Income unequality

Income inequality
Student’s name
Institution

Income inequality
Income equality is one of the skies that receive significant attention from academic activity. High my income rates or gaps is undesirable because it is unhealthy for the growth of an economy of a country. Income tax is one of the various tools used by governments to fix the inequality. The American income taxation system is incremental, which means that a person’s tax is proportional to the income earned. “Marginal tax rate” is the appropriate term for the incremental income tax structure. “Marginal tax rate” is the tax charged on every increase in dollar income. As such, the “marginal tax rate” increases with income. The system intends to promote equality such that the rich (with high income) pay high taxes as the low-economic status households or individuals pay lower taxes. The following table depicts the current marginal tax rates for 2018. An unmarried person requires earnings of $178750 to enter the top quartile (Tax Foundation, 2018).
Rate For Unmarried Individuals, Taxable Income Over For Married Individuals Filing Joint Returns, Taxable Income Over For Heads of Households, Taxable Income Over
10% $0 $0 $0
12% $9,525 $19,050 $13,600
22% $38,700 $77,400 $51,800
24% $82,500 $165,000 $82,500
32% $157,500 $315,000 $157,500
35% $200,000 $400,000 $200,000
37% $500,000 $600,000 $500,000
Table 1. Tax Brackets and Rates, 2018
Taxes can classify under the three main categories that include proportional, progressive, and regressive.

Proportional tax has a fixed rate for all amounts of income. Progressive tax changes with the variation in the amount of salary or wages earned. The high income and low-income earners pay high and low taxes respectively. Regressive tax system reduces the value of taxes as the income increases. The relationship between income tax and earnings is indirect proportionality.
Wealth inequality in America is huge. Only few people own and control over 80% of the nation’s wealth. In 1982, it took a person to have $80 million to list in the Forbes 400 richest Americans. In 2016, a person could only feature in the Forbes 400 richest American if their net worth amounts to $1.7 billion (Inequality.org, n.d). The society is unequal to the point that one percent of the American population owns over half of the entire wealth. In 2016, the median net worth of low-income households was 75 times less than that of the median high-income homes (DePillis, 2017). Dealing with the issue of wealth inequality may require the government to ease the process of middle-income people access lucrative businesses like the stock and hedge funds. This move is possible through easing access to loans and extension of incentives to the low-income earners.
References
DePillis, L. (2017). America’s wealth gap is bigger than ever. Retrieved February 27, 2018, from http://money.cnn.com/2017/11/03/news/economy/wealth-gap-america/index.html
Tax Foundation. (2018). 2018 Tax Brackets. Retrieved February 27, 2018, from https://taxfoundation.org/2018-tax-brackets/
Inequality. Org. (n.d). Wealth Inequality. Retrieved February 27, 2018, from https://inequality.org/facts/wealth-inequality/