Expert entrepreneurs at the 2016 Skoll World Forum on Social Entrepreneurship at the University of Oxford stated that growing global wealth inequality is becoming a fundamental risk to democracy and to economies around the world.
The reasoning is that more people feel government rules are “rigged” in favor of the rich, leaving them with few options to get ahead within the system.
We are in a time of massive income and wealth inequality, where the very rich are getting much richer and working families are facing increased desperation. This hopelessness may have contributed to the election of Donald Trump in 2016, be a reason for increased gun violence in America and even led to the Jan. 6 Capitol attack. It is causing many to look for ways outside the system, most probably illegal, that will eventually break the system.
Recent history in the U.S. has shown that the Republican “trickle-down” model of economics doesn't work for those on the bottom. This model supports tax cuts for the rich, with the aim of boosting economic growth and jobs. Instead of trickling down to the middle and lower classes, tax cuts have led to a $2 trillion annual redistribution of wealth from the bottom 99 percent of earners to the top 1 percent over the last 30 years. Predictions are, by 2030, the top 1 percent of Americans will earn up to 40 percent of the country’s income, with the bottom 50 percent getting just 6 percent.
Since March 2020, during this world pandemic, billionaires have added $1.3 trillion to their net worth. The U.S. also saw more people join the group of centi-billionaires (worth over $100 billion) in the past 11 months.
And now it was recently disclosed that some of the richest people in America had years in which they did not pay anything in federal income taxes. According to a report by ProPublica, IRS records show that the wealthiest can — perfectly legally — pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.
Pure capitalism will not solve the problem of income inequality.
So what role can the government play to equalize income? Democrats in Congress are proposing a sweeping $3.5 trillion, 10-year spending plan that will make life better for everyone by expanding education, health care and childcare support, tackle the climate crisis and make further investments in infrastructure.This will be funded by tax hikes on corporations and wealthy people.
The plan calls for top corporate and individual tax rates of 26.5% and 39.6%, respectively, and 3% surcharge on individual income above $5 million and a capital gains tax of 25%.
Meanwhile, Democrats’ policies would give an average tax cut to all households with incomes less than $200,000. This is in addition to the expanded Child Tax Credit that was in the COVID Relief Bill. Married parents filing joint returns, as well as qualifying widows or widowers with incomes under $150,000, are eligible for the full credit.
Republican legislators have shown they will not support increased taxes for the billionaires, instead favoring corporations and the wealthy with tax cuts and bailouts.
And the COVID Relief law passed Congress without any support from GOP lawmakers.
It is the Democratic Party that continues to fight for the working class. To quote the late Senator Paul Wellstone, “We all do better when we all do better.”