school and not having children before you get married?

  • reggie

    Simple: restore pre-Reagan tax rates, simplify the tax code to eliminate loopholes, tie corporate tax breaks to domestic employment and wage levels, and establish a national minimum living wage. Employment up, wages up, consumption spending up, more people living the middle class good life. Once we have fully retired the national debt and operate with a balanced budget, then I’ll be all for reducing individual tax rates. Corporate rates, not so much.

    • Walker

      I’m not of the belief that kneecapping the successful is the best way to boost up the unsuccessful.

      It’s like saying since Joe Mauer is a better hitter than Nick Punto, he needs to start with 2 strikes to make it more fair.

  • PaulJ

    Allow the rich to chose, between donating to charities or paying taxes, to the extent that decentralization of power is practical.

    • PaulJ

      Or course, in a global economy, most of us in the US are considered rich.

  • Sue de Nim

    It is necessary to allow some income inequality to exist, or capitalism doesn’t work. Too much, though, results in a plutocratic oligarchy. We seem to be edging toward that outcome at the moment. To prevent that, and to prevent the worst abuses of capitalism, two things are necessary: just enough of a social safety net that no one falls into complete destitution, and just enough redistribution to prevent the the rise of an oligarchy. Right now we don’t have either of those things.

    • Walker

      Define some for us.

  • Jim G

    First, let us as a country stop with the tax breaks for the Uber Wealthy. Second, stop starving our financial engine. Step on the gas pedal. We have a consumer driven (70%) economy. Middle class spending is the fuel in our economy. Financial austerity policies just do not work. You do not create jobs and growth by firing workers and cutting spending. The reason that firms with access to money are not investing in hiring is that there is a lack of demand. Austerity has only cemented the income disparity that has occurred since the end of the Great Recession.

    Since, as the U.S. News and Reports article reports, the Uber Wealthy have captured 91% of the real income expansion during the recovery, make sure we rescind every tax cut this income has bought in Congress over the last 15 years. Then just as we did after WWII, when the GI Bill provided a free college education to every adult male who served in the war, use this money to repeat this successful program and provide free college educations to every American who has satisfactorily completed High School or passed its equivalent. Now, to immediately start to remediate the great income divide, finally raise the minimum wage to what I earned working at Target in 1968; $1.60. That hourly wage with CPI inflation is now $10.88.

    • Walker

      The past 30 years of giving schools whatever they want has led to skyrocketing tuition in the first place. I encourage you to watch the documentary “Ivory Tower” and see what is really on college campuses these days when it comes to amenities, it’ll rival any 5 star resort you’ve ever stayed at.

      I sure wish someone else paid for my college, I would have stayed there a couple more years for drinking.

  • Rich in Duluth

    Raise taxes on upper income individuals and corporations to post World War II levels, set a minimum wage that provides a real living wage, use the new tax revenues to provide a college or technical school education to all those who want it, pass an equal rights amendment guaranteeing equal pay for women, encourage union membership, strengthen Social Security and Medicare and provide Medicare for all, cut military spending, dramatically, and direct those tax dollars to research and development of renewable energy technology (good paying jobs) and, just as we spend billions on new submarines and military equipment, spend those billions on building a renewable energy infrastructure (windmills, solar, geothermal, and new technologies), again creating good paying jobs.

    • Walker

      “Raise taxes on upper income individuals and corporations to post World War II levels”

      Problem with that is that you have states with high income taxes too.

      Post WWII federal income tax of 94% on $200,000 + Minnesota’s 9.35% tax rate (California is at 13.3%) basically means you start taxing people over 100%?

      Pure stupidity on your comment.

      I’m not really sure why people feel so entitled to other people’s paychecks. If LeBron James makes $100 million, why do you believe most of that should be yours?

      • Rich in Duluth

        I’ll admit I could have been more specific and said something about adjusting the tax rates for inflation over the past 60 years. $200,000 then is worth something like $1.76-million, now . In the 1950s, the marginal rate was 91%, but the maximum effective tax rate was actually 87% . The only historical data I could find on your example of California state income was a rate of 3-4% in the 1950s , so that would mean 87%+4%=91%, so you might have a point. However, I have no doubt that, then as now, high income earners were very good at finding deductions and lowering their rates significantly. And, if Federal taxes covered things like health care, state taxes might not be so high.

        But, this was not my point. My point was to raise taxes to address the income inequality in this country. And a side effect could be energy independence and a more educated, less warlike society that has a secure safety net.

        To address your question about rich ball players…these people would not have a venue to play in or a way for those who like to watch to get there if it were not for lots of tax dollars. Consider the billions of dollars needed to construct and maintain the roads, bridges and airports that bring people from hundreds of miles away to watch him play with a ball. Then there are sewer and water systems, security, traffic control, and whatever else is needed to put on a game. So, yes, I think he should have to pay for his opportunity to to make millions.

        Finally, I think that being rude detracts from your point. It makes you sound smug and self-righteous, qualities few of us strive for.

  • whitedoggie44

    Economic Inequality -motivated by resentment that some are doing better than others and certainly no connection to sound economic growth. Greater government dependance and use of handouts to increase the moocher class. Making big government bigger by confiscating income and wealth is a failed policy. France has a 75% marginal tax rate and yet unemployment has remained steady at 10% and over 25% for youth. :” A society that puts equality of outcome ahead of economic freeedom, will end up with neither” Milton Friedman

    • reggie

      To see the growing imbalance as unhealthy has nothing to do with resentment; it has everything to do with stability and sustainability. There is no greater moocher class than the 1%, which continues to stack the deck to futher its own interests.

      “A society that puts concentration of outcomes (wealth) ahead of equality of opportunity ends up in flames.”
      — me

      • whitedoggie44

        You and others like you believe the 1% won some mythical lottery. As a former CFO, I have worked with many in the 1% and when these people secure the outcomes of millions and milllion of americans with difficult decisions everyday. To state the 1% are moochers only confirm your complete and total ignorance of economic growth. If the 1% stopped paying federal income tax, the US economy would come to total and complete halt, as the government would not have funds to pay interest on the 18 trillion in debt. How about rewarding merit? Remember, there is no such thing as a free lunch, someone, somewhere is paying for current moocher entitlements.

        • reggie

          No, you missed the point. Merit is one thing, a truly good thing; hard work is another good thing; innovation and imagination are good things. Stacking the deck, rigging the tax breaks, and parking profits in overseas tax havens are not good things, even if legal. That’s the part you don’t get. If we had anything like a level playing field, I’d be standing with you arguing to reward the hard working meritorious, or at least the hard working. But the field isn’t level, and pretending it is undermines your argument.

          (And there is a free lunch, or at least a lunch that is tax deductible, if you charge the expense to your business. As a former CFO, I would have expected you to know all about that. You eat, taxpayers subsidize. It’s the American Way.)

          • whitedoggie44

            I work for an international company that is based in US. 70% of our revenue and profits now originate outside the US. Unlike Apple and Google, we do not use offshore tax havens to lower our corp taxes but we also do not bring back out profits and pay 35% corp taxes and we use these profits to expand where ROI is most beneficial. If we are forced to repatriate our profits and pay the highest corp tax rate in the world, we will either choose to fire US based staff or relocate our HQ offshore, along with highly paid staff. I could also go one about the cost of US regulations which has continued to push more US jobs offshore just to break even. At least we agree on one issue- merit matters

          • reggie

            Just out of curiosity, why in times of global stress do you think money flows to the safe haven of the U.S.? Could it have something to do with the stability of our economy and government compared, say, to Brazil, Russia, India, China, or any number of equally or more dynamic economies? If you’re chasing ROI, take the risk of Russia. But if that’s too risky, there’s the good ol US of A.

            This economy and this system of government has costs that we are not currently covering. It’s not a partisan issue to observe the basic lesson of econ 101: organizations (families, business, and nations) that don’t operate with a sustainable balance of revenue and expenses eventually go out of business. When we’ve retired our debt and balanced our budget, we can argue about tax rates and appropriate levels of spending. Right now, we have a largely fixed national budget, a voracious appetite for global militarization, and a diminishing willingness to pay the cost of operating the society we all rely upon, and some profit from. Until we fix that imbalance, the imbalance of income inequality will continue to grow.

          • David P.

            I agree with you completely. Well stated. I would also add we have a rigged system where the risk is shared by all, but the benefits are only enjoyed by a select few, especially in the speculative investment business.

          • whitedoggie44

            another clueless statement!! When target invested in Canada and then took a 3 billion write down when they determined it would take 10 years to reach ROI, other than stockholders and émployees, who else took a financial hit? I know I didn’t. Companies take risks all the time and sometimes there is payoff and others times they lose money. That is how capitalism works for those not in the trenches.

          • David P.

            AIG, Goldman Sachs, Bear Stearns…

          • whitedoggie44

            Wrong again, capital flows to where investors receive the highest return. Accept for very unstable countries with no actual rule of law.

            We spend too much and tax too much. Milton Friedman was a big supported of the EITC but only if it replaced all other welfare programs. Not so fast, said the looney left, since these other welfare programs have such an intrenched bureaucracy, we need to expand not contract these programs. I repeat, we have a spending not a tax problem.

            No, I am not willing to support the moocher class which is one reason why 65% of voters with incomes above $200k vote republican.

        • Yanotha Twangai

          No, not a lottery. However, given that your chances of being in the 1% are highly correlated with having been born into it and consequently having been given a whole lot of advantages one did not earn, it is simply false to say that it is entirely due to merit.

  • John

    One of the best ways to redistribute wealth is to return the federal estate tax to the levels it was for many decades. From World War 2 through 1976 the top marginal rate was 77%. Today the top rate is 40% and you can pass over $5 million with no tax. Married couples can pass $10 million.

    • Walker

      How is that one of the best ways?

      The estate tax as it stands today only brings in $26 billion annually (roughly $75 per person). That’s nothing.

      Unless you think $75 annually would change your life and change that inequality.

  • Gary F

    So we follow the path of Venezuela?

  • MyMNDoc

    As a former Democrat, it is appalling that so many are so uneducated on the facts, just the government’s own numbers tell all, looking over the past 6 years under Progressive liberal government heads. Here are the facts: The top cities with the largest number of murders, highest unemployment rate and highest growth in families on food stamps goes to… Ta Da_ yup, it is those cities run by liberal progressives for the past decades. So when we want to see a change in Income inequality..all we need to do is to to let more liberal progressives take over until America emulates communism_ there’s a great system huh? where all are equal and all are dirt poor!..excepting their leaders that are billionairs..look at North Korea, China, Venezuella to be and Cuba. That Hillary talks about income inequality is proceless. It is hypocrisy at its best liberal mantra. Gov. records show she paid her female staffers less_ $0.73 for every male’s $1.00 Her and Billy took in over $121 million last year giving Pay to Play speeches_ research the funds and outcomes in Haiti. Go see their shell company for the Clinton Fund, thier daughter had the most lavish expensive wedding in all of DC history_multi millions spent on a wedding. That cash could have fed 16,600 poor children in DC for a month. Ah, but their wealth gained for doing nothing of value to the citizens ( cheap useless speeches) is a better ploy.