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Economics Discuss Raising Income Taxes Won't Fix Wealth Inequality at the Political Forums; There is a never ending stream of demogoguery blaming the unequal distribution of wealth in the US for all sorts ...

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Old 09-15-2019, 08:42 AM
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Default Raising Income Taxes Won't Fix Wealth Inequality

There is a never ending stream of demogoguery blaming the unequal distribution of wealth in the US for all sorts of problems. A popular solution is to raise income tax rates to confiscatory levels for top income earners. The assumption is that reducing the income of top earners will reduce their accumulation of wealth.

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To decrease wealth inequality, pundits, politicians, and economists often suggest raising income tax rates on top earners to as high as 50, 70, or even 90 percent.

The idea sounds plausible, but according to a new study published to PLoS ONE it probably won't work in practice.
Researchers based in Tel Aviv university developed a model predicting predicting wealth inequality based on income. They back tested the model for the period of 1930 - 1910. The results from the model strongly correlated with history. After this validation they turned their model to the future.

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What would happen, they wondered, if income inequality was varied? In their model, income inequality was tied to a metric called the Gini index, a statistical measure of inequality used for decades. They found that altering income inequality to a Gini index of 0.1 (very low inequality) resulted in the top 10% controlling 78.6% of wealth in 2030, while raising income inequality to a Gini index of 0.9 (very high inequality) resulted in the top 10% controlling 79.3% of wealth in 2030, hardly a significant difference.
According to the research altering income inequality by whatever means including progressive taxation doesn't alter wealth distribution. Raising income taxes just makes it harder for new people to accumulate wealth.

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When income tax is increased, the top earners, who are not necessarily the wealthiest individuals in the population, have a larger difficulty of accumulating wealth, with respect to the wealthiest. On the other hand, it barely affects the wealthiest individuals. Therefore, such an increase might even deepen the wealth gap."

"Progressive taxation, which might have a significant effect on the distribution of income, will have a small effect on wealth inequality," they add.
But wait, a study by the Brookings institution produced similar findings.

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The team behind the current study is not the only group to return such a result. Just last year, experts at the Brookings Institute created their own model and found that increasing the top tax rate from 39.6% to 50% wouldn't even dent income inequality, let alone wealth inequality.
So, despite the near religious fervor of Leftists preaching the virtue of punishing success with higher taxes to solve the problem of unequal wealth distribution, research shows it is unlikely to be an effective solution. Raising taxes actually insulates the wealthy from new members joining their ranks.

https://www.realclearscience.com/jou...ty_109613.html
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Old 09-16-2019, 07:20 AM
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Default Re: Raising Income Taxes Won't Fix Wealth Inequality

The left has known this for years. But that is not the point. While they understand how this works, their constituents don't. Therefore, they can campaign on these ideas while also receiving campaign contributions from the 1% to maintain their economic positions.
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Old 09-16-2019, 07:40 AM
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Default Re: Raising Income Taxes Won't Fix Wealth Inequality

Why should we bother trying to fix wealth inequity? All you're guaranteed is equal opportunity. Outcome is up to you.
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Old 09-16-2019, 09:43 AM
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Default Re: Raising Income Taxes Won't Fix Wealth Inequality

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Originally Posted by jimbo View Post
Why should we bother trying to fix wealth inequity? All you're guaranteed is equal opportunity. Outcome is up to you.
There you go again, hawking your white supremacist dream.

The Founders never dreamed everyone would be rich. They dreamed everyone ought to have the opportunity, and presumably anyone could be.
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