# How do we actually address rampant income inequality? **URL:** \ **Category:** Great Debates\ **Created:** [February 17, 2016, 12:00am UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303 "2016-02-17T00:00:22Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [February 17, 2016, 7:11pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/81 "2016-02-17T19:11:18Z")
> [@Johnny\_L.A](#): > > Our time of greatest prosperity was an era where the highest tax bracket was over 90%. And that was under a Republican President. All we need to do to recreate that wonderful time is have a war that destroys the other industrialized nations, repeal all of the regulations that have been passed over the past 65 years, and pass enough loopholes so top 3% of earners pay only 29% of income tax collected instead of 51% like they do now. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [February 17, 2016, 7:22pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/82 "2016-02-17T19:22:53Z")
> [@puddleglum](#): > > The estate tax has no bearing on income inequality which was what the OP was about. Adding an higher estate tax will raise very little money and just cause the really rich to be more careful about estate planning. You’re missing the point of the estate tax; it’s not really as much of a revenue-generator, as it’s a mechanism to try and kill the intergenerational transfer of wealth, and prevent income inequality. Now of course, on the lower end of estates, intergenerational wealth is one way for people to break out of poverty / get a leg up, so there’s a minimum estate that’s actually taxed- I think it’s like 5.5 million bucks or something absurd like that. So if someone’s estate is worth 4 million at their death, they’re not paying estate taxes on it. And it’s a progressive tax, meaning that the bigger the estate, the bigger the tax percentage. If the government’s going to do anything with the estate tax in the guise of preventing income inequality, they ought to lower the minimum by quite a bit, so that more estates are taxable. (the minimum went up during the Bush II administration). In a broader sense, the biggest challenges facing the country in terms of income inequality are that we’re suffering a sort of post-WWII and post-globalization hangover. The 1940s-1970s stretch were a complete anomaly, in that the US was pretty much the only industrialized nation with untouched industrial capacity, an abundant workforce, and a world trade climate that gave our companies an advantage. But… at some point in the 1970s-1990s, that stopped. Japan and Europe came back into prominence, and various other countries like China, India, Korea and Brazil developed competing manufacturing industries of their own, and still other countries didn’t so much develop their own industries, as become a low-cost labor source (Mexico, Vietnam, India) Ultimately what happened is that during the 1940s-1970s stretch, the US could afford for a huge segment of the population to be middle class - it was very common for blue collar people to earn a middle class income, because US companies could and would pay those wages. Now, when they’re competing with manufacturers in China paying their workers $2/hour for the same product, what happens is that the Chinese manufacturers drop the price of their products, while still making the same profit. So now US workers are basically thrown into a global pool of labor, and if they’re not specialized enough or protected by some kind of tariff or protectionist legislation, they come out on the high side, wage-wise. I’m personally not convinced that the idea that say… 50% of the country will be “middle class” again, unless we seriously redefine “middle class”. What we’re going to end up with is a fairly large lower class of relatively unskilled service workers, some truly poor, a much smaller middle class composed of specialized/skilled blue collar workers and the white collar workers. Then there will be a sort of upper class defined more by income than anything else- today’s upper middle class and the lower parts of the “upper class”. Finally, you’ll have the upper class, who will be the people who actually literally own everything. This isn’t really a consequence of income inequality; rather income inequality is a symptom of the underlying economic system changes and governmental policy. It’s most definitely not a matter of greedy owners keeping their profits while the workers toil for peanuts; it’s more a matter of the jobs that are available don’t pay shit, while the people with enough money can leverage that money to make even more. Redistribution via some sort of negative income tax/basic income seems like an obvious way to mitigate this, but I’m not at all convinced that it wouldn’t also just raise prices for everything across the board, as now companies don’t have to try to make a profit by catering to poor/lower income consumers- there’s no such thing in that world. There’s also a notion that redistributive efforts like a negative income tax reward the stupid and slothful, and penalize the smart and industrious. And resentment as a result is natural; expecting people to willingly forego whatever luxuries they might afford, in favor of taking that money and giving it to someone else isn’t a very realistic expectation. Most people would rather buy their kids an extra pair of shoes, or go to the movies, or get a better car, than have the government take the money that might make that possible, and give it to some random person somewhere else. I’m not convinced that corporate taxation is really the issue either; certainly the government ought to tighten the laws up and severely penalize offshoring headquarters and the like to avoid taxes, but I don’t think that the money gained from that would be a drop in the bucket compared to the cash flows involved in something like a negative income tax. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [February 17, 2016, 7:30pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/83 "2016-02-17T19:30:52Z")
> [@puddleglum](#): > > All we need to do to recreate that wonderful time is have a war that destroys the other industrialized nations, repeal all of the regulations that have been passed over the past 65 years, and pass enough loopholes so top 3% of earners pay only 29% of income tax collected instead of 51% like they do now. You forget re-instituting segregation and only looking at the prosperity of white people. But let’s not accept the assertion that the 1950s was our time of greatest prosperity. Who here, today, would want to live the life of a 1950s American? I’ve never understood this conservative nostalgia for the 1950s. And it is conservative, regardless of who is doing the dreaming. ---
**Author:** ![Tom\_Tildrum](https://avatars.discourse-cdn.com/v4/letter/t/e95f7d/32.png) [@Tom\_Tildrum](https://boards.straightdope.com/u/Tom_Tildrum)\ **Post date:** [February 17, 2016, 7:39pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/84 "2016-02-17T19:39:35Z")
> [@Damuri\_Ajashi](#): > > I think so. Welfare does very little to equalize income, its supposed to be a safety net, not an elevator. The Welfare Reform Act of 1996 was followed by a period of much lower unemployment and poverty among those that would normally be on welfare. Now a lot of this is the result of a generally good economy but if there were no significant negative effects, then why would we want to count it against him? It was [denounced](http://www.theatlantic.com/magazine/archive/1997/03/the-worst-thing-bill-clinton-has-done/376797/) at the time as “legislative child abuse” that moved two million people into poverty. It has more recently been [cited](http://www.washingtonpost.com/wp-dyn/content/article/2009/12/04/AR2009120402604.html) by as aggravating the effect of the 2008 financial crisis upon America’s poor. You yourself were just noting the inadequacies of the social safety net. The plight of the poor is the whole reason people worry about inequality, after all. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [February 17, 2016, 7:55pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/85 "2016-02-17T19:55:27Z")
> [@Salvor](#): > > One of the most annoying things I hear from partisans is that the policies of X president were beneficial and had a direct \*\*causal \*\*relationship to some positive happenings in the nations economy that has no such bearing. I agree that Presidents generally get far too much credit / blame for the economy, depending on whether it’s going well or poorly. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [February 17, 2016, 8:03pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/86 "2016-02-17T20:03:01Z")
> [@BobLibDem](#): > > This whole “we’ve got to compete in the race for the bottom” argument is crapola. We don’t need to lower our wages, the third world has to raise theirs. And they have been. Today there is less world poverty (by percentage) than at any point in human history and it continues to get better, in no small part because jobs that used to be limited to western countries are now spread across the globe. ---
**Author:** ![Salvor](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Salvor](https://boards.straightdope.com/u/Salvor)\ **Post date:** [February 17, 2016, 8:04pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/87 "2016-02-17T20:04:00Z")
> [@SmartAlecCat](#): > > No, you shouldn’t ever tax someone just for leaving an estate. No double taxation on that person. > > Yes, you should tax anyone receiving money from an estate (just like you tax them for income received from any other source like a job.) I’m fine with that formulation, I always thought the transfers should be taxed, not the estate itself. You can even allow windows where there is zero effective tax, but that should be capped at several million or lower where anything above that is taxed as income. My concern is over transfers like trusts where instead of leaving money to a child directly, where the tax on the transfers over millions of dollars is captured, it’s controlled by a trust where the executor of that trust shifts from the parent to the child. That essentially avoids any taxes does it not? So if you pay for a trust you essentially avoid the entire point of estate taxes on the transfers to others. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [February 17, 2016, 8:08pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/88 "2016-02-17T20:08:58Z")
> [@bump](#): > > You’re missing the point of the estate tax; it’s not really as much of a revenue-generator, as it’s a mechanism to try and kill the intergenerational transfer of wealth, and prevent income inequality. This feels like nothing more the pure spiteful jealousy. Why in the world would you want to “kill” families passing on their wealth to their children? Jealousy is a terrible basis for tax policy. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [February 17, 2016, 8:28pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/89 "2016-02-17T20:28:01Z")
> [@Damuri\_Ajashi](#): > > I think it is fair to only apply the effects of their policies rather than the effects of a prior administration’s policies. I disagree, but I understand your perspective. Presidents (and Congresses) operate largely through inertia, continuing the policies and trends of their predecessors in many cases, but it doesn’t have to be that way, and I don’t want to let them off the hook just because they think it’s hard to change things. ---
**Author:** ![Salvor](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Salvor](https://boards.straightdope.com/u/Salvor)\ **Post date:** [February 17, 2016, 8:32pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/90 "2016-02-17T20:32:32Z")
> [@Deeg](#): > > This feels like nothing more the pure spiteful jealousy. Why in the world would you want to “kill” families passing on their wealth to their children? Jealousy is a terrible basis for tax policy. Perhaps the solution is a combination of increased taxation of the well to do and emulation of the well to do. What is the biggest driver of greater income and wealth for wealthy people? What is the breakdown over time? -higher income throughout a life from labor? -higher income throughout a life from investments" -the compounding effects higher financial starting points of wealth from inheritance? -favorable tax treatment for certain kinds of income (carried interest, capital gains) -higher income from accumulated rents (rental properties, other arenas) -Off Shore storage of investments to avoid taxes (I know a young guy who explicitly told me he has an account in Lebanon for this very reason - this is not a case of lower taxes, it’s a case of requiring virtually no taxation on his investments) My list seems cartoonish because I have a feeling I have not even begun to scratch the surface of what the factors are that lead to greater wealth. In any case, the emulation part comes in the following way. If it turned out that 30% of the contribution to wealth or larger was based on investment income and starting capital, why not try to expand that for people that are not just at the top? Alaska splits oil revenues, Norway has a sovereign wealth fund for their population, the US as a whole has… social security? What about matching funds to help savings and investments of the less well to do? Or do what Bush suggested and replace social security for a retirement account, but this time have the federal government guarantee some basic level of payout. Idea expressed here. > **[Bloggingheads.tv](https://bloggingheads.tv/videos/28886?in=21:14&out=25:31)** > > Bloggingheads.tv That only focuses on retirement, but there has to be some way to use the beneficial activities of wealthier people to benefit more than just that segment. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [February 17, 2016, 8:33pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/91 "2016-02-17T20:33:36Z")
> [@Salvor](#): > > But if a portion of my taxes went towards the project of clearing them out of the streets (self interest to have less blighted humans polluting public spaces) I’d be ok with that. I’d rather have the public pay for some space to put them that is not on the streets, and some food to live than have them dot downtown areas or set up zombie camps of the walking dead. The public already _does_ pay for some space to put them and some food for them to live, and they still dot downtown areas and set up zombie camps. The war on poverty is a failure. It hasn’t worked: despite (one poster wrote) tripling welfare spending in the last three and a half decades, I can still go to just about any urban core in America and find “blighted humans polluting public spaces”. Basic income? They’ll spend it on more alcohol or meth. How is taking more money from the rich going to fix that? ---
**Author:** ![Salvor](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Salvor](https://boards.straightdope.com/u/Salvor)\ **Post date:** [February 17, 2016, 8:40pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/92 "2016-02-17T20:40:47Z")
> [@HurricaneDitka](#): > > The public already _does_ pay for some space to put them and some food for them to live, and they still dot downtown areas and set up zombie camps. The war on poverty is a failure. It hasn’t worked: despite (one poster wrote) tripling welfare spending in the last three and a half decades, I can still go to just about any urban core in America and find “blighted humans polluting public spaces”. Basic income? They’ll spend it on more alcohol or meth. How is taking more money from the rich going to fix that? The public is more tolerant than I would be about allowing homeless to camp out on the streets. The first (and only) time I went to the Berkeley area I was with friends and we were walking through some park that was literally filled to bursting with homeless people. It was like a literal zombie movie of blighted humanity out in public for the world to see, and it was tolerated. It should not be. I don’t think we should let people camp out on the streets in public, and if we are going to ever actually clear them out, we have to have somewhere for them to go and continue what’s left of their meager existence. For those that want to move out of that situation, we should try to help, for the rest, at least don’t clog up the streets with their dysfunction for the rest of us. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [February 17, 2016, 8:43pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/93 "2016-02-17T20:43:04Z")
> [@Salvor](#): > > What is the biggest driver of greater income and wealth for wealthy people? What is the breakdown over time? I’d say it is opportunity. Bill Gates is a multi-billionaire because he had early access to computers, got a good education, and went to Harvard (for a time) and made connections. Page & Brin were able to go to a top-tier school, came up with a great idea, and had the opportunity to put that idea into a company. That’s the point about social/economic mobility: does everybody in the US have the opportunity to be successful like Page and Brin? If the answer is no, what can we do to change it? Confiscating people’s inheritance does not help that. ---
**Author:** ![Salvor](https://avatars.discourse-cdn.com/v4/letter/s/b5e925/32.png) [@Salvor](https://boards.straightdope.com/u/Salvor)\ **Post date:** [February 17, 2016, 8:48pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/94 "2016-02-17T20:48:41Z")
> [@Deeg](#): > > I’d say it is opportunity. Bill Gates is a multi-billionaire because he had early access to computers, got a good education, and went to Harvard (for a time) and made connections. Page & Brin were able to go to a top-tier school, came up with a great idea, and had the opportunity to put that idea into a company. > > That’s the point about social/economic mobility: does everybody in the US have the opportunity to be successful like Page and Brin? If the answer is no, what can we do to change it? Confiscating people’s inheritance does not help that. I almost wish I believed it was mere opportunity gaps that were the difference there. If I had a magic wand and could wave it to set opportunity and initial wealth gaps to zero, I still think we’d have a stratification of what people achieved. Not based off skin color or starting resources, but their own personal resources and human capital. Nature is itself unequal, it does not dole out its gifts of intelligence and capability that are more favored in society in equal measure. I ALWAYS expect differentials no matter how just and fair we structure society, my goal is not to iron those out to a flat plane, it’s merely to try to shore up the prosperity of people who were not born so gifted or had the right opportunities. For now though, I do think there is room to improve in terms of greater opportunity and educational factors to help people out. The game is not over there yet, but that’s not everything. If only it were. ---
**Author:** ![OldGuy](https://avatars.discourse-cdn.com/v4/letter/o/3bc359/32.png) [@OldGuy](https://boards.straightdope.com/u/OldGuy)\ **Post date:** [February 17, 2016, 8:50pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/95 "2016-02-17T20:50:48Z")
> [@HoneyBadgerDC](#): > > It should be noted that when Clinton took office the sharp upswing in the economy was allready well underway, by the time he left office it was still fairly healthy but on a downward trend. I think any president would have done well durring that same period. He is getting too much credit for being in the right place at the right time. I still think he did a good job overall as president. Clinton does get too much credit for being in the right place at the right time, but Obama certainly gets too little credit for being in that same place at one of the worst times. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [February 17, 2016, 8:52pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/96 "2016-02-17T20:52:41Z")
> [@Salvor](#): > > … we have to have somewhere for them to go and continue what’s left of their meager existence. For those that want to move out of that situation, we should try to help, for the rest, at least don’t clog up the streets with their dysfunction for the rest of us. We already have places for them to go. They’ve chosen not to, for whatever reason. I don’t see any way to fix that without empowering government to do things I don’t feel comfortable with them doing (like locking up the poor). ---
**Author:** ![OldGuy](https://avatars.discourse-cdn.com/v4/letter/o/3bc359/32.png) [@OldGuy](https://boards.straightdope.com/u/OldGuy)\ **Post date:** [February 17, 2016, 9:26pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/97 "2016-02-17T21:26:20Z")
> [@puddleglum](#): > > All we need to do to recreate that wonderful time is have a war that destroys the other industrialized nations, repeal all of the regulations that have been passed over the past 65 years, and pass enough loopholes so top 3% of earners pay only 29% of income tax collected instead of 51% like they do now. The top 20 percent earned 61.4 percent of income in 2006 and the top 1 percent earned 21.3 percent of income that same year. So I wouldn’t be too surprised if the top 3% earn substantially more than 29% of the total income which would mean they are paying a smaller percentage of the tax than they earned of the income. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [February 17, 2016, 9:32pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/98 "2016-02-17T21:32:16Z")
> [@HurricaneDitka](#): > > We already have places for them to go. They’ve chosen not to, for whatever reason. ‘Are there no prisons?.. And the Union workhouses. Are they still in operation?’ I don’t know where you live, but everywhere I’ve lived there are not enough shelters for the number of homeless. Unless by ‘places for them to go’ you mean parks, underpasses, alleys, and city streets; in which case the do have places to go. It’s not that they choose to; it’s the only place they _can_ go. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [February 17, 2016, 9:39pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/99 "2016-02-17T21:39:30Z")
> [@Deeg](#): > > This feels like nothing more the pure spiteful jealousy. Why in the world would you want to “kill” families passing on their wealth to their children? Jealousy is a terrible basis for tax policy. The thing to keep in mind is that the estate tax isn’t meant to prevent intergenerational wealth in “normal” families, only ones with large estates, i.e. the “1%” that everyone is so torqued about. Even at the lowest threshold, it was estates larger than something like half a million dollars, which even most middle/upper middle class households don’t have. The other reason that estate taxes aren’t such a terrible thing is because they’re essentially a tax on unearned income; nobody really misses something they never had. But in the current incarnation, the estate tax is squarely taking aim at people who, by any definition, count as “rich”, and trying to minimize the amount that they can make their children rich through as well. Of course, there’s a whole industry that revolves around skirting estate taxes, so I’m not so sure it’s all that effective. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [February 17, 2016, 9:44pm UTC](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303/100 "2016-02-17T21:44:35Z")
> [@Salvor](#): > > my goal is not to iron those out to a flat plane, it’s merely to try to shore up the prosperity of people who were not born so gifted or had the right opportunities. You sound rather “Harrison Bergeron”-esque. People aren’t equal. Ideally they’re equal under the law, and equal in opportunity, but beyond that, there are any number of things that factor into success- competence at the activity, luck, social skill, connections, geographic location, etc… You can’t equalize for all of them, and honestly, I think trying is kind of horrifying. [Previous page](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303.md?page=4) [Next page](https://boards.straightdope.com/t/how-do-we-actually-address-rampant-income-inequality/746303.md?page=6)