WASHINGTON: Wealth inequality is reaching historical extremes in the United States, as the richest 10% now control over 71% of the country’s total wealth. While this level of concentration is unmatched among developed nations, Central European economies like Poland and Hungary are also witnessing mounting disparities. The contrast offers a glimpse into different paths capitalism can take—one driven by financial supremacy, the other by structural transition.
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The U.S.: A prosperity engine turned plutocracy?
The United States has long been hailed as the land of opportunity, but the economic staircase to upward mobility has become steep, if not inaccessible. According to the World Inequality Database, the top 10% of Americans now hold 71.2% of the nation’s wealth—a figure that rivals or surpasses many developing economies.
Tax reforms, notably the 2017 Tax Cuts and Jobs Act, deepened this divide. Designed to stimulate investment, the act disproportionately benefited high earners and corporations, costing the federal budget an estimated $3.6 trillion by 2034. Around $1.8 trillion of this will benefit individuals earning over $400,000 annually. Critics argue the tax breaks failed to “trickle down” and instead ballooned asset values and widened the wealth gap.
Income inequality has mirrored this trend. The top 10% of earners now receive over 52% of national income, a sharp climb from earlier decades. With the middle class shrinking and costs of housing, education, and healthcare soaring, America risks becoming a „two-tier society”—a democracy in form, but not in economic substance.
Central Europe: A tale of transition and tension
While not as extreme as the U.S., Central Europe’s inequality story is evolving rapidly. Poland, for example, has seen its top 10% rise to control over 60% of national wealth. In Hungary, the number reaches 67.1%, making it one of the most unequal in the EU. In contrast, countries like Slovakia and Greece report more balanced figures around 34–42%.
These disparities reflect the post-communist transition, where privatization often favored elites and wealth accumulation was rapid and poorly regulated. However, social programs, public pensions, and tax structures still mitigate the full brunt of inequality—though this is changing.
Unlike the U.S., Central European tax systems remain less progressive. Poland, for instance, has relatively low effective tax rates for the highest earners (around 19%), while the poorest often pay a significant share through indirect taxes like VAT.
Yet, Poland has managed modest gains in tax revenue thanks to better enforcement, not necessarily higher rates. Between 2017 and 2024, tax revenues increased, largely due to efforts in VAT tightening and new sector-specific levies.
Global reflections: Is a course correction possible?
From a macroeconomic perspective, rising inequality has broader implications:
- It dampens consumption among the middle class.
- It exacerbates political polarization.
- It undercuts social cohesion and trust in institutions.
While the U.S. faces these challenges as a legacy of unfettered market capitalism, Central Europe grapples with them as a consequence of rapid liberalization post-1990s. The difference is instructive: one region needs reform, the other needs recalibration.
The way forward: Equity or entropy?
The solution lies not in punishing success, but in rebalancing opportunity. This includes:
- Progressive tax reform that captures capital gains more effectively.
- Social investments in education, healthcare, and housing.
- Global cooperation on tax avoidance and offshore wealth.
Ultimately, inequality is not just an economic statistic—it is a moral and social dilemma. Without intervention, societies risk eroding the very foundations of democratic capitalism. But with thoughtful policy and civic will, the tide can still be turned.
Central Europe Reports >> Economy >> IKJ Source: FB >> Photo: Ideogram >> 8.04.2025
