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Child Poverty and InequalitySecuring a Better Future for America's Children$
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Duncan Lindsey

Print publication date: 2008

Print ISBN-13: 9780195305449

Published to Oxford Scholarship Online: April 2010

DOI: 10.1093/acprof:oso/9780195305449.001.0001

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Growing Inequality: From the “Era of the Middle Class” to the “Era of the Wealthy Class”

Growing Inequality: From the “Era of the Middle Class” to the “Era of the Wealthy Class”

Chapter:
(p.34) 2 Growing Inequality: From the “Era of the Middle Class” to the “Era of the Wealthy Class”
Source:
Child Poverty and Inequality
Author(s):

Duncan Lindsey

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780195305449.003.0003

This chapter examines the growing inequality in the United States. According to the Internal Revenue Service, in 2005 the top 1% of income earners received more than twice as much income as everyone in the bottom 50% combined. Two decades earlier, the bottom 50% earned twice as much income as the top 1%. The half century after World War II can essentially be divided into two periods. The first period is called the “era of the middle class.” This was the time when the American middle class emerged in full force. During this period, for the first time in history, a majority of Americans graduated from high school. College and university enrollments tripled. Home ownership increased from 40 to 60% — the highest rate of home ownership in the world. The era of the middle class began to close in 1970 and essentially came to an end by 1980. In 1980, Ronald Reagan became President of the United States and ushered in a new “era of the wealthy class.” During this period tax rates were cut substantially for the wealthiest families, whereas the taxes for middle income families rose. The major federal tax borne by the middle class has been the employment tax, including Social Security and Medicare, and it has increased substantially during this same period. As a result, the wealthiest families have been able to save more and accumulate more wealth, and further improve their relative wealth and prosperity. In contrast, the middle class and the poor have seen their portion of the nation's income and wealth decline. The result has been the most dramatic increase in inequality in the nation's history.

Keywords:   United States, American poverty, inequality, middle class, taxation, tax policy, Ronald Reagan

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