Wealth Inequality In America Essay

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Centuries of discrimination and exploitation have left black Americans far poorer than white Americans. The net worth of the average white household is 10 times that of the average black household. If black households had a share of the national wealth proportional to their share of the US population, the actual amount of that household wealth would be $12.68 trillion, not $2.54 trillion. So the total racial wealth gap is $10.14 trillion.

There is an important and lively debate in the United States today about reparations programs and other cost-based approaches to closing the racial wealth gap. These investments are a moral imperative and an urgent economic need.

Wealth Inequality In America Essay

Wealth Inequality In America Essay

But any program to close the racial wealth gap will have to contend with the reality of the concentration of wealth in America today. The combined wealth of the 400 richest American billionaires is greater than all 10 million black American households. Black families own about 3 percent of all household wealth, and the 400 richest billionaires own 3.5 percent of all household wealth in the United States. Because wealth in the United States is highly concentrated and the wealthiest Americans are predominantly white, the racial wealth gap is also concentrated among the wealthiest families. Indeed, if the wealth gap were to be completely eliminated for all but the richest 10 percent of households, the overall racial wealth gap would still exceed $8 trillion.

Pdf) Wealth Inequality In The United States

Any plan to close the overall racial wealth gap requires a program of heavy and highly progressive taxation that targets the wealthiest Americans, in addition to a transformative national investment in black homes and communities. A comprehensive agenda to close the racial wealth gap includes income and property tax reform, as well as new wealth and inheritance taxes, with significant investment in the effort.

Although these taxes generate significant revenue, this is not their primary purpose. A high and progressive tax on the extreme wealth is itself a racial justice strategy because it directly reduces the portion of the racial wealth gap that remains at the top of the economic ladder.

This article begins by describing the racial wealth gap, its origins, and some recent spending proposals to reduce or eliminate it. I then examine how the racial wealth gap relates to the continuum of wealth in the United States and demonstrate the important role of taxes in closing racial wealth inequality.

There is a huge wealth gap between black and white Americans. According to the 2016 Survey of Consumer Finance, the average white household has $171,000, more than 10 times the $17,100 average for blacks. In other words, there is a large number of black households among the poor and working class. class, and underrepresented among the upper middle class and affluent (Figure 1). The poorest 20 percent of American households have a net worth of less than $4,700. Most of these households have negative debt-related wealth. 26% of these households are believed to be black. The richest 20 percent of American households have a net worth above $500,000. 3% of these households are black.

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Unfortunately, politicians are placing the responsibility of correcting centuries of racial inequality on the shoulders of blacks. For decades, elected officials have argued that personal choice explains racial inequality. These claims have been completely denied. As economists Trevor Logan and Darric Hamilton point out:

[c] Audience, labor, better financial decisions, and other changes in black habits and practices … are not entirely sufficient to close the racial wealth gap.

Even when blacks hold high degrees, own homes, hold high-paying jobs, and engage in other asset-building activities, their wealth is generally much lower than that of their white peers. Individual-level factors do not explain differences in economic status between blacks and whites.

Wealth Inequality In America Essay

Instead, the racial wealth gap should be recognized as a result of public and private discrimination throughout American history and continues to the present day. After nearly 250 years of slavery came a century of Jim Crow segregation and economic exploitation reinforced by state-sanctioned violence. up to 20

Racism And Income Inequality Essay

During the century, blacks were excluded from government programs that encouraged home ownership and higher education. Racial inequality persists in our current, supposedly color-blind system; Because of discrimination, black people get lower prices for their homes and earn less money than white people doing the same job. Public investment and bias in the criminal justice system simultaneously excludes and overregulates black communities, and these civil rights violations also have serious economic consequences.

Blacks in America have been systematically deprived of the wealth they have created. Only a transformative national agenda can address the racial wealth gap, because the disparity is a product of racialized social racism.

It is, of course, impossible to create any political agenda that will completely reverse the effects of centuries of racism. Justice has long given way to intergenerational injustice. But today there is an important and lively conversation that predicts what compensation will look like.

The easiest way is for the federal government to give money to the descendants of American slaves. William A. Darty and A. In her book, From Here to Equity, Kristen Mullen provides a detailed program that looks at visibility, total costs, payment mechanisms, and potential compensation policies.

Wealth Inequality In America Over Time: Key Statistics

There are many other economic policies that are commonly proposed to reduce the black-white wealth gap. Rashon Ray and Andre Perry outline some of these proposals in their article “Why We Need Black America to Change.” In addition to direct payments to the descendants of slaves, Ray and Perry envision various programs to finance college education, forgive student loans, and promote home and business development in the black community. Dark Hamilton and William Darty proposed a system of “infant relationships” in which American children were provided with a nest egg at birth; Directing larger bonds to children from low-income families significantly reduces the average generational wealth gap between generations.

A cost-based compensation program is an ethical imperative. It is also an urgent economic need. Capital compensation investment provides tremendous economic stimulus to the economy as a whole and injects urgently needed funds into households and communities that suffer from chronic underinvestment. But taxation—especially heavy and progressive taxation of wealth—will play an important role in achieving racial equality. To understand why, we need to look at the relationship between racial wealth gaps and overall wealth.

It is an amazing fact that the combined wealth of the 400 richest American billionaires is greater than the combined wealth of all 10 million black American households. Black families own about 3 percent of all household wealth, and the 400 richest billionaires hold 3.5 percent of all household wealth (Figure 2).

Wealth Inequality In America Essay

– Not the median difference between typical households, but the stark contrast between the share of property owned by blacks and their share of the US population. Using data from the Federal Reserve’s 2016 Survey of Consumer Finances,

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If black families had a share of the national wealth proportional to their share of the US population, the actual amount of that household wealth would be $12.68 trillion, not $2.54 trillion. The total racial wealth gap is more than $10.14 trillion.

Second, the overall wealth disparity between the 400 billionaires and 10 million black households also reflects the extreme and highly racialized persistence of wealth in America today. A minority of Americans own the majority of American wealth, and they are the only whites. So while white households are richer on average than black households at every income level, the vast majority of the overall racial wealth gap, in dollar terms, is higher.

Figure 3 shows these two phenomena in a graph. This figure shows the share of total wealth at each level of white and non-black households. Dark blue bars show the share of wealth owned by black families in each wealth category. As noted above, black households own only a fraction of the national wealth, and this is true across all wealth levels. The chart also shows how concentrated wealth is. The richest 10 percent of American households own more than three-quarters of American households.

Finally, the graph shows the relationship between the racial wealth gap and wealth concentration. Among the richest 10 percent of households, only 1.9 percent of those households are black. In short: At the top of the wealth spectrum, there is a lot of money and very few black people.

Wealth Inequality In America: Key Facts & Figures

In fact, the chart doesn’t fully capture how concentrated wealth is by class and race. Half of the wealth of the top 10%, or about two-fifths of all American household wealth, is held by the top 1% of households. Within the top 1% of households, less than 1% identify as black.

Even the richest black households have less wealth than the richest white households. According to the Forbes 2020 list,

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