News Summary: States' role in wealth gap

AP News
Posted: Jun 05, 2014 1:56 AM

WEALTH GAP: Economic research shows that the gap between the richest U.S. residents and the rest of the population has been growing over the past four decades, particularly recently. Some economists are raising concerns that the trend could be limiting growth in consumer spending.

STATE POLICIES: Though labor markets and federal policies play a major role in someone's wealth, states also have an impact. State taxes can take more or less out of people's paychecks. State minimum wages can increase the income of those earning the least. And welfare and unemployment benefits can prop up people with less income in hard times.

RECENT TRENDS: States have increasingly been cutting their top income tax rates, which benefits the wealthy more than the poor. States have also been raising sales taxes that can disproportionately affect lower-income consumers. State minimum wages and welfare benefits have failed to keep pace with inflation. And in recent years, states have begun paring back the amount and duration of unemployment benefits.