Tags: socioeconomic | wealth | recovery | tax

The Rich Get Richer While the Poor Get Poorer

By    |   Friday, 07 Jun 2013 07:53 AM

Wealthy households continue to prosper at the expense of the middle and lower socioeconomic strata.

The Center for Household Financial Stability at the St. Louis Federal Reserve Bank states that household net worth at the end of 2012 reached 99 percent of the level it was at the end of the first quarter of 2007.

White or Asian households between the ages of 40 and 61 with two or four-year college degrees represent 15.5 percent of all families and possess 37.5 percent of all wealth. They have recovered 98 percent of their wealth on an inflation-adjusted basis during this time frame, while those 62 or older, who represent 15.1 percent of families and 30.2 percent of all wealth, have retained 84 percent, roughly the average for all U.S. households.

However, families in the lower socioeconomic strata have suffered terribly.

African American or Hispanic households between 40 and 61 years of age with a two or four-year degree recovered 58.7 percent, while those 40 or older recovered 31.3 percent. More distressing, white or Asian families under 40 years of age with less than a high school degree are left with only 20.9 percent of their original wealth.

During this recovery, employment growth has stalled, the wealth disparity has risen and economic vibrancy continues to elude us. Economic growth will remain stagnant as long as monetary velocity continues to fall. Currently, it is nearly 60 percent below the 1980 level — a historic low for the broadest monetary aggregate, money of zero maturity (MZM).

Stagnant economic growth is due to the low level of investment relative to gross domestic product. Investment has fallen during this time, since corporate tax rates were higher than personal rates were for virtually all levels of income.

Lowering corporate tax rates will be a key driver in our economic recovery. It will add employment at all socioeconomic levels, increase income and lower the debt service.

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Wealthy households continue to prosper at the expense of the middle and lower socioeconomic strata.
Friday, 07 Jun 2013 07:53 AM
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