Income Gaps

Divided America

Over the past couple of decades, income gaps between the Rich Americans (who own homes, Stocks and big tax breaks) and middle class and those whose paychecks buy less has steadily increased. One of the major reasons for this increase in the pay gap is that the wages are not increasing but the prices of basic necessities such as health care, gas and food have soared. This results in the middle class and poor people carrying a larger tax burden. Of all high-income nations, the United States has the most unequal distribution of income, with over 30 percent of income in the hands of the richest 10 percent and only 1.8 percent going to the poorest 10 percent.

Today, most politicians strictly believe that America is divided between two groups of people, rich and poor. Rich are the ones who get the rewards and tax breaks. Poor can be characterized as the ones who do the work and pay the taxes. They are the ones whose income level lies very close to or below the poverty line.

Poverty line is the level of income below which one cannot afford to purchase all the resources one requires to live. People who have an income below the poverty line have no disposable income, by definition. It is widely discussed how and where to set the poverty line. In practice, different countries often use different poverty lines. Globally, however, it is more common to use only one poverty line in order to compare economic welfare levels. On August 30, 2005, the U.S. Census Bureau published its poverty report for 2004. The official poverty rate rose from 12.5% in 2003 to 12.7% in 2004. This puts the number of people officially living in poverty in America to 37 million. Within a span of one year it was an increase of 1.1 million people whose income level lies below the poverty line.

According to the Census Bureau, "The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income. Their share jumped to 50 percent in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent."

One of the major causes of this income gap increasing at a threatening rate is lack of education. Better education today will create a flexible workforce for tomorrow. Most of the people living below or around the poverty line do not complete high school education. A small fraction of those who do complete high school cannot afford to go to college for further education. So either they depend on a dead end job for the rest of their lives which hardly enables them to pay for themselves or they are not qualified enough to get any sort of job and they rely on the welfare to keep them alive. Now as more people rely on welfare, the government has to increase the taxes to pay for these expenses. The burden falls on the working population, the middle class America. They pay a big chunk of their income to the government in the form of taxes. Unlike the rich, they don't have any money in spare that they can use. These are the people who survive from paycheck to paycheck and if that's not enough, the constant increase in taxes and inflation pushes them