Opinion | How unfair is America? Economists’ debate rages on about income inequality.


Economists are once again contesting a fundamental question about American society: how equitably has the prosperity of the past half-century been distributed?

A forthcoming study by two economists, Gerald Auten and David Splinter, of the Treasury and Congress’ Joint Committee on Taxation, suggests that it may not be as biased as social scientists have come to believe. This has had a major impact on anti-poverty policies in the United States. America’s economic model, and even how Americans view themselves.

They estimate that in 2019, the richest 1 percent of Americans collected about 14 percent of national income, excluding taxes and transfers from government programs. When the effects of government redistribution are included, that share drops to 9%, slightly higher than in 1960.

Their analysis is being seen as a fundamental reshaping of U.S. inequality, challenging the belief built over the past two decades that those at the top are eating an ever-larger share of the pie. ing. Research by economists Thomas Piketty, Emmanuel Saez, and Gabriel Zucman shows that by 2019, the top 1 percent will account for about 15 percent of national income after taxes and transfers, up from about 10 percent in 1960. That’s up from 9 percent.

Mr. Auten and Mr. Splinter’s numbers have sparked a backlash. “Denial of inequality, like denial of climate change, is a dead end from a scientific perspective,” Piketty wrote in an email. Still, their estimates are plausible, based on different but not unreasonable assumptions about how to allocate all the national income that is not reported on tax returns.

For example, Piketty, Saez, and Zucman assume that business income not reported to the IRS is distributed in the same way as reported business income. In other words, 1% accounts for about half of the total. Mr. Auten and Mr. Splinter argue that it will be distributed more equitably, based on a study of IRS audits. Notably, a large portion of undisclosed income comes from companies reporting negative profits, or losses.

But most important is how a new view of income distribution might change the diagnosis of American society. While the differences in estimates are certainly large, with Auten and Splinter’s view costing 1% or about $1.1 trillion a year less than Piketty, Saez and Zucman’s view, the new study shows A break with other estimates of inequality that may not be as large.

Consider the distribution of income across the spectrum. This is often measured by the Gini index. The Gini index measures how the actual distribution of income deviates from a line of perfect equality in which everyone gets the same thing. The range is from zero, for a perfectly homogeneous society, to one, for a society where all incomes peak. Auten and Splinter estimated that between 1970 and 2019, America’s Gini before taxes and transfers rose from about 0.42 to 0.54. When the government’s redistributive effect is included, it increases from 0.35 to 0.42.

This speaks volumes about America’s redistribution, a backlash against market forces that promote inequality. However, the numbers are quite similar to existing works. The Luxembourg Income Survey estimates inequality based on survey data (rather than official government data, as Oaten, Piketty et al. do), and the U.S. Gini index before taxes and transfers ranges from 0.40 to 0.51. It was found that there was an increase in 0.32 to 0.39 after period and redistribution.

The American story may need to be reinterpreted. Perhaps the very rich don’t receive as much of a slice of the pie as many people think. Still, the “new” United States remains a markedly unequal place compared to most other developed countries. According to Luxembourg survey data, Norway’s Gini with taxes and transfers is 0.28. Canada is 0.29, Germany is 0.30 and the UK is 0.30. Of the 38 countries in the Organization for Economic Co-operation and Development, only four of her countries are more unequal: Chile, Costa Rica, Mexico and Turkey.

This inequality is important because it is closely related to the fact that the United States has a higher poverty rate than its peers. Whether measured by obesity, life expectancy, infant mortality, maternal mortality, hepatitis B incidence, or the number of accidental poisonings and suicides, the United States is an outlier, faring worse than other countries. It is in. And those who suffer the most are Americans at the bottom of the socio-economic ladder.

America’s extraordinary inequality may not be directly responsible for these conditions, but taken together, these numbers paint a picture that makes the country look unequal compared to other countries. A new debate among economists highlights government programs to reduce poverty and improve health and living conditions as a key inequality reducer, and a central feature of any response: It is also pointed out that these programs can be made more robust, efficient, and effective.

Poster’s opinion | About the editorial board

Editorials represent the views of the Post as an institution, determined through discussion among editorial board members, and are independent of the newsroom and based in our opinion section.

Editorial board members: Opinion Editor-in-Chief David Shipley, Opinion Associate Editor Charles Lane, Opinion Associate Editor Steven Stromberg, and writers Mary Duenwald and Christine Emba. Shadi Hamid, David E. Hoffman, James Homan, Heather Long, Miri Mitra, Eduardo Porter, Keith B. Richburg, Molly Roberts.



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