Sample Essay on Income Inequality in America Analysis

Income Inequality in America Analysis

Income inequality is an issue that has continued to bother the United States of America for decades. Over the years, it has persistently commanded the attention from policy makers, the media as well as citizens. There is growing concern that Americans need to recognize the need for an inclusive economy that works for all and not just a few people at the helm. According to statistics from various research agencies, all the 50 states that make up America have experienced cases of income inequality in the recent decades.

In America, it is estimated that 1% of the population occupies the section of the rich while the remaining 99% fall among the middle and lower classes. Based on an analysis of tax findings, the top 1% of income earners in the US registered 19.3% of household income in 2013 to break the record that was set way back in 1927. The pre-tax incomes of the 1% of the households moved to 19.6% compared to only 1% for the rest of the Americans.

As a result of America’s support for free market capitalism; it has been able to exhibit some of the highest rates of income disparity compared to most developed nations. However, it should be noted that it is not uniform across all the 50 states. For instance, in 2009, America experienced the greatest and lowest case of income inequality in Texas and Maine respectively. Even though this is not the result that can be expected, it should be noted that there will be continued uneven income disparity among the states.

Over the years, most of the growth has been experienced between the top earners and the middle class. A study by CBO in 2011 revealed that the 1% of Americans labeled as the top earners were able to significantly increase their income by an estimated 275% between the period of 1979 to 2007 after federal taxes and income transfers. The same report also found out that within the same period, the 60% of the population that occupies the middle class were able to register an income gain of only 40%. Other sources also point out a more similar case, noting that the trend has been so over the years. In 2012, America registered the widest gap between the richest 1% and the remaining 99%.

Despite the adverse effects that the crash of 2007 to 2009 had on top income earners, they have been able to still enjoy great benefits from rising corporate profits and stock prices. A greater percentage of these gain have gone to the richest in the recent years, thus, giving them an upper hand. In fact, it should be noted that in the last four years, almost 95% of all income gains have gone to the 1% of Americans at the top of the income table. Despite the numerous concerns raised by analysts and policy changes by the government to curb income inequality in America, it still presents a great risk to the growth of the economy.

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