What do Uganda, the Ivory Coast, and the United States have in common?
Extreme wealth inequality. And according to a new paper from Thomas Hungerford at the Congressional Research Service, capital gains and dividend tax loopholes are responsible for our nation's unequal income divide. Capital gains and investments used to be taxed like regular income, but they were lowered once in 1996, and again by the Bush tax cuts. Over the last decade, those tax loopholes allowed the rich to gain massive amounts of wealth, and led to an extreme increase of income inequality in our nation.
According to Mr. Hungerford's report, changes in wages between 1986 and 1996 had an equalizing effect, and most of the equalization occurred after a 1993 tax hike. However, after the Bush-era tax cuts in 2001 and 2003, Hungerford says, “most of the equalizing effect was reversed.” And this isn't the first time Thomas Hungerford researched the the income divide in our nation. In a 2011 study he prepared for the Congressional Research Service, he found that between 1996 and 2006, income grew at 25% for all Americans, but the top 1% saw a 74% growth rate on their wealth.
So, thanks to big tax breaks, the rich are getting richer and the poor are getting poorer. It's time to make the rich pay their fair share. Close the capital gains loophole and stop rewarding people who make money with money. Let's help out the real job creators in our country – the working people.