Should we worry more about the poor getting poorer or the rich getting richer?

The OECD have released figures showing that the gap between the poorest section of the population and the richest is the widest for 30 years. This is in fact truer of the countries that are usually considered the most equal, Germany’s top ten percent of earners earned on average eight times the income of the poorest ten percent, this will be held up as another example of why more taxes are necessary on the richer sections of the population when really attention should be given to creating wealth and opportunities within the low earners.
The amount needed to be included in to the top ten percent of earners was broadly the same though out the OECD countries, UK was £55K, Germany €57.3K and $114K in the USA, where as the lowest wage was just £4,700 in the UK this is where action is needed and not more poorly thought out redistribution.
Tax and benefit systems play a major role in reducing market-driven inequality, but have  become less effective at redistributing income since the mid-1990s. The main reason lies on the benefits side: benefits levels fell in real terms in nearly all OECD countries,  eligibility rules were tightened to constrain spending on social protection, and transfers to the poorest failed to keep pace with earnings growth.
As a result, the benefit system in most countries has become less effective in reducing inequalities over the past 15 years.
Another factor has been a cut in top tax rates for high-earners.
“There is nothing inevitable about high and growing inequalities,” said Mr Gurría. “Our report clearly indicates that up-skilling of the workforce is by far the most powerful instrument to counter rising income inequality. The investment in people must begin in early childhood and be followed through into formal education and work.”

Trends in inequality of disposable income

Employment is the most promising way of tackling inequality. The biggest challenge is creating more and better jobs that offer good career prospects and a real chance to people to escape poverty.


One Response to “Should we worry more about the poor getting poorer or the rich getting richer?”

  1. Have you ever thought about writing an e-book or guest authoring on other websites? I have a blog based upon on the same subjects you discuss and would really like to have you share some stories/information. I know my viewers would enjoy your work. If you are even remotely interested, feel free to send me an e mail.

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