INCOME
INEQUALITY
Do Tax Codes Create Income Inequality?
About Page
This graph and data are from The Illinois Update's article "The Economic
Reasons to Care about Income Inequality"
Political
Agendas
By one measure, U.S. income inequality is the highest it’s been since 1928.
Q&A:
What is income inequality?
What are tax codes?
What tax codes effect
income inequality?
What's the problem?
- The term “tax codes” can refer to a collection of tax laws.
- Capital Gains tax
- Charitable Deductions
- Mortgage Income Deductions
Republican Party: 43% of Republicans would agree that income inequality is a major issue, however most agree that income inequality is where it should be.
Democratic Party: 78% of Democrats agree that income inequality is a major problem and are in favor of more government involvement and higher taxes on the rich.
- Income inequality is how unevenly income is distributed throughout a population. The less equal the distribution, the higher income inequality is.
Presidential Plan:
Those making $1,000,000+ under capital gains will be taxed the same rate as income tax, 37%
Keep charitable and mortgage income deductions. Lower capital gains tax.
The wealth gap between America’s richest and poorest more than doubled from 1989 to 2016 and could be greatly affected by the 2020 election.
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Income inequality affects economic opportunity and mobility, which are declining among the lower class. The standard of living among the lower class has gone down along with funding to social programs
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How Tax Codes Create Income Inequality
The capital gains tax is a tax on unearned income. Unearned income is for people who trade stocks or invest in real estate. As opposed to getting income tax, these people get the capital gains tax. The capital gains top tax rate is almost half
the top income tax rate. This explains how billionaire Warren Buffett pays less in taxes than his secretary. The charitable deductions allow people with higher incomes to deduct more from their taxes the more they donate. Billionaire Mitchell Rales gets a tax break for donating his collection of fine art to a private art museum he built
right next to his house. Mortgage deductions allow for the wealthy to take tax deductions for every house, yacht, or even fancy dinner party they pay for.
Stakeholders
How do the following stakeholders influence tax codes?
Congress/ Policy Makers
For profit & Nonprofit
businesses
Social Classes
Make, Vote, and Pass tax codes.
Timeline:
Benefit from tax codes created by Congress
Positively/negatively affected by tax codes