Income Disparity Sparked by Low Top Marginal Tax Rates
*Click to Enlarge* • Background Chart: Source • Capital Gains Data: Source
The chart above is a graphical representation of United States income disparity throughout history. It clearly shows the two spikes in disparity which led to the two worst economic times the United States has ever faced. In 1928 the disparity grew to a level that unbalanced the economy and pulled money away from the working class. By 1929 the Great Depression had begun.
The depression didn’t end until the early 1940’s when the disparity dropped to a stabilizing level. Large drops in top marginal tax rates led to these two extreme spikes in income disparity.
Chart: Source
Over the last 100 years we’ve had two major troughs occur in our top marginal rates. These troughs were the only periods in the history of the United States where the top marginal capital gains tax rate was dropped below 20%. The first led to the great depression, and the second has lead to our current great recession.
Presently the top marginal capital gains tax rate sits at 15%.
Table of Contents & Page Links
Introduction
Economic Problems
1) Income Inequality Influences the US Personal Savings Rate
2) Income Disparity Sparked by Low Top Marginal Tax Rates
3) Unequal Distribution of Wealth
4) Tax Breaks and Tax Loopholes for the Rich
5) Low Capital Gains Tax Rates Cause Investment Bubbles
6) Great Depression VS Great Recession
7) The Job Creators Myth Debunked
8) Government Spending and the National Debt
Economic Solutions
1) How To Fix Income Inequality
2) Restructuring is Needed to Stop Government Overspending
3) Use Taxes for Economic Recovery
Conclusion
Resources
Disclaimer:
This is a working paper and will be updated and expanded upon as time permits. All comments, questions, and alternative opinions are greatly appreciated.
About the Author – Brian Rogel
Senior SEO Manager at Silverback Strategies, Co-Founder of Helping the Underprivileged Grow, & Actor/Producer for Joey’s Town TV Show. Google+
Brian Rogel isn’t a household name but his analysis of wealth inequality could become household reading.
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