Question

Current Event question: The current unemployment numbers look pretty good, but is there more to the story? Discuss the issue of income inequality that exists today vs. the 1950s to 1970s. How can a more progressive tax structure address this? Or should we institute a flat tax on income and do away with loop holes?

Answer 1

Income inequality in USA has largely increased from 10% in 1970 era and has grown to 18% in 2015 suggestinghuge growth in earnings for top 1% of quintile of population.

This has largely been due to rising Silicon valley organisation with hefty pacakages, discrimination towards men and women, rise of ESOP and long term stock options for top most people and to add the global turmoil which affects lowest quintiles income avenues.

Progressive taxing structures like surcharges and mandatory contributions towards CSR for top 10% quintile can entirely change dynamic of income inequality and help diversion of funds. With more government spending on basic health care and education programmes and meeting UN sustainability development goals the inequality can be reduced largely.

Flat taxes never serve nation as this leads to tax aversion and loopholes are founds which affect the implementation of programmes.