Tuesday, September 28, 2010

Mediaite: Cenus finds huge wealth gap between rich and poor

The Census Bureau released new data today that suggests a deepening divide between the countries wealthiest citizens and its poorest. According to census statistics, the United States has the greatest disparity between “rich” and “poor” among Western industrialized nations, which spawned commentary from Rachel Maddow via Twitter.

The recession took a dramatic toll on the institution of marriage in America last year, new figures show, with weddings for people 18 and older at the lowest ebb in over a hundred years.

A broad array of new Census Bureau data released Tuesday

Writing for the Associated Press, Hope Yen reported:

The government already had revealed that the income gap between the richest and poorest Americans grew last year by the largest margin ever, stark evidence of the impact the long recession starting in 2007 has had in upending lives and putting the young at greater risk.

The top-earning 20 percent of Americans — those making more than $100,000 each year — received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line, according to the newly released Census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.

A different measure, the international Gini index or the Gini coefficient, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.

The disparity in US income is well-known, but the wealth differential is far worse. The US GINI index is 46.8 in 2008. Any index more than .40 can lead to social instability. The GINI index in EU countries is estimated to average .31.

The Federal Income Tax can control income disparity and the Estate Tax can mitigate wealth disparity. Republicans have traditionally tried to flatten the progressive income tax that is now less than 40 per cent for the top tax bracket. GWB also suspended the Estate Tax that only affects the top 5,000 American families.

Because of regressive GOP tax policy, the middle class had been weakened since the Reagan era and some business people are realizing that tax breaks won't help them if they lose their middle class customer base. Of course, Blue Dog Democrats have worked with Republicans so the Democratic Party is not blameless either. Bill Clinton could have also done more to reverse this trend, but he didn't.

It is obvious that GOP ideas and supply side economics will not work in the present economic environment. Giving millionaires $100,000 a year tax breaks will damage the economy further.

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