Monday, December 19, 2011

Don't Tax The Rich, Tax Inequality

This article does a good job of succinctly describing the problem of growing income inequality. It also links growing inequality to declining democracy and increasing social unrest. The authors propose a tax plan that would limit the ratio of the income of the top 1% to median income. That ratio is currently 36 and it has been growing rapidly.

Even though it is unlikely to ever become law, I think that it is mistake to base the ratio on the lowest income earners in the top 1% which is around $300,000 today. The doctors, lawyers and professionals in this bracket have not seen their incomes rise anywhere near that of the top 0.01%, and they are not the ones who are financing elections and corrupting democracy. It would be better to make the income tax much more progressive within the top 1%.

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