Gap

Many people are concerned about the growing gap in wealth and income throughout the world and in particular in the United States. Whether you are rich or poor there is only four things you can do with your after tax money. You can save it, spend it, invest it or give it away. If you are poor you mostly spend and if you are rich you mostly invest. To save means to buy treasuries, money market certificates or certificates of deposit (CD's). If you invest it is mostly in stocks, bonds and or real estate. The government gets most of its money from individual and corporate income tax. The government spends all of its money and then some since it has been many years since any revenue was applied to the debt. The government invests some in the form of subsidies and research and development but most of the government money goes toward public assistance, primarily Medicare, Medicaid and social security. The rest goes mostly to defense and interest on the debt. This reveals that tax policy is not so much economic policy but rather social policy. How much money should the government take from one group and give to another group. Here is one example to illustrate the gap. The average income of the bottom 20% is $28,000 and the top one percent is $820,000. The bottom 20% have $4 trillion in wealth and the top one percent has $36 trillion. There are many things besides taxes that can be used to narrow this gap.