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Wealth Inequality in Usa

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WEALTH INEQUALITY IN AMERICA

Course coordinator: - ALAN MONTAGUE

TUTOR: - JACINTA RYAN

STUDENT NAME: - MURALI KAMBLIPURA VIJAY VENKATESH

STUDENT ID: - S3521189

EXECUTIVE SUMMARY

The American economy is considered as mixed economy supporting both free market and normal enterprise since then global financial crisis has hit America who was largest consumer of economy, and the government had to support free trades in sense of increasing employment sectors in industry. The kind of monopoly power exerted by companies over market has dealt with unequal wealth distribution in USA resulting in firm of low wage payments to their company employees and other small ventured firms.

The wealth inequality is present all over the OECD countries and low is in countries like Spain, Denmark and almost zero in japan but in case of rich countries, America portrays more inequality in cases like wealth and income due to disparity created between rich and poor which can be measured from Gini coefficient. The recent trends shows that the rich people in America is said to receive seven times higher income than normal middle class families or low income families. Also the rich is considered to possess assets seventy times greater than poor families. The reason behind the raising inequality may be due to low income wages, lack of proper education and improper redistribution of tax incomes from rich to poor and increase in debits in case of mortgage repayments. However, tax survey shows rich is exempted from paying taxes because of return of incomes from investments on shares and bonds, immovable assets in cases of properties etc. and if at all there is payment of taxes the rich are paying only 17 percent from work income and not from other assets.

There is lack of funds in US treasury even after the government has spent more 4 trillion dollar income on building economy improving health care systems, education and on defense systems, providing insurance, increasing retirement funds which is said to be inevitable.

On that point, Government had collected 160 million$ taxes by increasing tax collection in rich from 15 percent in 1970’s to 60 percent today. But after all these measures taken by government towards adopting long term fiscal policies and proper re-distribution of wealth the inequality rate is said to have seen upward growth rather than down fall.  

Moreover, the capitalist system has played major role in American economy by foreseeing more technological growths and exchange of goods in case of free trade and agreements (NAFTA), but in fact the capitalist system has prone to impose more threats in inflow of more imported goods in country from undeveloped countries and raised unemployment rates among unskilled labors due to offshoring activities performed by multi-national companies in Canada and Mexico.

Altogether, Obama had shown concern towards civil society and labor unions in raising more voice against unethical behaviors of companies exerting on employees. But on other side civil society had asked government to regulate policies which are cushioned in protecting workers and normal people to skirt out from poverty problems.

Table of contents

EXECUTIVE SUMMARY

INTRODUCTION5

CAUSES FOR WEALTH INEQUALITY 10

COMPARISON OF INEQUALITIES BETWEEN OECD COUNTRIES11

ROLE OF USA GOVERNMENT TOWARDS INEQUALITY 12

DISTRIBUTION OF TAX INCOME IN U.S.A13

IMPACTS OF GLOBALIZATION15

THE IMPACTS OF CAPITALIST SYSTEM ON USA17

ACTIONS OF CIVIL SOCIETY ON RAISING WEALTH INEQUALITY19

CONCUSIONS20

List of figures

Figure14

Figure17

Figure18

Figure19

Figure112

Figure114

Figure119

INTRODUCTION

The up rage of wealth inequality is set to be continuing from decades in United States of America from 1970’s to 2010. In fact the wealth is defined as house, car, debits, loans, business etc.  Also, in 1970 the rich had 19 percent of wealth income and the average middle class families had 80 percent of wealth income. But in today’s fact the rich is having 35 percent of income more than middle class and poor wage families who are accumulated with 64 percent of wealth income as depicted from figure below. Substantially due to growing recession the middle class families had lost 39 percent of wealth ($158,400 to $96,500) and poor families had lost 48 percent of wealth ($18,000 to $9,300) as shown in below table (Wolff, 2013).

Table 1: difference in wealth acquisition between rich and poor people in USA

 

Bottom 99 percent

Top 1 percent

1922

63.3%

36.7%

1929

55.8%

44.2%

1933

66.7%

33.3%

1939

63.6%

36.4%

1945

70.2%

29.8%

1949

72.9%

27.1%

1953

68.8%

31.2%

1962

68.2%

31.8%

1965

65.6%

34.4%

1969

68.9%

31.1%

1972

70.9%

29.1%

1976

80.1%

19.9%

1979

79.5%

20.5%

1981

75.2%

24.8%

1983

69.1%

30.9%

1986

68.1%

31.9%

1989

64.3%

35.7%

1992

62.8%

37.2%

1995

61.5%

38.5%

1998

61.9%

38.1%

2001

66.6%

33.4%

2004

65.7%

34.3%

2007

65.4%

34.6%

2010

64.6%

35.4%

Sources: share of wealth held between top 1 % and bottom 99% in the USA, from 1922-2010.

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