No Pity for the Rich

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"No Pity for the Rich"

When considering the alleged plight of the very rich groaning under the socialist yoke of Charlie Rangel’s tax proposals, it’s worth keeping in mind that the super-rich’s share of the overall income pie is been skyrocketing:

blog_chart_2_-_top_10_percent_us_income_share_into_three_groupsjpg-1

The reasons behind this trend are complicated. But one natural response to it would be to raise taxes on the very rich and use the tax revenue to finance public services. Under that scenario, everyone winds up better off than they were 25 years ago. Absent stepped-up taxation on the rich, changes in the structure of pre-tax income in the United States ensure that many—if not most—Americans see little actual gain from economic growth.

This is worth noting because outside the health care context, many morally admirable policies such as liberal immigration laws and openness to trade have the impact of both boosting overall economic growth and also exacerbating domestic income inequality. They’re also very good for poor people in the third world who want to have jobs in which they do stuff in exchange for money. Responding to growing inequality with ramped-up taxation and ramped-up social services makes these kind of policies more sustainable and serves the general interests of mankind.

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