Tax Inequality

Friday, December 23, 2011

In a recent NYT Op-Ed, economists Aaron Edlin of UC Berkeley and Yale's Ian Ayres propose to combat inequality with a tax that would automatically kick in when gap between the median income and the top 1% widens.  Aaron Edlin is a co-editor of the new book, Economists' Voice: Top Economists Take On Today's Problems (Columbia University Press, 2011) and Ian Ayres blogs for Freakonomics.

Comments [12] from Central New Jersey

A topic I was tailor-made to love if ever there was one but weakly presented. I did appreciate the adolescent crack in the first caller's voice as it seemed to match his undercooked point-of-view.

Fixing the distribution of income in this country will take GENERATIONS to repair but let me re-state my position here for probably the last time in 2011. If the average American wage of $4,200 had grown with the overall economy, the average wages would now be $108,000. Since average wages are only about $42,000, those wages are being "earned" by someone else. The economy generates the dollars but the average person doesn't get his due.

Stop paying rock-star salaries to company men...Do you really think they can't be replaced in a day or two? Stop paying rock star salaries to athletes and movie actors. Do you think you would enjoy the game or movie any less if their understudy did the work? Hell, stop paying rock stars like rock stars. $300 for a CD set! Friggin' unbelievable. Start appreciating the daily grinders a lot more.

Happy Holidays to all.

Dec. 23 2011 11:09 AM
jgarbuz from Queens

No such thing as a "fair" tax. It's impossible to construct such a thing. Governments have traditionally gone after where the money was, like the bank robber Willy Sutton. However, in a democracy, where the people have some voice in electing politicians, the politicians cannot go to far in hitting one group over another. Between democracy and lobbyist, the tax situation will swing like a pendulum, temporarily favoring one side or the other. Democracy will keep taxes as "fair" as possible under the circumstances.

Dec. 23 2011 10:49 AM
Mike from Manhattan

The caller that states that this idea is absurd and does not conform to the constitution misses he point. The whole idea of a progressive income tax is evidence of its acceptance. We all agree that there is a penalty for amassing "wealth." This idea assumes that the "rich " accumulate $$$$ in such proportions that masses of concentrated "wealth clots" start to "gum up" the flow of $$$ in the general economy. Money is supposed to move, and is the life blood of an economy, what happens in a physical body when blood pools and engorges only one part of the body and does not circulate in the body? Gangrene sets in and death is imminent.

Dec. 23 2011 10:49 AM

Great quotation, Joe Mirsky. Thanks.

And great point from the guests. In the absence of government protection of intellectual property rights, for example, Bill Gates could not possibly have made what he has. Health insurers like Angela Braly benefit from government kickbacks to the insurance industry. The wealthy benefit disproportionately from government _protections_. There was a time when the less-well-off benefitted disproportionately from government _redistribution_. But post-bailout, redistribution has been reversed with wealth being redistributed from the poor and middle classes to the rich.

Dec. 23 2011 10:46 AM
Edwin Rosenberg from Oldwick, NJ

"Where in the Constitution?" Right at the beginning: "We the people, in order to form a more perfect union...promote the general welfare...".
At the very beginning of our founding document We The People declared that it is the purpose of government to look after the welfare of the people.
Most people who talk about amending the Constitution, or question the validity of certain laws or policies, have never read (or understood) our foundational documents.

Dec. 23 2011 10:45 AM
Joe Mirsky

"We can have concentrated wealth in the hands of a few or we can have democracy. But we cannot have both.”
Louis Brandeis

Dec. 23 2011 10:42 AM
fuva from Harlemworld

Anyone know how many of the rich were born rich or highly-resourced? Has any such poll been conducted? Maybe tax policy should also consider a "Horatio Alger" factor.

Dec. 23 2011 10:41 AM
Mike from Manhattan

Great Idea if we want to continue this capitalist session of three card the rich would have us do. Wealth comes from the people and thus belongs to the people. Without the masses of non wealthy, the wealthy can not amass "wealth".

Dec. 23 2011 10:38 AM

A tax is a pretty straightforward government intervention... But how about a self-enforcing system of incentives along the lines of what one caller hints at with respect to the relation between capital and labor. Great call from Jim.

Dec. 23 2011 10:38 AM
Steve from Brooklyn

I'm a liberal/leftist. I think progressive taxation is great. But is there any reason to think the additional funds raised would benefit the 99%? Wouldn't more unions be better?

Dec. 23 2011 10:37 AM

Sounds like philosopher John Rawls's difference principle at work!

Dec. 23 2011 10:34 AM
Gerald Fnord from Palos Verdes, Ca

This handles income inequality, but what about the massive inequality of extant ownership?---every 'top N percent own M percent of the economy' is a statement about wealth though income reflects this.

Let's don't be confiscatory, but as many have pointed out in the past---most notably Ben Franklin, Tom Pain, and Henry George---large fortunes generally can't exist without a State, so it is only right that the State wet its beak. The same goes double for intellectual property, which definitely can't exist without the threat of State violence to back it up.

Dec. 23 2011 10:25 AM

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