What Can Our Government Actually Do to Reduce Extreme Financial Inequality?
Question/Comment: What can our government actually do to reduce extreme financial inequality after the fact (assuming that such reduction is desirable)? Once extreme wealth has been created, don’t those chosen “elite” have considerably more opportunity than the rest of us to protect their assets?
Governmental redistribution of wealth worries me, largely because I always suspect that the wealth will end up being taken not from outrageously paid CEOs and their ilk (who can afford to make themselves unassailable) but from middle class workers/ savers whose limited assets are more easily accessed: Isn’t there some historical precedent for this concern?
Paul Solman: To be honest, there is probably historical precedent for every concern under the sun. To answer your question, though, what CAN government actually do, given the fact that the “chosen ‘elite,’” as you put it, probably DO “have considerably more opportunity than the rest of us to protect their assets.” Or, at the very least, have more assets. Here are a couple of thoughts.
1) Make the tax code more progressive. Before Ronald Reagan, the top marginal rate was 70 percent. It was down to 50 percent by 1982. That’s also when inequality began to rise dramatically in the U.S. Just raising the payroll ceiling on taxes for social security would have an equalizing effect.
2) Have government insist on capping executive salaries to any company which it assists financially. That already includes America’s major banks and may soon extend a lot further.