Income Inequality in America - Essay Example

The low-income earners are heavily taxed through high effective tax rates while the high-income earners are taxed less, thus creating a wide economic gap. Although Americans consider themselves as a middle-class society, the society has a wide income inequality between the affluent and the poor. Income inequality in America has various meanings and implications for the American economy.

Some people argue that there is no harm in having a wealthy class people with large disposable income. Others argue that the recent winner-take-all economy caused the massive American recession resulting in income stagnation for most Americans. Most economic and political analysts agree that income inequality is increasing mainly because the top earners’ incomes have skyrocketed. There are numerous views and suggestions on the implication of high-income inequality in America.

Most analysts suggest that a certain level of income inequality is important because it motivates innovations in the process of seeking better rewards. In addition, they suggest that countries with high-income inequalities in the past have experienced rapid economic growth. However, high-income inequality in America may result in economic stagnation or economic recession as the number of the proceeds of the poor decrease and that of the rich increase. Lastly, the income inequality in America is more harmful to society than its good.