Friday, January 20, 2012

On income inequality versus economic growth

Income inequality has long been a favorite rhetorical device to promote such disparate policies as tariffs, immigration restrictions, or subsidies to builders of low-income housing.... The mantra of "rising inequality" is incessantly used as a rationale for punitive tax policies toward high-income taxpayers and even middle-income investors—proposals rarely defended on their economic merits. "Fairness" arguments often seem to drown out serious debate about the potential impact of higher marginal tax rates on economic efficiency, incentives, tax avoidance or economic growth. This [unending] campaign for higher tax rates on upper incomes invariably relies on measures of incomes among the "top 1%" as reported on individual income tax returns....
— Alan Reynolds, senior fellow at the Cato Institute
and author of Income and Wealth

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