Hello, Everyone – Income inequality is an issue that has been in the news lately. The Occupy Wall Street and other ”occupy” movements/settlements of a few years ago are related to the macroeconomic coordination problem of ”for whom” to produce goods and services. More recently, the debates among the candidates for President and the proposals to increase the minimum wage have kept income inequality in the news. In addition, in the U.S. many people who earn very, very high incomes pay lower income taxes than middle- to low-income people. An interesting study of tax rates from 1945 – 2010 by the Congressional Research Office, which is attached to this message, concluded that: Analysis of such data suggests the reduction in the top tax rates have had little association with saving, investment, or productivity growth. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. (Hungerford, 2012, para. 4)Jeffrey noted that ”. . . making it to a level were you make the money that places you in a different tax bracket also takes you a step back in that you get taxed so hard.” The exception is Social Security taxes. For example, in 2015, social security taxes were only be collected on wages up to $118,500; any wages earned over $118,500 were not subject to social security taxes. In 2016, that wage tax cap remains unchanged at $118,500. This is also a hot topic for the candidates for President. According to the CNN article and video at , ”. . . Sanders has also proposed to bolster Social Security funding by making the wealthy pay more into the program. He would do so by subjecting any income over $250,000 to the 6.2 % payroll tax, which currently only applies to the first $118,500 in wages” (Sahandi, 2016, para. 20) The wage cap debate leads to the question of whether it is fair for someone making $118,500 a year to pay the same amount of social security taxes as someone who makes a million dollars a yearReginald alluded to how increasing taxes on the richer members of society might hurt the economy because those are people who create business and employment. I would argue that consumers, like you and me, create jobs when we buy things. Consumer demand for goods and services creates jobs. So, with a more equal distribution of income and wealth, the demand for goods and services would increase and more jobs would be created to fulfill that demand.Joel and Class — Joel said ”. . . income equality will continue since the money paid on taxes does not affect the income of bottom tier or working class. The higher taxes simply puts money into the political scene which in turn will need to determine how the additional money is used.
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