Barone has an excellent piece up, Entitlement, Not Tax Cuts, Widen the Wealth Gap.
I see no reason to care about income inequality in America: I hope the very prosperous 1% spend and donate their money wisely and enjoyably. The poorest have more comforts and conveniences than middle-class Americans had in the 1960s, and, in fact, live in larger quarters than members of the European middle classes do today.
The poorest, most dysfunctional or unfortunate have abundant governmental and charitable supports, but, unfortunately, these supports are not counted in their income status thus exaggerating disparities. Just Medicaid alone is equivalent to around $10,000 of income.
And, of course, income varies over the course of life; down, up and down and maybe up again for many, so statistics do not tell you who is newly poor and who is newly but perhaps only temporarily prosperous.
Of course, one way (if you want to address the statistics alone and ignore the people behind the numbers) to reduce income disparities is just to tax the hell out of the upper 10%. They'll quit working, of course, if they can afford to. Seen many big entrepreneurs in Europe lately?
Barone makes a few good points. Here's one:
...surprising, federal transfer payments have done much more to increase income inequality than federal taxes. That's because, in Ryan's words, "the distribution of government transfers has moved away from households in the lower part of the income scale. For instance, in 1979, households in the lowest income quintile received 54 percent of all transfer payments. In 2007, those households received just 36 percent of transfers."
In effect, Social Security and Medicare have been transferring money from low-earning young people (who don't pay income but are hit by the payroll tax) to increasingly affluent old people.
