Solutions to Income and Wealth Distribution in America

1. Introduction

The purpose of this proposal is to identify solutions to the rising wealth and income

inequality in the United States. As a finance major is see uneven wealth distribution as a major

problem in the United States. I aspire to have a career as a financial advisor so understanding

why citizens are unable to build wealth consistently interests me.

2. Problem

The problem in the United States is that a large portion of the country’s wealth is

concentrated among a small portion of the population. The top earners of the country hold a

large share of wealth while lower income earners have a much smaller share of the country’s

wealth. Recent trends have indicated that the wealth is becoming even more concentrated as

higher earning individuals have experienced rapid growth in their net worth (Goda, 2017).

Average earners have experienced the opposite effect. Middle-class individuals have

experienced a decline in wealth (PIIE, 2021). This is an issue as it makes wealth distribution

increasingly uneven. Through research I have determined multiple ways to suppress the

unequal growth of income and wealth in the United States.

3. Solutions

Tax policies can be used to make income and wealth distribution more equal. Top

earners have experienced a decline in tax rates in recent years. As tax rates have decreases

their share of the nation’s wealth has increased. This is in part because earnings from

investments have been given privileges that make them more valuable than earned income.

Taxing investment gains the same as earned income would make the tax system more fait to
every individual in the United States. Making taxes more progressive would make it easier for

lower income individuals to save money and build wealth. The United States taxes earned

income and gains on investments differently. A progressive tax code that taxed all earnings the

same would give saving incentives to everyone (Powell, 2021). A wealth tax is another tax policy

that would benefit the average American. Wealth taxes would not tax income, but it would tax

the earnings made from investments. This would allow the government to obtain money from

the super wealthy and put it to use to help those in need (PIIE, 2021).

Investing in education could lessen the income and wealth gap. The United States

government needs to be more active in giving access to early education. Programs like universal

preschool education would greatly benefit low-income children. Providing children with great

education as they develop into young adults has shown to produce less high school dropouts

and higher test scores (Powell, 2021). Better childhood learning affects the likelihood that

certain children will be able to attain higher education after graduating high school. More

access to a higher level of education is shown to result in more wealth (Killewald, 2021).

Providing better access to higher education would allow more people to become educated and

as a result build wealth. Other countries like Germany have tuition-free public universities for

students. America has some policies to help students obtain higher education. Education from

job training would also boost incomes. Providing better job training programs would allow

employees to perform their tasks better and earn more income. In some cases job training has

been linked an increase in income of up to 40 percent (PIIE, 2021).

Increasing the minimum wage has been linked to more even wealth distribution. Raising

the minimum wage would greatly help a large majority of the United States population. Many
fear that increasing the minimum wage would hurt the economy. The opposite has been shown

to happen. Wages increasing does not hurt employment or economic growth. The increase

would result in a large increase in the United States income. By increasing the minimum wage

children would also benefit greatly. Higher academic achievement and increased health are

positive effects of raising the minimum wage. Along with increasing the minimum wage,

enforcing established wage laws will make a great difference. Employers can avoid wage laws

many ways. Employers can classify employees differently to avoid paying them overtime and

depriving employees of other benefits (PIIE, 2021).

4. Conclusion

The United States has a lot of work to do before its citizens will benefit from equal

wealth and income distribution. The nation’s government should start investing more into

education. Tax codes could be changed to benefit lower class individuals while still being fair to

wealthy earners. Wages increasing would benefit everyone on the United States. Job growth

and economic growth would remain constant while workers would earn more income.
 References

Killewald, A., Pfeffer, F. T., & Schachner, J. N. (2017). Wealth Inequality and Accumulation. Annual

Review of Sociology, 43(1), 379–404.

Goda, T., Onaran, Ö., & Stockhammer, E. (2017). Income Inequality and Wealth Concentration in the

Recent Crisis. Development and Change, 48(1), 3–27.

Powell, J. (2021). “Six Policies to Reduce Economic Inequality.” Othering & Belonging Institute.

https://belonging.berkeley.edu/six-policies-reduce-economic-inequality.

PIIE. (2021). “How to Fix Economic Inequality?”. https://www.piie.com/microsites/how-fix-economic-

inequality.