I have written here before about income inequality in the U.S. as one of the national flaws we must address. The U.S. has the highest level of income inequality among modern western states. The disparity of income invalidates forever Ronald Reagan’s “trickle-down” economic policies that slashed taxes on wealthy Americans with the promise that this extra money would go to the middle class. It didn’t then and hasn’t since.
But the wealthy still pay taxes at lower rates than the rest of us. America’s 400 wealthiest families paid an average federal individual income tax rate of 8.2 percent on $1.8 trillion of income over the period 2010–2018. The rest of us paid 13.29 percent in 2019, the most recent year for which I could find complete figures.
And the wealthiest Americans have far more money that the rest of us. In 2019, according to the Los Angeles Times, compensation for corporate CEOs was 278 times greater than for ordinary workers. The same year, the top 10 percent of households held 70 percent of the country’s wealth, while the bottom 50 percent held 2 percent. America’s middle class now holds a smaller share of U.S. wealth than the top 1 percent. Put differently, the average person in the top 1 percent earns an income roughly 40 times that of someone in the bottom 90 percent.
How many of us are living in poverty? In 2020, the most recent year for which I could find figures, there were 37.2 million Americans in poverty, approximately 3.3 million more than in 2019. The definition of poverty in the U.S. is an individual with income less than $36 per day or a family of four with income less than $72 per day.
The unfairness of our income distribution is patently obvious. As a democracy, it is long since past time for us to take steps to reduce the unfairness that shapes our nation.