Everyone knows that the U.S. has high income inequality relative to other rich countries. But what you may not know, and which the above chart by the Luxembourg Income Study’s Janet Gornick makes clear, is that this isn’t the case before you take taxes and government transfers like Social Security into account. If you just look at peoples’ pre-tax/transfer income (also known as their “market” income), the U.K., Germany, and Finland are less equal than the U.S., and the U.S. ties Norway, Spain, the Netherlands, and Sweden. We’re well within the developed world norm. But other countries have adopted policies that reduce inequality far more than the policies that the U.S. has embraced do.
Click “Know More” to read John Cassidy on more surprising findings about the nature and extent of income inequality in America.