Overview[ edit ] Social inequality is found in almost every society. Social inequality is shaped by a range of structural factors, such as geographical location or citizenship status, and are often underpinned by cultural discourses and identities defining, for example, whether the poor are 'deserving' or 'undeserving'. In tribal societies, for example, a tribal head or chieftain may hold some privileges, use some tools, or wear marks of office to which others do not have access, but the daily life of the chieftain is very much like the daily life of any other tribal member.
Download image Effects on income inequality and the distribution of gains from growth Everything else being equal, increasing top marginal tax rates would decrease after-tax income inequality by definition making the tax and transfer system more progressivebut economic research suggests such changes could also have powerful effects on pretax inequality.
As discussed above, the pretax market distribution of income has been the primary driver of inequality growth, and the federal tax and transfer system would have to be made substantially more redistributive than it was in in order to reverse the increase in post-tax, post-transfer inequality since then.
Reducing pretax inequality growth is the key to slowing post-tax, post-transfer inequality growth, although there is certainly scope to restore lost progressivity through the tax and transfer system.
Using time series regression analysis over —, Hungerford found that reductions in the top capital income tax rates and the top ordinary income tax rates were significantly correlated a 5.
To this point, Hungerford decomposed the roles of labor income wagescapital income, and tax policy in widening income inequality over the years —, a period in which taxes on investment income were cut substantially.
The last two are generally referred to as the Bush-era tax cuts.
The Bush-era tax cuts introduced a percent tax bracket, reduced the top income tax rate to 35 percent, reduced other marginal income tax rates particularly for high earnersreduced the long-term capital gains tax rate from 20 percent to 15 percent, and created a new 15 percent preferential tax rate for qualified dividends previously taxed as ordinary income.
Note that in relative terms, the biggest relative swings in tax rates between and were for capital income, notably a Looking at a comprehensive measure of income including capital gains, Hungerford found that the Gini index of inequality rose from 0.
The share of business income rose from 2. Overall, capital income—capital gains, dividends, business income, and interest income the share of which fell over this period —rose as a share of total income from The share of income going to federal taxes fell in absolute value from The share of payroll taxes fell in absolute value from The share of income inequality explained by the distribution of investment income rose from As wages fell as a share of total income, the portion of inequality explained by wage income moved in the opposite direction, falling from Meanwhile, the role of federal taxes in alleviating inequality was diminished, from a dampening effect of a Hungerford found that a 1 percent increase in taxes would have reduced the Gini index of inequality by 0.
This suggests substantially more scope for tax policy to push back against income inequality through a combination of increased tax progressivity and, more importantly, greater equity in the treatment of capital and labor income.
Similarly, Hungerford found that the rising share of capital income—heavily concentrated at the top of the income distribution—at the expense of labor income was the single largest driver of widening income inequality between and Tax policy changes exacerbated the trend of increased post-tax income at the top of the income distribution, and the rising share of capital income was almost certainly encouraged by tax cuts for investment income.
Again, the largest relative and absolute changes in statutory tax rates over this period were decreases in the qualified dividends rate from Are tax incentives driving trends in market-based income?
For households that can reclassify compensation to minimize tax liability, the relatively large reductions in tax rates on capital income, particularly after the Tax Reform Act, which equalized tax treatment of labor and investment income, has created an incentive to shift income away from wages and salaries toward capital income.Data and research on social and welfare issues including families and children, gender equality, GINI coefficient, well-being, poverty reduction, human capital and inequality., Inequality is a multi-dimensional challenge, it goes beyond income and it affects the well-being of our people.
Evidence now tells us that the levels of inequality are becoming . The CSJ Foundation For Research and Education conducts original research, produces training programs, and publishes reports and educational materials on social and economic issues.
Source: Perry (a), Ministry of Social Development, using data from Statistics New Zealand's Household Economic Survey Note: The period between Household Economic Surveys has varied across the period shown..
Over the period of the survey, the ratio was the highest in () and lowest in (). Through a historically grounded conceptual framework that explains the presence and reproduction of social stratification and social inequality, [Social Inequality and Social Stratification in US Society] analyzes the four major American classes (upper class, middle class, working class, and the poor), identifies the major historical events that have influenced contemporary social inequality.
Income inequality is defined as a measure that highlights the gap between different individuals' or households' disposable income in a particular year and in a given country.
Income Inequality Income includes the revenue streams from wages, salaries, interest on a savings account, dividends from shares of stock, rent, and profits .