Washington ? Now it is official: The rich get richer, the poor tread water, and those in between struggle — this according to the Federal Reserve’s three-year report on the subject. Income during the 1998-2001 period — not adjusted for inflation — rose 19.3 percent for the nation’s wealthiest 10 percent of families, and only 14.4 percent for the poorest 20 percent. At this rate, America’s wealthy would see their incomes outpace America’s poor by a factor of 50 percent over the next 30 years.

There are those people who would say that such is the way of the world. In fact, it is a pathway to disaster. Historically, the concentration of wealth into the hands of the few at the expense of the many has led to social unrest, economic disruption and even revolution. A cornerstone of modern democracy is a free enterprise system that has a burgeoning and vibrant middle-income population, and it can only burgeon by adding to its numbers people who have lifted themselves out of the lower-income strata. In other words, the percentages reported by the Fed are unacceptable.

Does this mean that wealthy people do not pay their fair share of taxes? No. It is that everyone else pays too much, especially through the onerous payroll tax that virtually exempts wealthy taxpayers because the tax is only assessed on the first $87,000 of income.

Does this mean that wealthy people have an unfair advantage in the competition for higher earnings? No. It is that the minimum wage of $5.15 an hour has not be increased since 1997. So much for cost-of-living increases. And the argument that increasing the minimum wage decreases the number of jobs is refuted by history. In reality, the minimum wage is so low that it is nowhere near the level of diminishing returns for any company.

Does this mean that wealthy people have unfair tax breaks? No. It means that less wealthy people — especially non-homeowners — have almost no tax breaks. The least affluent people tend to be renters, which means they do not have the ability to deduct interest and property taxes on their homes like more prosperous people do.

These and other problems are the culprits. They are easily solved. The payroll tax should be eliminated, and Social Security benefits should be paid out of general revenues. The minimum wage should be tied to inflation, which would only raise it to around $6.25 today. And renters should be allowed to deduct 80 percent of their rent from gross income, which would give them approximately the same benefit as homeowners.

The lesson of Franklin Roosevelt’s New Deal was that safety nets such as the minimum wage and Social Security do not equate to socialism, but rather to a more equitable form of capitalism.

Other bold moves would likewise help the less affluent. President Bush’s call for an end to the taxation of dividends, for example, would help lower-income people even more than the wealthy because it would allow young people starting out to attract capital to start small businesses. Investors could receive tax-free returns on their investments because the small-business owner could make distributions of profits without fearing double taxation. Further, people with very little money would have an incentive to invest in stocks and thereby share in the risks and rewards of capitalism, including receipt of tax-free dividends that paid more than bank interest and the possibility of capital appreciation if the companies did well.

In the end, fairness is the watchword. Fairness benefits everyone and benefits the nation.

Prediction: The minimum wage will be increased, hopefully to $7.50 an hour. Renters will get a tax break. Taxation of dividends will end. Some form of relief for payroll taxes will finally be enacted.