Friday, March 30, 2007


Income Disparity Keeps Increasing

My first blog in May of 2006 was about income disparity. According to an article in the New York Times (Thursday, March 29, 2007) things are getting even worse. A study based on IRS returns showed in increase in the gap between the very rich and the rest of the population. The authors point out that the gap is likely to be even bigger because the IRS "estimates that is able to tax accurately 99% of wage income but it captures only about 70% of business and investment income."

On Sunday, April 1, the New York Times published an article about the problems of the auto workers. While payments for those forced to early retirement have eased their pain, the fact remains that thousands of well paying blue color jobs have disappeared. This does not bode well for the future and income disparity is likely to increase. Many middle class jobs have been outsourced.

I pointed out in last week's blog that, historically, states with large income disparity have not fared well. Of course, by the time the situation becomes critical it is too late to do anything about it. It may be difficult to keep some well paying industrial jobs in the United States or, for that matter anywhere (because of automation). But having a trully progressive tax that produces revenue that can be used for universal health care, subsidized college education, and the like should help to reduce the income disparity.

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