America’s generational wealth gap is alarming, with Professor Scott Galloway attributing it to government economic policies that favor older Americans over younger generations. The NYU professor believes these policies, including Social Security and tax breaks for assets over earned income, perpetuate the divide rather than bridging it.
Galloway points to three key tax policies as the biggest culprits driving this divide: Social Security, mortgage tax deductions, and capital gains taxes. He argues that these policies disproportionately benefit older Americans, who are more likely to own homes and have invested in stocks. In contrast, younger people are less likely to have accumulated wealth through selling assets.
The effects of these policies are evident in the data. Empty-nest baby boomers own 28% of large homes, while millennials with kids own just 14%. The share of U.S. equities owned by those over 55 has surged to 80%. To address this disparity, Galloway suggests that younger Americans accumulate assets through various means, such as saving for retirement and investing in tax-sheltered accounts like the 401(k).
Individuals can take steps to bridge the generational wealth gap by boosting their savings rate, focusing on tax-sheltered accounts, and leveraging employer matching plans. By taking these actions, young people can improve their chances of enjoying similar tax benefits as seniors.
Galloway emphasizes the need for government policies to support younger Americans who have seen a transfer of wealth from their generation. While individual action is essential, changing economic policies can also address this issue.
Source: https://finance.yahoo.com/news/prof-g-claims-us-economic-140100043.html