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Paper Topic:

The Role of US Government in the Creation of Economic Inequality

The Role of U .S . Government in the

Creation of Economic Inequality (Your Name (Your University

2008

The Role of U .S . Government in the Creation of Economic Inequality

Economic inequality refers to the disproportionate distribution of economic assets and income . There is no debate about the U .S . being one of the wealthiest nations because of the wealth it amassed through its concept of corporate capitalism (Gutman , 2002 . However , the U .S . also has the greatest disparity in the distribution of wealth . Albeit American corporations earned profits in huge amounts

and mushroomed in every part of the world , the American worker did not benefit from it The wages of these workers remained flat or declining since 1978 (Gutman , 2002

There are three main causes for the disparity in the distribution of wealth , i .e . capitalism , government and pay (Gutman , 2002 . The dynamics of capitalism is to make the rich , richer . The inherent mechanism of capitalism is to multiply wealth at a faster rate for those with more assets than those with less . To offset and balance the effect of concentration of wealth , two methods are employed to even out the disparity in wealth . The first one is by levying taxes and the second by government spending

When taxes are levied , money is taken from the people . Income is redistributed when taxes are levied and collected . Government thereafter spends taxes to implement its programs . This in effect , returns money to the people in terms of public services and social programs . The persons or classes of entities against who the tax shall be levied , at what extent , and the manner by which the government would spend it , are matters entirely within the scope of the government policy and decision The policy direction taken towards these decisions will have implications on redistribution of wealth

For instance , the trend in former Presidents ' tax policies including the current President is to implement tax cuts which actually took funds out of social services and benefited the wealthy people Moreover , the taxes imposed and levied on the wealthy people were reduced in many ways and consequently , the social security tax and health care for elderly are absorbed by the working class (Gutman 2002 . In 1993 , it was former President Clinton who made an exception by taxing the wealthy more

Fewer funds are allocated for education , housing , social services and health care which the working class and the poor rely on . The worst part is that cuts are also made not only from the services but also in terms of taxes . The result is that the rich becomes richer and the poor poorer with the tax plan and program of the Government (Gutman , 2002 It is believed that capitalism makes the rich thrive . The American tax policies on the other hand , are deliberately twisted to benefit the rich by taking from the middle class and the poor and give it to the wealthy segment of the society (Gutman , 2002

The third cause of economic inequality is pay...

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