Economic Inequality Essay Topic – One of the deepest fault lines dividing the political right and left in this country…and in Texas…is the appropriate role of the government in aiding the poor. Should the Texas government do more to redistribute wealth from upper income to lower income households? How might the state’s tax system be reformed to accomplish this? Is the present system regressive? Or is it fundamentally fair and conducive to economic growth?
- Be 3 to 4 pages of content (do not include Works Cited, Endnotes, and Bibliography pages in the page count).
- Use at least three (3) academic resources (e.g. journal article, government web site, online newspaper, etc.) to support your position.
- Conform to MLA style when citing sources and composing your Works Cited page.
To facilitate grading, all writing assignments must comply with the following guidelines:
Papers must be completed as a Word document, using one-inch margins, one-and-one half or double spacing, and size 12 Times Roman or Arial font.
Economic Inequality in Texas
The issue of economic inequality remains a significant social, economic, and political problem. Many countries record an increasingly growing levels of economic inequality, which impacts on socio-economic development significantly. The U.S., for instance, reveals a higher income and wealth inequality compared to all the major world economies. According to Green (30), income and wealth inequality in the U.S. is highest since the 1920s. While this is the case, though different States have different rates of economic inequality, most record significantly high rates. For instance, Illinois, Texas, Arkansas, Michigan, New Jersey, and Maryland among others show the highest economic inequality. Through the application of the case of Texas, this essay outlines the issue of economic inequality, its influence, and the role of the government in aiding the poor. Further, it analyzes right and left political arguments on the need for the redistribution of wealth and discusses the measures necessary for reforming Texas’ tax system to progressive economic development.
The federal government and state governments in the U.S. have devised different techniques for the promotion of economic growth and development. Some of the policies adopted and implemented have led to the development of economic inequality in the country. For instance, following the ideological differences between conservatives and liberals, tax laws distribution laws and policies differ across states and have significant impacts. For instance, conservative-majority states implement low tax rates, light regulation, right-to-work laws, and pro-energy development policies. While this is the case, their counterparts enforce laws that encourage high government spending, promote welfare benefits, high income tax rates on high-income earners, forced union requirements and set restrictions on drilling of oil and gas. The different policies have impacted significantly on the economic growth of the different states thus affecting the economic standing of the citizens. Most notably, states that have lesser restrictions on investment, low tax rates, right-to-work laws, and established pro-energy development policies have recorded extensive economic growth and equally a significant increase in the economic inequality therein. However, the other states also record higher economic inequality rates. To curb the problem, wealth redistribution has been suggested as a way of alleviating the economic inequality.
The government of Texas should engage in activities that promote the redistribution of wealth from the upper-income to lower-income households. The economic inequality affects socio-economic growth significantly. According to Dabla-Norris, Kochhar and Suphaphiphat (5), the development of economic inequality slows the rate of economic growth in a country. The inequality shifts more of a country/state’s income to the wealthy. The shift causes lower spending per each marginal dollar and thus decreased consumption. As the rate of consumption decreases, there is lower rate of economic growth and development. Moreover, if the economic inequality worsens, income mobility falls making it difficult for people from poor backgrounds to achieve economic freedom. Additionally, increased income and wealth inequality cause an upsurge of borrowing among the lower-income households who strive to maintain their consumption. Such borrowing often triggers the development of a financial crisis (Dabla-Norris, Kochhar and Suphaphiphat 18). Also, the economic inequality gives the wealthy and upper-income households more political power and the ability to influence the development of policies that limit the growth of the economy. Therefore, it is important for the Texas government to focus on the development of policies that redistribute wealth from the upper to the lower-income households.
The redistribution of wealth serves a significant role in curbing the levels of economic inequality in the US and thus states with high levels of economic inequality should consider the implementation of policies that promote the process. The rising rate of economic inequality depicted by the extensive income and wealth inequality demands an effective approach. The redistribution of wealth can be done through taxation, land reforms, charity programs, welfares and other programs. The Texas government, for instance, can implement progressive income tax to collect revenue and ensure the redistribution of wealth. The reform will ensure that higher income earners receive high rates of taxation and decrease the rate of economic inequality (Carroll and Viard 33). The revenue can be directed towards public assistance and welfare programs such as health care services and food provisions among others. Also, the money can be directed towards the overall economic development of the State. The reform will ensure that the benefits of increased work productivity within the State will be shared among all the societal members instead of benefitting the wealthy with no significant positive impact on the general population. The present system, which continues to influence the development of the economic inequality within the country is regressive and should be reformed.
Despite the increased worker productivity recorded in Texas over the last decades, there is a significantly high percentage of low-income earners, and poverty remains adamant. In the current taxation system, the State levies no individual or corporate tax (Jillson 247). The result has been the shift o more income to the wealthy causing a significant increase in the level of economic inequality. The wealthy continue to record increased wealthy while the lower-income households experience an immense challenge in creating wealth. As such, the system is regressive even when it claims to offer a chance to every citizen to create wealth by not imposing individual and corporate tax. The increasing gap between the low-income and upper-income households in the State, the percentage of the rich to the poor, shows that the system is ineffective and unconducive to economic growth. It only favors the creation of wealth by a part of the society but discourages the overall economic and social development of the society. For instance, the inequality deprive low-income households of the ability to stay healthy and accumulate human and physical capital (Dabla-Norris, Kochhar and Suphaphiphat 8). Additionally, it causes under-investment in social amenities thus lowering livelihood for people from poor backgrounds.
In conclusion, wealth and income inequality in
any country impacts significantly on its socio-economic development. Texas
continues to experience various effects of the economic inequality caused by
the existing policies. For instance, there is a larger gap than ever before
between lower-income households and the upper-income households. As the wealthy
continue to accumulate wealth, the poor continue to experience different
challenges that make it difficult for them to accumulate physical and human
capital. Additionally, the poor continue to lack access to quality education
and health care services due to lack of sufficient investment in social
amenities. This is also the case due to the lack of welfare programs and programs
that enhance the economic and social development of the state as a whole.
Therefore, there is a need for the government of Texas to reform its taxation
system by integrating progressive income tax that will ensure the overall
development of the State. This act will also ensure the alleviation of the economic
inequality recorded in the State. Considering the impact of the inequality, it
is important for other states to implement the strategy to ensure the promotion
and protection of the wellbeing of all Americans.
Carroll, Robert and Alan D. Viard. Progressive Consumption Taxation: The X Tax Revisited. Washington, D.C.: AEI Press, 2014. https://www.amazon.com/Progressive-Consumption-Taxation-X-Tax-Revisited/dp/0844743941
Dabla-Norris, Era, et al. “Causes and Consequences of Income Inequality: A Global Perspective.” 2015. IMF. https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf. 14 January 2016.
Green, Gary P. Handbook of Rural Development. Cheltenham, UK: Edward Elgar, 2013. https://www.researchgate.net/publication/273158813_Handbook_of_Rural_Development_edited_by_Gary_Paul_Green_2013_Cheltenham_UK_and_Northampton_Massachusetts_Edward_Elgar_358_xix_ISBN_978-1-78100-670-2_18450
Jillson, Cal. Texas Politics: Governing the Lone Star State. Austin: Routledge, 2013. https://www.routledge.com/Texas-Politics-Governing-the-Lone-Star-State-7th-Edition/Jillson/p/book/9780429397660