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Truth About the Income Disparity

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Truth about the Income Disparity Recently, President Barack Obama announced his plan to rein in the compensation of executives and raise tax rates on capital gains. This has again brought the topic of America’s widening income gap to the front page. While it is true that the wealth of America has long been dominated by a small number of people, most Americans do not see it as economic inequality or an obstacle to the development of the economy, which can be explained from two aspects—culture and economy. Instead, the real problem is the workers’ slow-paced wage increase, especially compared with the rising health care costs. Admittedly, most of the household income and wealth in America are occupied by a small minority of people at the very top, and actually the income gap has been rising at an increasing pace for the last few years. According to the data released by the Internal Revenue Service in 2005, 21.2% of all the household income went to the top 1% of Americans, the percentage of which was just 19% in 2004, and 20.8% in 2000—the previous high hit due to the skyrocket stock market. First of all, however, are the income disparity and economic inequality the same thing? Definitely not. As pointed out by Ladd and Bowman, rooted in the concept of equality for Americans is the notion of “equality of opportunity” (33). Great disparity in income distribution among social members can be tolerated as long as they can perceive that they have the opportunity to move up the economic ladder, and the rules are fair to them ( Ladd and Bowman, 3).In a national survey about what Americans think are the reasons for riches and poverty, which was conducted in 1986 by James R. Kluegel, a sociologist from the University of Illinois, and Eliot R. Smith, a psychologist of Purdue University, it was found that 64% of people surveyed considered “personal drive,

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