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As our economy grows and becomes more productive as well as more prosperous, it is evident that the profits only benefit a few people. The middle and lower classes seem to be the victims in Americas magnifying wealth-gap. Wealth is the abidance of valuable possessions as well as of money. The wealth-gap is the difference in income and prosperity between the rich and the poor. Our wealth-gap widens due to taxation differences, investment differences in stocks and bonds, and the unfair job opportunities in the manufacturing trade industry. A person is considered wealthy when their income is substantially larger than that of the average person in their community.
Society encourages everyone to strive for power and wealth and as Cohen says, money in all its manifestations has always been the prime source of power. Yet given the situation, not everyone attains it. A person status in society's social ladder is determined by their wealth. In other woods, wealth determines the social class of a person. There are three social classes: the upper middles and lower class.
The upper class consists of these whose income exceeds the average persons income. It consists of those whose social and political importance can give them the same wealth available to the excessively wealthy. The middle class are those whose income is substantially lower than that of the upper class. They make enough for all their needs such as rent, food, clothing, bills, and extras such as forms of transpiration and communication. However do not have enough for the luxuries that the wealthy have. The lower class is referred to as the poverty-stricken class.
Galbraith says, People are poverty-stricken when their income, even adequate for survival, falls radically behind that of their community (241). The lower class receives no more than the minimum wage, and even though they do make enough to survive, their income does not provide them with, as stated Galbraith, what the larger community regards as the minimum necessary for decency (241). As the wealth-gap widens, it allows some people, mainly the wealthy, to prosper far more than the middle and lower person. Cohen states: ... the ratio of the earnings of the average CEO to the average factory worker has exploded from 42 to 1 in 1980, to 419 to 1 in 1999. Taxation is partly responsible for this.
The upper class is the wealthiest. They own businesses and corporations. The employ the middle and lower class to manage them. It is required required by law that everyone pay taxes. Those who make higher profits, pay more taxes on them.
the logical conclusion is that the large companies and corporations, being much more profitable, pay more taxes than the average middle or lower class. However this conclusion is not valid because somehow these companies end up paying less. Anything and everything that is given away by a business is tax free, much like charity donations. All charity donations are tax free to that business.
Companies and corporations find a way to let go of a portion of their earnings so that they dont have to pay the taxes on them. Not letting go of that portion would make their total earnings much higher. Thus being taxed on a much larger sum, and consequently paying more than that portion was worth. For example, an employer can give a $ 100 bonus.
A bonus for one employee will not save the employer much, but a bonus to all his employees will result in thousands of untaxed dollars. This makes a considerable difference especially as the company in question grows. However, those employees who received free money do not have to pay the taxes for that bonus. You could say that the workers pay the taxes that the companies avoid.
Another way they become exempt from paying some of their taxes is by reporting losses in the company. The middle and lower classes cannot avoid their tax. They have no choice but to pay them, and in cases such as this pay them twice. Once for themselves, and again for the company. Their income is not great to begin with, and it shrinks considerably after taxes. They may improve their economic situation slightly, but at the rate that the economy is going, they will not prosper as much as those who are already in the lead.
Thus, taxation differences illustrated above show a reason for which the wealth-gap continues to widen. Investment differences in stocks and bonds also contribute to the wealth-gap problem. There is an obvious difference in how much money is taxed and as a result kept. The amount of money left after taking care of all the necessities, is considerably different in proportion. Hence, the amount left invested in stocks and / or bonds varies between the rich and the poor.
According to Hausman, less than half of the population owns any form of stocks, and the richest 10 percent of Americans who own 88 percent of stocks and 90 percent of bonds, are the ones significantly benefiting from the bull market. This means that of all the wealthiest Americans, being a small portion of our population, 10 percent, being a minute portion of our population own 88 percent of all the stocks and 90 percent of all bonds. The rest of the population that invite does not gain nearly as much; of those that do invest, very few are middle class. However, there is a great contrast in amount of investment from rich person, and the middle class person. This middle class person will make some money on that investment, but when compared to the investment made by the richer person, it is small to none. Ironically, it makes the middle class person, who is slightly wealthier form their investment, poor.
When compared to other investors who were wealthier to begin with and the gap between profits is taken into consideration they remain poorer. The existing wealth-gap makes it virtually impossible for the common person to ever attain such measure of wealth. Another contribution to the wealth-gap is the way the manufacturing trade industry treats their employees. The goal of large manufacturing companies is to raise production and make higher profits. These companies try to cut back as much as possible so that the end result is minimal spending. It is easiest for them to take away benefits from the employees to save money.
These companies are not required by law to offer them benefits. Consequently, when the employees families get sick, they must pay for the bills out of their own pocket. These kinds of situations, often emergencies, set those workers even further back financially. Another unfair fact is that in order for these companies to prosper they must expand. By expanding, they are forced to hire more people. Often times they do not want to pay more wages so again, they find a way to cut back.
When they ship their manufacturing jobs over seas, they save a huge amount of money; . This allows the labor costs for theses products to be considerably lower. It is much cheaper to manufacture the product overseas where the expected wage is lower. Not only does it allow them to get richer, but in turn causes unemployment for the middle and lower class worker. The loss of well-paid manufacturing jobs makes the wealth- gap wind. Consequently the growth of the economy is causing an uneven distribution of wealth in American society, allowing the wealth gap to be magnified.
Large companies expand and the owners become much more prosperous while the rest of us just sit back and watch. There is an obvious wealth-gap due to the taxation differences, the investment differences in stocks and bonds, and result of manufacturing companies cutting back on expenses and spending. This leaving the rich wealthier and the poor more poverty-stricken. Bibliography: Work Cited Jacobus, Lee A.
A World of Ideas. Boston: Bedford, 1998 Galbraith, John. The Position of Poverty A World of Ideas. ED Lee A. Jacobus.
Boston: Bedford, 1998 Hausman, Tate. Booming Economy Benefits the Rich, Busts the Rest. San Francisco: Alter. Org, 1999 Cohen, George D. Americas Obsession with Wealth.
The Christian Science Publishing Society. (Oct 7, 1999): online. Internet.
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