Tags: Stiglitz | income | inequality | economy

Stiglitz: Tax Reform, Economic Reform Needed to Reverse Income Inequality

By    |   Friday, 24 April 2015 09:30 AM

Nobel laureate economist Joseph Stiglitz of Columbia University has spent a lot of time studying the issue of growing income inequality.

He offers several solutions in his new book, "The Great Divide: Unequal Societies and What We Can Do About Them," which was excerpted on Yahoo Finance.
  • Tax Reform. The idea should be for "those at the top pay at least the same share" of their income as everyone else does, Stiglitz says. Tax provisions that weaken the economy and create more inequality should be eliminated.
  • Structural economic reform. It is "the way our economy works that creates this inequality," Stiglitz says, citing "ineffective and ineffectively enforced" antitrust and corporate governance laws that favor the wealthy. That leaves "less for investment, less for wages," Stiglitz writes.
  • Equal access to education. "We spend more even in the public school on the children of the rich than we do the poor," he says. "We are transmitting advantages and disadvantages across generations, and that is the most important factor in creating this inequality of opportunity."
Interestingly enough, while Americans are concerned with the growth of income inequality, but they aren't blaming it on the wealthy.

"You might expect more and more people to conclude that it's time to soak the rich," writes New York Times columnist Neil Irwin.

"Here's a puzzle, though: over the last several decades, close to the opposite has happened. . . . Americans' desire to soak the rich has diminished even as the rich have more wealth available that could, theoretically, be soaked."

So how do you explain the conundrum?

Conservatives might answer, "Americans are seeking less redistribution because they have come to their senses," Irwin says.

"They realized the very high tax rates and generous social spending that prevailed in the middle decades of the 20th century came at a high economic cost, and that low taxes on the rich encouraged greater investment and entrepreneurship, spurring faster economic growth that ultimately made everybody better off."

Then there's the liberal view: "Americans have been hoodwinked by conservative politicians and media outlets, and have come to view redistribution as a dirty word because they don't recognize the ways it benefits them."

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Nobel laureate economist Joseph Stiglitz of Columbia University has spent a lot of time studying the issue of growing income inequality.
Stiglitz, income, inequality, economy
Friday, 24 April 2015 09:30 AM
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