Rich Are Getting Richer, Poor Are Getting Poorer: Time for a Fair Tax Policy (Debate)

Editor's note: This article is part of a debate on income inequality with Christine Harbin. For her response, see here.

Today in America, we are in the midst of economic unrest. Even as the Occupy Wall Street movement slows to a crawl in many cities, the message of the 1% versus the 99% is still pretty rampant. Our income inequality is growing and wealth numbers show a disturbing trend. In Joseph Stiglitz’s book, The Price of Inequality, he talks about the real issue with our current income gap (mobility), and why that points to a troubling future. If we do not generate solutions for the lack of mobility, the income and wealth gap in the country will grow deeper and we may not be able to recover.

The base of this conversation is the growing income inequality. Without income you cannot build wealth, and without any wealth you cannot create opportunities.  This is why any discussion about the 1% and the 99% has to start with income. The nature of our capitalist economy means that some will always be richer than others, but for that same economy to work, the 99% has to be able contribute.  Thirty years ago, the wage gap was more acceptable, with the top earners receiving about 12% of the nation’s income. Since then, wages have stagnated for the majority of wage earners.

As the conversation continues, the wealth numbers cannot be ignored. Everyone took a hit during our current recession, but because the wealthy had the ability to spread their wealth beyond their homes, they have been able to recover the majority of their wealth. The middle and working class had all their eggs in one basket, and when the housing market crashed, their wealth went with it. Wealth creates opportunity, and with the wealth of the middle and working class all but gone, the onus for creating opportunity falls on the wealthy. 

We have to talk about the real troubling factor in our income and wealth disparities. Despite what some think, even in the land of opportunity, we do not have equal opportunities for upward mobility. This is at the heart of what Stiglitz references in his book. Each generation of the wealthy has managed to stay wealthy, while each generation of the poor has stayed poor. There is a saying circulating the airwaves that if you “work hard and play by the rules you will make it,” but statements like this fail to recognize the lack of equal opportunity. The same opportunities that exist for the children of wealthy families to stay wealthy are nonexistent in the poor rural and urban centers of this country. So countless families “work hard and play by the rules” and still don’t improve their situations very much.

If we are to ever move this conversation to a conclusion, we need solutions to address the lack of opportunity and mobility. This cannot be done by the government or the private sector alone; rather it needs to be a joint effort. Tax cuts for the wealthy have not led to job creation as promised; the tax breaks for corporations are not the right tax breaks to lead to more mobility and opportunity.  

To create the kind of mobility that is needed, we need job training programs in our poor rural and urban centers, and not just for low wage jobs. Both small and large businesses should get tax breaks for putting training programs where needed and hiring from them. With increased training comes higher wages, but companies have to be willing to pay higher wages as well. Ultimately, people need to spend money to make our economy work, and higher wages enable people to spend. The driving force of that spending is the 99%, but our current climate does not provide the proper opportunities to drive the economy, and that needs to change.