With the recent release of the French economist Thomas Piketty’s popular book "Capital in the 21st Century," the idea of wealth redistribution has once again moved to the forefront of public debate.
Piketty’s book critiques the idea of the 1 percent, or highly privileged and very exclusive upper class. Piketty analyzes the growth of this small and massively wealthy part of the population and what it means for the future. He ends his book “with a call to arms,” said Paul Krugman of the New York Times. “A call, in particular, for wealth taxes, global if possible, to restrain the growing power of inherited wealth.”
Piketty is not alone in calling for wealth reform. According to a 2013 Gallup poll, the majority of Americans — around 59 percent — believe that wealth in the U.S. should be more evenly distributed. Higher taxes on the wealthy is one of the most prominent methods of doing so. While some claim that higher taxes on the wealthy is punishing the successful, others disagree.
“To be clear, the tax burden on all Americans, not just the wealthy, is low both in historical and international terms,” said Jared Bernstein of the New York Times. “We’re collecting less revenue than many other advanced economies and less than we have in the past.”
Bernstein concludes with the idea that the wealthiest may have to make sacrifices in the form of taxes in order to improve the economy for everyone. “We’d all love to lift the poor without lifting a finger of sacrifice by the rich,” he said, “but I don’t think it can be done.”
One opposing argument is the idea that wealth must be made before it can be redistributed, and increasing taxes or redistributing wealth before it has been made is dangerous.
“I accept the obvious truth that they need to be set at adequate levels to fund appropriate government actions. I also accept the idea that assistance for the poor is such an action,” said Deseret News columnist Robert Bennett. “What I do not accept is the idea that high taxes will automatically close the wealth gap.”
Even if a tax system skewed to favor lower-income citizens is considered more “fair,” said Bennett, that fairness may have a negative impact on everyone. He gave the example of California, where households or individuals making over $48,000 annually have tax rates of 9.3 percent, one of the nation’s highest rates.
“In the last 15 years, California's industrial employment base shrank by 600,000 jobs,” Bennett said. “California’s unemployment rate is fourth highest in the nation. Yet California’s wealth gap, which high taxes are supposed to fix, is both wide and widening.”
Bennett believes that these flaws in the California economy are due, in part, to their redistribution system. Others think that the government has created this faltering economy and is now trying to make the wealthy fix the country’s mistakes.
“In order to get serious about addressing America's deficits in both money and opportunity, we have to deal with our real problem,” said Arthur Brooks of USA Today. “Our government is too big and it spends too much. It is wrecking our economy and mortgaging our future.”
Brooks lists problems with the economy such as extravagant spending and the resulting deficits, lack of budgets, and a broken tax system. But “increasing tax rates cannot and will not solve these problems,” said Brooks. “It is only a class warfare diversion, and it wastes valuable time.”
Bethan Owen is a writer for the Deseret News Moneywise and Opinion sections. Twitter: BethanO2
Copyright 2017, Deseret News Publishing Company