January 20, 2015

At tonight’s State of the Union address, President Barack Obama will announce a series of proposals designed to aid middle class and poor Americans and address income inequality in this country. These proposals include an increase in the child care credit and a $500-tax credit for working couples. To pay for it, inheritance and investment taxes, such as taxes on capital gains, would be increased, which mainly affects the wealthy. The president also proposes closing some loopholes that small numbers of the super-rich exploit. These included moving money offshore to such tax havens as the Cayman Islands. Political experts suggest that the president’s proposed change to the tax code will not pass in the Republican-controlled House and Senate but is likely to shape the upcoming presidential race. They point out that as the economy improves, both parties will be forced to address the underlying issues of stagnant wages and inequality that has resulted in a steadily shrinking middle class.

President Obama will give his annual State-of-the-Union address to a joint session of Congress this event. During joint sessions, all members of the Senate and the House of Representatives meet in the House chamber. (© Greg Mathieson, MAI/Landov)

Yesterday, the charity Oxfam released a study on income distribution. (Oxfam is an international confederation of organizations working worldwide to find solutions to poverty and injustice around the world.) The study’s authors concluded that by 2016 the richest 1 percent of the world’s population will likely control more than half of the world’s total wealth. The world’s 80 wealthiest individuals together own $1.9 trillion, reported the study’s authors, nearly the same amount shared by the 3.5 billion people who occupy the bottom half of the world’s income scale. The type of inequality that currently characterizes the world’s economies, and in particular, the U.S. economy, is unlike anything seen since before the Great Depression of the 1930′s, the report concluded. Oxfam’s warning about deepening global inequality comes just as the world’s business elite prepares to meet this week at the annual World Economic Forum in Davos, Switzerland.

Additional World Book articles:

• Income tax
• Tax evasion