Does the federal tax system help reduce income inequality? Yes, but only to a certain extent.
Thats what David Wessel, director of the Hutchins Center on Fiscal and Monetary policy, explained in a recent video for The Brookings Institute.
Using Legos, Wessel breaks down the American working class into five income groups by average earnings, which shows theres a wide gap between the lowest income earners, who earn on average $14,250 per year, and the highest earners, who earn about $306,320 per year a difference of $292,070.
Wessel includes the top 1 percent of income earners, who make over $2 million per year, in the fifth quintile, but he stresses that if that group was taken out of that fifth quintile and left on its own, it would take more than 200 Lego bricks to show it on screen.
Wessel then shows how much earned income each quintile receives after federal taxes are taken out. The gap between the different income groups lessens, but only slightly. For example, the gap between the lowest and highest earners goes from $292,070 to $215,691 after taxes.
The federal tax system does shrink the gap between the rich and poor, Wessel said in the video. But even after taxes, the distribution of income in the United States remains substantially unequal.
The Brookings Institute also used Legos to describe social mobility back in December of last year. The video showed how race, education and marital status affect Americans who want to climb the social ladder, Deseret News National reported.
Thats what David Wessel, director of the Hutchins Center on Fiscal and Monetary policy, explained in a recent video for The Brookings Institute.
Using Legos, Wessel breaks down the American working class into five income groups by average earnings, which shows theres a wide gap between the lowest income earners, who earn on average $14,250 per year, and the highest earners, who earn about $306,320 per year a difference of $292,070.
Wessel includes the top 1 percent of income earners, who make over $2 million per year, in the fifth quintile, but he stresses that if that group was taken out of that fifth quintile and left on its own, it would take more than 200 Lego bricks to show it on screen.
Wessel then shows how much earned income each quintile receives after federal taxes are taken out. The gap between the different income groups lessens, but only slightly. For example, the gap between the lowest and highest earners goes from $292,070 to $215,691 after taxes.
The federal tax system does shrink the gap between the rich and poor, Wessel said in the video. But even after taxes, the distribution of income in the United States remains substantially unequal.
The Brookings Institute also used Legos to describe social mobility back in December of last year. The video showed how race, education and marital status affect Americans who want to climb the social ladder, Deseret News National reported.
