Tuesday, April 22, 2014

Inequality alert: US non-rich are getting non-richer

Here is one way in which the US is exceptional - although we might not want to brag about it.  Relative to other countries, the middle class is losing ground and our poor are poorer.
Read on for a summary of factors contributing to losses by middle and low income groups, and a tax policy that counters the growing inequality.

  1. Science and math literacy is high for 55-65-year olds.  However, Americans in the 16-24 year old bracket lag behind other industrialized countries with respect to science and math skills.  So we lose out in terms of high-skill jobs.
  2. US companies distribute less of their funds to middle and lower income groups and more to well-paid executives.  US minimum wage is lower.
  3. Other governments are more aggressive in implementing tax policies that benefit lower and middle income groups.
The upshot is stagnant wages and larger income disparity than in other countries.  Another way to put it:  income inequality is driving us into the economic ditch.

Here is a tax plan that could mitigate the inequality - link corporate taxes to the discrepancy between worker wage and CEO compensation.

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