Just hours after Yale professor Robert Shiller won the Nobel prize for economics Monday he told the Associated Press: “The most important problem that we are facing today…is rising inequality in the United States and elsewhere in the world.”
Former U.S. Labor Secretary Robert Reich could not agree more.
“Of all the advanced economies, we are the most unequal and we are surging toward greater inequality at the fastest rate,” Reich tells The Daily Ticker. “The 400 richest Americans own more wealth than the bottom 150 million Americans puts together.” Here is a direct video link.
On the issue of tax policy there is an obvious step needed that will help to repair income equality and better align corporate executives to long-term investment and building value in their companies rather than just short term pops to their share price, and that is to mandate the same tax rates on investment income (capital gains and dividends) as is applicable to employment income. This was a critical step enacted under Ronald Regan 1988 to 1990 pursuant to the Tax Reform Act of 1986, and much to the contrary of the far right anti-tax coalition, level tax rates for capital and wages in the late 80’s did not cause investment to fall. Investment in capex, infrastructure and employment rose. Bush one and two revoked this intelligent policy in their presidencies and the economy continues to pay the price today.
Also anyone remember how the French Revolution ended for the aristocracy?