I think keeping track of just how disproportionate wealth is in America is important. I think that many (including myself) didn't know that the wealthiest in a company don't make just 30% more than the laborers in that company, but 300% more. That's ridiculous! At a certain level, I think it is worth asking, "how is this level of wealth useful?" Would it really harm society to not have billionaires in our country? What if it were prevented citizens from having more than $200,000? Would society really be up in arms about that? Could anyone, really, not live a life comfortably under $200,000?
I think it's worth making the progressive tax more serious, as mentioned in this article. The progressive tax is something that has come and gone in terms of severity; although our tax code has almost always remained progressive, the amount that it has been progressive has changed. Making a serious dedication to keeping our tax code progressive would be beneficial to us, I believe. I don't submit to the "trickle down" theory. At a certain point, a given level of wealth isn't helpful to society's overall well-being.
I politely disagree with Bret. A society that puts a ceiling on how much people make just does not sound smart to me. Where's the incentive to work hard if you are virtually forced to stop making money after a certain point? While I agree that one could live comfortably of $200,000 per year, what's the fun in that? I think the beauty of the United States is that one can make as much money as they please, even though we do have one of the highest nominal corporate tax rates in the world at 35%. Is the income inequality becoming an issue in this country? Perhaps. But I don't think punishing the rich is the best way to address this issue.
I thought John Cochrane had a good commentary on inequality at a recent conference. He mentions that there's no concrete reason why inequality in and of itself is bad. One commonly cited reason is that it creates resentment and unsustainable behavior among the less rich. But as Krugman explains here, most people don't even realize the extent of inequality.
Unlike Cochrane, I think that inequality represents an opportunity to increase welfare through progressive taxation, but I agree that it is not bad in and of itself per se. If there were some magic wand that would give 1000 people $1 billion (and actually increase output in some way so that the effect wasn't purely inflationary), I would wave it even though it would increase inequality. Of course, it would be even better if I could wave a wand that gave 1 million people $1 million.
I agree with Phil that inequality is not bad and that with most Americans unaware of the situation it is certainly not causing nationwide riots. It does provide opportunity to use taxation to help support public programs. However I don't believe that the U.S. is taking advantage of this in order to increase welfare. The wealthy are often aware of tax loopholes that allow them to pay lower tax rates. Mitt Romney took public flak for only paying an effective 14% tax rate and Warren Buffet has publicly criticized the tax system and stated that he is able to pay a lower tax rate than his secretary. The tax system may not be as progressive as most Americans would like (including Warren Buffet) and this prevents the government from using taxation to increase welfare.
I think keeping track of just how disproportionate wealth is in America is important. I think that many (including myself) didn't know that the wealthiest in a company don't make just 30% more than the laborers in that company, but 300% more. That's ridiculous! At a certain level, I think it is worth asking, "how is this level of wealth useful?" Would it really harm society to not have billionaires in our country? What if it were prevented citizens from having more than $200,000? Would society really be up in arms about that? Could anyone, really, not live a life comfortably under $200,000?
ReplyDeleteI think it's worth making the progressive tax more serious, as mentioned in this article. The progressive tax is something that has come and gone in terms of severity; although our tax code has almost always remained progressive, the amount that it has been progressive has changed. Making a serious dedication to keeping our tax code progressive would be beneficial to us, I believe. I don't submit to the "trickle down" theory. At a certain point, a given level of wealth isn't helpful to society's overall well-being.
I politely disagree with Bret. A society that puts a ceiling on how much people make just does not sound smart to me. Where's the incentive to work hard if you are virtually forced to stop making money after a certain point? While I agree that one could live comfortably of $200,000 per year, what's the fun in that? I think the beauty of the United States is that one can make as much money as they please, even though we do have one of the highest nominal corporate tax rates in the world at 35%. Is the income inequality becoming an issue in this country? Perhaps. But I don't think punishing the rich is the best way to address this issue.
ReplyDeleteI thought John Cochrane had a good commentary on inequality at a recent conference. He mentions that there's no concrete reason why inequality in and of itself is bad. One commonly cited reason is that it creates resentment and unsustainable behavior among the less rich. But as Krugman explains here, most people don't even realize the extent of inequality.
ReplyDeleteUnlike Cochrane, I think that inequality represents an opportunity to increase welfare through progressive taxation, but I agree that it is not bad in and of itself per se. If there were some magic wand that would give 1000 people $1 billion (and actually increase output in some way so that the effect wasn't purely inflationary), I would wave it even though it would increase inequality. Of course, it would be even better if I could wave a wand that gave 1 million people $1 million.
I agree with Phil that inequality is not bad and that with most Americans unaware of the situation it is certainly not causing nationwide riots. It does provide opportunity to use taxation to help support public programs. However I don't believe that the U.S. is taking advantage of this in order to increase welfare. The wealthy are often aware of tax loopholes that allow them to pay lower tax rates. Mitt Romney took public flak for only paying an effective 14% tax rate and Warren Buffet has publicly criticized the tax system and stated that he is able to pay a lower tax rate than his secretary. The tax system may not be as progressive as most Americans would like (including Warren Buffet) and this prevents the government from using taxation to increase welfare.
ReplyDelete