In a recent Business Insider article (Holodny, 2016), Elena Holodny raises an alarm concerning income inequality in the United States.  In the article, she shows how the share of wealth has dramatically changed and is currently a large outlier compared to other developed countries. Clearly there is something amiss.

Notice below, a comparison of the gross domestic product versus the Gini coefficient shows the USA as an outlier. I’ve updated her chart to hopefully make it a more compelling visualization. Notice how far off is the USA is.

(View chart on Tableau Public)

In this visualization, Tableau shows the trend lines and the size of the circle gives an indication just how the United States is such an outlier.

As in the article, it raises a red flag for the people of the United States, however it doesn’t really suggest a plan of action. Due to great interest in the subject, additional data was gathered.

Given that the presidential election has elected someone who plans on cutting taxes, does data available suggest that cutting taxes would improve the income inequality or would it make it worse?

Included here is an additional visualization that compares the top tax rate with the split of income among the U.S. population for a considerable time period. The data was gathered from Tax Policy Center and Professor Gabriel Zucman of UC Berkeley.

(View chart on Tableau Public)

Perhaps a better course of action is to increase tax rates on the wealthy and use the additional revenue for public education. That plan of action to address income inequality was major issue in the most recent U.S. presidential election especially in the Bernie Sanders campaign.

References

Holodny, Elena. (2016) The top 0.1% of American households hold the same amount of wealth as the bottom 90%. http://www.businessinsider.com/share-of-us-household-wealth-by-income-level-2016-11

Tax Policy Center. (2016) Historical Individual Income Tax Parameters. http://www.taxpolicycenter.org/statistics/historical-individual-income-tax-parameters

Zucman, Gabriel. (2015) Wealth Inequality in the United States since 1913. http://gabriel-zucman.eu/uswealth/

C.I.A. World Fact Book. (circa 2014) DISTRIBUTION OF FAMILY INCOME – GINI INDEX. https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html

C.I.A. World Fact Book. (circa 2015) GDP – PER CAPITA (PPP). https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html