Over the past years, the issue of wealth inequality has risen in America as well as other countries. According to Schaeffer (2020) America tops on the subject of income inequality in the list of group of seven countries in the world. According to Bloomberg, 25% of the wealthiest people in the planet control approximately $1.4 trillion. Despite the several ways that have suggested resolving the issue of wealth disparity, there is hardly any that has substantially shown results. One of the methods is the introduction of wealth tax on the very-wealthy people, and this has been applied by countries such as Norway, Spain, and Belgium, among others. In America, presidential aspirants such as Ms Warren and Ms Sanders have suggested the same, but the approach is not a good idea because it has been tried and minimal results were achieved.
Introduction of wealth tax is not a good idea because administration costs often offset the revenues obtained, and this does not achieve the intended goal of reducing wealth gap. Additionally, not much money is raised through the plan and therefore not useful. It is evident in Greene’s research (2020) where she explains that some countries in the Organization for Economic Co-Operation and Development (OECD) had tried the approach before and did not raise much money. The approximates that the states raised as low as 0.2% of GDP . Similarly, it is not the right approach because valuing the wealth of the tremendously wealthy people is difficult. Some of the reason as to why it is confusing is that there is considerable fluctuation in markets for assets that are listed in securities. Also valuing assets such as horses, houses, and art can be cumbersome as it can take auditors and tax administrators to agree (Greene, 2020).
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An alternative solution can be increasing the minimum wage, and this will help the lowest income earners to rise out of poverty. It is estimated that if the minimum wage is increased, there is a likelihood of at least 4.6 million people rising out of poverty (Bloomberg, 2020). The solution is ideal because it will increase the income of low earners helping them to rise from the poverty line.
References
Greene, G.(2019). Wealth taxes will not solve inequality
https://www.ft.com/content/47c4d764-0d32-11ea-8fb7-8fcec0c3b0f9
Powell, J. A. (2014). Six policies to reduce economic inequality. Berkeley, CA: University of California . https://belonging.berkeley.edu/six-policies-reduce-economic-inequality
Schaeffer. K (2020) 6 facts about economic inequality in the U.S
https://www.pewresearch.org/fact-tank/2020/02/07/6-facts-about-economic-inequality-in-the-u-s/
Bloomberg (2020). The World’s Wealthiest Family Gets $4 Million Richer Every Hour
https://www.bloomberg.com/features/richest-families-in-the-world/
