Unbalance sheet

Not all income inequality is created, um, equal. Dave Schuler explains:

[M]y greatest concern on this subject is how rent-seeking drives income inequality rather than on income inequality per se. Michael Jordan’s or Tiger Woods’s wealth do not concern me. The Kennedy family trust does. In a society as complex as ours with a government as pervasive as ours these rents take a vast number of forms — they encompass everything from royalty income to physicians’ wages to the subsidies received by bankers or GM executives and workers in the late recession. When you use the wealth you’ve gained through these rents to promote increases in your rents, as the late Sonny Bono manifestly did, it presents an assault on liberal democracy.

Not surprisingly, tax rates — effective tax rates, anyway — won’t be going up any time soon:

[W]hen the highest marginal tax rate was over 90%, effective tax rates were little higher than they are now, i.e. marginal tax rates are virtually irrelevant to income inequality. Also, consider how many millionaires are sitting in the U. S. Congress. Does it actually seem likely to you that Congress will enact a tax on wealth? IMO a significant number of them are there to ensure that such a tax is never enacted into law.

And the rest, I’d be willing to bet, are willing to prevaricate about it in order to shore up their own positions.







4 comments

  1. McGehee »

    24 April 2014 · 7:46 am

    There’s a reason a tax on wealth per se won’t address income inequality in any desirable way: static wealth doesn’t do its owner all that much good. Dollars sitting around the house doing nothing are little better than grown children sitting around the house doing nothing (you don’t have to feed dollars).

    Even when someone’s cash assets are invested, going after them rather than the income they generate is tantamount to stealing their seed corn. If the purpose is to use the tax laws to wipe people out, one may have an issue with something that happened 240 years ago.

    The tax code’s legitimate purpose is to raise revenue to operate the government. Even leaving aside the differences I have with people who think fixing income inequality is a legitimate purpose of government, impoverishing the rich through the tax code is an evil, depraved idea.

  2. CGHill »

    24 April 2014 · 11:54 am

    Not to mention useless: if you confiscated everything owned by the Forbes 400, you couldn’t run the government for so much as a year.

  3. McGehee »

    24 April 2014 · 5:12 pm

    And they have no intention of limiting their definition of “rich” to a bucketful of millionaires, let alone that handful of billionaires.

  4. CGHill »

    24 April 2014 · 7:23 pm

    They’ll surely figure out a way to exempt their donors.

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