Due to wealth disparity, tens of millions of working-class Americans are living in poverty while the richest billionaires in the country continue to expand upon their already vast wealth.
To better understand wealth inequality, wealth is usually equated with net worth.
Net worth is the sum of what an individual owns and what they owe.
The observable gap in net worth between different groups of Americans shows the inequality in the distribution of wealth.
According to research done by Statistica, in 2021 the bottom 50% of Americans possessed only 2% of the entire nation’s wealth, while the top 10% owned 70% of the wealth.
This egregious gap in wealth between Americans dismantles the theoretical meritocracy that many believe still exists in American economics.
The perceived meritocracy that many want to exist in America can not exist because of the rigid class boundaries.
These boundaries make it so that lower-income families struggle to build and maintain wealth, while rich families can easily grow their fortune.
For example, when one person is born into a family with immense wealth and vast capital goods those assets can easily be used used to gain more wealth.
Another person who is born into a family with a negative net worth will have to work multiple jobs just to pay bills and put food on the table.
Wealth inequality will always exist under a capitalist mode of production due to the need for workers and entrepreneurs but it can be negated so that it is not as detrimental to the American working class as it currently is.
The reason that wealth inequality has become more and more prevalent especially over the pandemic is because of how corporations react to an increase in profits.
According to Forbes and the U.S. Bureau of Economic Analysis, billionaire wealth has gone up 70%, corporate profits have increased 50% while wages have only increased a mere 17%.
Another noticeable trend in the distribution of wealth in the United States is how wealth is shifting to the top billionaires.
At the beginning of the pandemic in March 2020, the top five billionaires possessed $357 billion.
At the end of 2021, these same individuals reportedly had a combined net worth of $779 billion.
The reason that this level of wealth inequality is bad is because of how severely it affects the everyday lives of the 42.5 million poor working-class Americans.
Those who have wealth will want to remain in control of it, even if it comes at the expense of many more people.
Therefore they will support fiscal policies which are in favor of the rich.
This was demonstrated with trickle-down economics used in both the Reagan presidency and the Trump presidency.
One solution to this increasingly harmful disparity in wealth would be an increase in the minimum wage.
The minimum wage should, at the very least, rise at a proportional rate to the increase in profits that businesses have been seeing.
Another viable solution to close the wealth gap would be an increase in the capital gains tax for the top 1%.
This tax would include the sale of capital goods such as stocks, bonds and real estate which make up most of a billionaire’s wealth.
According to Princeton Economics, if the capital gains tax were to be increased by a mere 5% then an additional $18-30 billion would be collected.
With the excess money collected from these taxes, more funding could be allocated towards education and welfare programs.
These programs would be used to bolster America’s working class and help close the wealth gap.
It is important for voters to realize the importance of these policies which advocate to decrease wealth disparity and help millions of people.