Rescue aid package may reduce inequality, but for how long?

WASHINGTON (AP) — Democrats have celebrated President Joe Biden’s $1.9 trillion COVID-19 relief plan as a blow against one of America’s most entrenched economic woes: The vast inequality that divides the richest from the rest — a gap made worse by the viral pandemic.

Hailed as the biggest anti-poverty package in generations, the plan delivers huge benefits to low- and middle-income families. It sends $1,400 checks to most adults and extends $300-a-week unemployment aid for six months. Perhaps most significantly, it greatly expands a child tax credit and turns it into steady income for poor families. All told, experts say, the package will reduce child poverty by nearly half.

Yet for how long?

As ambitious and expensive as it is, the American Rescue Plan, which Biden signed into law Thursday, stands to go only so far in reducing income and wealth inequality.

Its boldest measures, including a massive tax cut for the poorest families, are only temporary. To make a lasting difference, these provisions would have to be extended, probably in the face of stiff resistance from Republicans. And as an emergency response to a health and economic crisis, the legislation would do little to address the outsize gains in earnings and wealth that the richest tier of Americans have accumulated.

From 1979 to 2019, the wealthiest 1%’s share of pre-tax income jumped from about 11% to 19%, according to the World Inequality Database, maintained by Gabriel Zucman, an economist at the University of California, Berkeley, and other experts on inequality. And that group’s share of wealth — including real estate and stock portfolios — surged from roughly 23% to 35% in the same period.

“To further reduce inequality, Congress would need to increase taxation at the top end — in particular, the taxation of wealth and capital...