{"id":127164,"date":"2014-07-01T17:51:25","date_gmt":"2014-07-01T17:51:25","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/?p=127164"},"modified":"2014-07-01T17:51:25","modified_gmt":"2014-07-01T17:51:25","slug":"makes-united-states-unequal","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/money\/makes-united-states-unequal\/","title":{"rendered":"What Makes the United States So Unequal?"},"content":{"rendered":"

Robert Ross<\/em><\/p>\n

In the United States, the government is doing less to reduce inequality than any other high-income society.<\/em><\/p>\n

If governments did nothing, Western Europe and the United States would have similar levels of inequality. But governments don\u2019t sit on the sidelines. They collect taxes. They provide social programs. They take steps that can lessen the amount of market inequality. The difference: Governments in European and other high-income societies do much more to reduce inequality than the United States.<\/p>\n

For the United States, the Gini coefficient runs about 38, according to the\u00a0OECD<\/a>, the economic policy tank for the rich countries, or about 48, according to the\u00a0U.S. Census Bureau<\/a>. The American Gini rating has risen sharply in the last generation, after falling gradually in the middle of the twentieth century.Comparisons of income inequality among the high income countries usually show the United States as the most unequal, as measured by a standard index called the Gini coefficient. A Gini value of 100 means that all the income is held by one household. A value of 0, on the other hand, means that all income is equally shared.<\/p>\n

By comparison<\/strong>, the Nordic countries\u2014 Sweden, Denmark, Norway \u2014 have among the lowest Gini coefficients, in the 25-27 range, while Germany has a Gini of 29 and France, 28.<\/p>\n

Comparisons that show the United States as the most unequal of high-income societies typically take into account the income households have from market-based activity (work and investments) and government transfer programs (Social Security and unemployment compensation, for instance) and subtract away taxes. Researchers call the end result from these calculations \u201cpost tax and transfer\u201d or \u201cdisposable\u201d income.<\/p>\n

Political decisions determine taxes and transfers. Public policies, everything from minimum wage to labor laws, also influence market-based income. So we should expect inequality levels to differ among developed nations. Even so, the actual differences among developed nations can be surprising.<\/p>\n

On the yardstick of market-based income, the level of inequality in the United States does not come off as particularly extreme. The United States ranks eighth most unequal among the 26 countries that reported 2010 data to the OECD. The United States sports about 7 percent more market-based inequality than the average of all OECD nations.<\/p>\n

The\u00a0extreme\u00a0<\/i>inequality<\/strong>\u00a0status of the United States only kicks in when we go beyond market-based income and look at tax and transfer policies.<\/p>\n

In the United States, taxes and transfers are doing much less to reduce inequality than these policies are doing in other developed nations. On average, rich countries\u2019 tax and transfer policies reduce inequality by about 36 percent. The figure in the United States: only about 24 percent.<\/p>\n

In Sweden, market-based inequality shows a Gini of about 44, but the disposable income Gini sits at a much more equal 27, a reduction of 39 percent in inequality. In the United States, the market Gini comes in about 50. The disposable income Gini: just 38 in the OECD data, a reduction of only 24 percent.<\/p>\n

Over the last generation, major changes in U.S. tax and transfer policies \u2014 mainly cuts in the tax rates on high incomes \u2014 have actually served to\u00a0increase<\/em>\u00a0inequality.<\/p>\n

Inequality, to be sure, is increasing in almost all high-income countries, the consequence of the triumph of global capitalism and its neoliberal policy package: market dominance, privatization, and deregulation. But even in this company, the United States stands out for the depth of its commitment to policies\u00a0\u2014 particularly tax policies\u00a0\u2014 that favor the rich.<\/p>\n

Many Americans<\/strong>\u00a0are, not surprisingly, concerned about excessive taxes. Ours, after all, has been a nation forged in a struggle against a grasping, remote, tax-hungry overlord. Yet when we compare ourselves to other countries about as rich and democratic as we are, it appears we are not highly taxed. Our total taxation level stands at about 24 percent of GDP (the total value of national production and income), a level significantly lower than the 34 percent average of the other high-ncome countries.<\/p>\n

Why should we care about how little our tax system reduces inequality? Among the world\u2019s high-income countries, the British epidemiologists Richard Wilkinson and Kate Pickett have powerfully pointed out in\u00a0The Spirit Level,<\/i><\/a>\u00a0the more unequal societies \u2014 and regions within countries \u2014 have more violence, infant mortality, lower life expectancies, and more mental illness. Societies that are more equal, on the other hand, have more trust among people. Our levels of inequality produce fractured community and social resentment, and they drive sour and even violent politics.<\/p>\n

Inequality has become like the weather: Everybody talks about it but no one does anything. Unlike the weather, we can fix this mess and heal these wounds. \u00a0To do so, we may need a reminder from Supreme Court Justice Oliver Wendell Holmes, Jr.: \u201cTaxes are what we pay for civilized society.\u201d<\/p>\n

Clark University sociologist Robert Ross is a member of the Board of Directors of the\u00a0Sweatfree Purchasing Consortium<\/a>. He is the author of\u00a0Slaves to Fashion: Poverty and Abuse in the New Sweatshops<\/a>.<\/em><\/strong><\/div>\n
<\/div>\n
This piece<\/a> was reprinted by RINF Alternative News<\/a> with permission or license.\u00a0<\/em><\/div>\n

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Robert Ross In the United States, the government is doing less to reduce inequality than any other high-income society. If governments did nothing, Western Europe and the United States would have similar levels of inequality. But governments don\u2019t sit on the sidelines. They collect taxes. They provide social programs. They take steps that can lessen […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487,52,1616],"tags":[],"class_list":{"0":"post-127164","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-breaking-news","7":"category-money","8":"category-usa-news"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/127164","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=127164"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/127164\/revisions"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=127164"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=127164"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=127164"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}