Income Inequality
Income inequality is a big problem in America! From 1979 to 2023 wages for the top 1% have soared an astounding 181.7%, while wages for the bottom 90% have only grown 44%. The richest 1% of Americans now earn nearly 139 times what the bottom 20% make. And in cities across the country — everywhere from Trenton, NJ, to Roanoke, VA, to Mount Pleasant, SC, to Appleton, WI, to Santa Clara, CA — income inequality is only getting worse.
On the global stage, America’s high level of income inequality has made us an outlier among other wealthy nations. Researchers commonly use the Gini Coefficient to measure income inequality within a population. A score of zero on the scale indicates perfect equality (where everyone would have the same income), and a score of 100 would indicate perfect inequality (where just one person would have all the income). The higher the score, the greater the income disparity.
America has a Gini score of 41. For comparison, both the UK and New Zealand score 32. Canada is even lower at 31. Many EU countries score even lower: Denmark is at 28, Ireland 27, and Finland 26. Countries like Belgium, Slovakia, and Slovenia sit in the low twenties.
Not only is our rate of income inequality higher than Europe’s, it’s also rising at a steeper rate. Between 1980 and 2017, the 1% in Europe saw their pre-tax income share go from 8% to 11%. In the U.S., that share rose from 11% to 21%.
So yes, friends, income inequality is definitely a problem in America.
The Cause
So how did we get here?
In short: Republicans. They seem to think working-class Americans don’t deserve a fair share of the profits their labor creates. Judging from their policies, they seem to think all the spoils of capitalism should flow upwards and into the already deep pockets of America’s centimillionaires, billionaires, and broligarchs. To ensure that it does, Republicans have done three key things:
1. They’ve Waged War on Labor Unions
It all started back in 1935, when Congress passed the National Labor Relations Act (NLRA). Part of FDR’s New Deal, the NLRA was intended to correct the glaring power imbalance between employers and employees. It gave private-sector workers the right to organize, collectively bargain, and strike. Thanks to the momentous legislation, labor unions soon flourished, a burgeoning middle class was born, and America saw the lowest levels of income inequality since the Great Depression. All of which seems to have really pissed Republicans off because they’ve been waging war on unions ever since.
Notable battles include:
President Reagan (R) firing 11,000 striking members of the air traffic controllers union, PATCO, in 1981. The mass firings accounted for 90% of the union’s membership and led directly to the union being officially decertified.
Wisconsin Governor Scott Walker (R) gutting public-sector unions in the state by signing his Budget Repair Bill into law in 2011. The law snatched away public-sector employees’ right to engage in collective bargaining, forced them to pay more towards their health insurance and pensions, and in the end left them with an 8 to 10% drop in take-home pay. (I’d be remiss if I didn’t mention that the [mostly male] police and firefighters unions were exempted from many provisions in the law, but the [mostly female] teachers’ union was not. And that’s because Republicans are a bunch of women-hating assholes.)
Donald Trump praising Elon Musk for firing striking workers. During a 2024 interview between the two, the fawning orange billionaire told the goofy broligarch, “You’re the greatest cutter… You walk in and say, ‘You want to quit?’… They go on strike, and you say, ’That’s OK. You’re all gone.’”
2. They’ve Kept the Minimum Wage a Poverty Wage
The federal minimum wage has been stuck $7.25 per hour since 2009. Adjusted for inflation, it’s worth less today than at any point in the past 65 years. Democrats have repeatedly introduced legislation to raise it to something approximating a living wage, but Republicans have repeatedly voted it down.
Meanwhile, across the country, 20 states still have a $7.25 minimum wage. In 15 of them, Republicans hold full governing control; in four more, they control both legislative chambers; and in the last, they control the state senate.
3. They’ve Re-Legalized Stock Buybacks
Of all the things they’ve done to cause and exacerbate income inequality in our country, it’s the Republicans’ re-legalization of stock buybacks that has done the most damage.
Stock buybacks occur when corporations use company profits to buy back shares of their own stock. Once they buy those shares, they retire them, which leads to fewer shares in the market. Fewer shares inflate the stock price, and that increased stock price translates into more money for shareholders—shareholders who are, statistically speaking, obscenely rich. (Today, the top 10% of Americans own 93% of all stocks, while the bottom 50%, own just 1%.)
For the better part of the 20th century, stock buybacks were widely considered a form of market manipulation and were regulated to the point of being, for all intents and purposes, illegal.
But that all changed when the SEC under Reagan (TFG again) adopted Rule 10b-18, granting corporations “safe harbor from liability under certain market manipulation rules.” Thanks to that safe harbor, American corporations can now legally invest the vast majority of their profits into stock buybacks. And that they do. This year alone, U.S. companies are expected to spend more than $1 trillion on stock buybacks.
While that investment has greatly benefited CEOs (their compensation, which is often tied to stock performance, has soared over 1,200% since 1978), it’s come at great expense to regular workers.
For example, with the money it spent on buybacks between 2015 and 2017, Starbucks could’ve given every one of its workers a $7,000 raise. Meanwhile, Lowe's, CVS, and Home Depot could have given their workers more than $18,000 each. And Kraft Heinz could’ve given all 40,000 of its workers an eye-popping raise of $68,197.
But instead, those companies invested that money in stock buybacks. That’s the main reason why, in 2023, CEOs on average received $16.7 million in stock-related compensation and made 290 times more than the average worker. In 1965, that ratio was just 21 to 1.
Between their war on unions, their refusal to raise the minimum wage, and their re-legalization of stock buybacks, Republicans have played the starring role in America’s income inequality origin story.
But just as Republicans used bad laws and policies to create and worsen the problem, we can use ones to minimize and alleviate income inequality in our country. The trick to getting those laws and policies passed is ensuring Republicans have no say in the matter.
And that’s where Choice Taxation comes in.
The Solution
If you’re not familiar with Choice Taxation, you can find a guide to the plan here.
For now, here’s all you need to know:
Under Choice Taxation, four new partisan tax systems would be in charge of creating and enforcing most of the rules and regulations that govern private sector businesses.
While our government would remain in charge of regulations that affect the general public, the tax systems would be responsible for regulations that affect consumers and workers.
American companies and corporations would have the freedom to apply to join the system of their choice, and in turn, each tax system could accept or reject applicants at its discretion.
With the tax systems in charge of regulations that affect workers, both the Progressive and Democrat Tax Systems would be free to create and enforce rules and regulations that ensure a fair share of company profits get passed on to regular workers.
For example, they could mandate their member businesses pay a living wage, honor and respect their workers’ right to engage in collective bargaining, and ensure they keep their market manipulation stock buybacks to a minimum. And they could cap CEO pay at a fixed multiple of the average worker’s pay (e.g., 40x).
Whatever the Progressive and Democrat Tax Systems decide to do, Choice Taxation ensures Republicans won’t be able to stop them.
While income inequality is a big and growing problem in America. But it doesn’t have to be this way. By adopting Choice Taxation, we can ensure Republicans can’t stop those of us on the Left from enforcing rules and regulations that will close the income gap between the working class and the ruling class, the regular workers and the CEOs, and the haves and the have-nots.
With Choice Taxation, we’ll finally be able to clean up this mess that Republicans made.
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