Over the years, the divide between the wealthy and those with fewer advantages has notably widened in advanced countries. At this moment, during significant health and economic turmoil, the increasing disparities in our society bring forth multiple ethical, social, financial, and political difficulties. The ones who are particularly susceptible to the negative consequences of a health and economic crisis have been harshly affected in more significant proportions. There are twelve strategies at our disposal to tackle the disparity in income and wealth. The main focus is on the potential impacts that various measures could have on long-term economic growth. Because they provoke disagreement, every action has the potential to produce both positive and negative consequences.
Increase the CTC and EITC
Enabling families with the most financial need, including those without any income, to receive the full reimbursement can be achieved by making the Child Tax Credit (CTC) fully refundable. This measure could serve as an intelligent tactic to reduce child poverty. The program's expansion will not only reduce poverty but also create more job prospects. This modification would effectively function as a type of financial aid for families with low incomes and children who depend on them. The program's payouts have been steadily increasing, leading to positive effects like enhanced education and health outcomes for children, as well as higher employment rates among single parents.
1. Shift the Taxes from Labor to Capital
Local officials have jointly decided against participating in a competition wherein they would offer excessive tax incentives to lure businesses to their specific areas. A clever strategy would be to reduce the burden on employees by lowering payroll taxes while also ensuring that capital gains are taxed at a comparable or possibly higher rate than individual income.
2. Wealth Tax Formation
They have an impressive level of wealth that significantly exceeds their income. A clever strategy employed by numerous billionaires involves the accumulation of their wealth through investments in stocks and other assets, which are subjected to legal taxation under capital gains instead of income taxes. Just increasing the highest tax rate would not be sufficient to effectively raise the total tax burden on highly wealthy individuals. It seeks to reduce the influence of wealthy individuals and provide financial support to essential programs that help those who require assistance. The legality of imposing a wealth tax is open to interpretation, and some states have encountered challenges in enacting such a tax.
3. Imposing Value-Added Tax
Numerous developed countries apply a value-added tax, which shares similarities with a retail sales or consumption tax. Nevertheless, it is more challenging to avoid paying this tax as it is imposed at every stage of production for both goods and services. Advocates for reducing inequality propose that removing the VAT on essential commodities such as food could lighten the financial strain on low-income households, as they allocate a substantial part of their earnings towards these basic needs. VATs contribute significantly to the revenue of countries where they are implemented. People with lower incomes face a more significant financial strain as they allocate a larger proportion of their earnings toward taxable items. The money obtained through taxation can be utilized to support government aid initiatives or provided as direct cash transfers.
4. Initiating Unemployment Benefits
Wise policymakers should implement pre-determined initiatives, like tax reductions and incentives, that are activated when the unemployment rate surpasses a certain threshold within a defined timeframe. In periods of economic decline, there is a chance for unemployment benefits to be automatically implemented.
5. Increased Support for Childcare
Increasing government-funded childcare is an intelligent strategy to generate employment opportunities that are immune to automation. Intelligently integrating universal preschool education and government-supported childcare would enhance the economic advantages for individuals with limited skills and incomes while also aiding in the retention of women in the workforce.
6. Access to Quality Education
Enhancing people's income prospects heavily relies on improving the accessibility of high-quality public higher education.
· A program has been developed at the national level that enables students to earn money exclusively for their educational expenses.
· Giving financial assistance to universities and colleges in order to improve their ability to provide a more significant number of scholarships.
· This could be going to the extent of completely eliminating tuition fees. Smartly consider a person's income and the length of time since the debt was incurred to effectively eliminate any remaining debts.
7. Raising the Wages for Low-Salaried Jobs
Opponents contend that the introduction of a higher minimum wage would present significant difficulties for businesses and potentially result in a reduction in employment opportunities. Numerous studies suggest that the effect on employment is minimal or insignificant. Raising the national minimum wage would offer assistance to individuals with the lowest incomes in states that have yet to raise their own minimum wage thresholds. Job prospects in childcare, nursing, eldercare, and healthcare tend to provide restricted remuneration and limited opportunities for career advancement.
8. Investment in Job Creation
In a similar manner as was done during the Great Depression, governments have the option to invest funds in infrastructure or other initiatives that create jobs, increase employee wages, or provide training opportunities. Increasing government expenditure on initiatives that generate employment, commonly referred to as fiscal and monetary stimulus, can have a more substantial impact on rejuvenating a thriving economy than individual transfer programs.
9. Creating a Job Guarantee
Establishing a federal job assurance program could have been considered as a potential approach to tackle the economic consequences caused by the COVID-19 pandemic. The federal government could cleverly enhance economic recovery by implementing employment programs that have the ability to adapt their size based on the condition of the economy. During times of economic decline, this platform enables individuals to explore job opportunities and reduce their efforts in searching for employment during periods of growth in the private sector.
Conclusion
At present, during a critical period of health and economic turmoil, the increasing divisions among various groups are giving rise to significant difficulties. This comprehensive guide presents a wide array of strategies to attain fair economic distribution.