Thursday, December 07, 2006

The Inequality Tax

What would you say if the PGA decided to penalize Tiger Woods by 5 strokes every tournament to prevent him from winning "too many" tournaments?

Or how about taking half of Stephen Hawking's papers and assigning them to less fortunate scientists?

Should Snoop Dogg be forced to donate to struggling rappers whenever one of his shows sells out?

No one in their right mind would agree with those decisions.

So why should we think any differently when it comes to using the tax system to reduce economic inequality?

The normally sensible Robert Shiller has suggested that we adopt a tax system which would automatically increase tax rates on higher income brackets based if measures of economic inequality worsened.

This is madness of the highest order.

Equality of outcome can never be legislated without severe cost to the overall well-being of society. Taken to its (il)logical extreme, this sort of policy might simply mandate a uniform wage for all types of work--the ultimate equality.

Excessive economic inequality is not the problem. The problem is a lack of opportunity for the economically disadvantaged (or, as I like to call them, "the poor"). Making the rich poorer won't change the situation for the better.

There are policies that can have an impact, such as the Earned Income Tax Credit, affirmative action for the poor, and school vouchers to improve the school systems. I don't necessarily agree with those policies either, but at least they attempt to solve the root cause of the issue.

1 comment:

Zoli Erdos said...

If all those happened, than your blog would be called "Adventures in Communism" - that is if there were blogs left at all:-)