Would a significant increase in the top income tax rate substantially alter income inequality?

[Axulus]

The high level of income inequality in the United States is at the forefront of policy attention. This paper focuses on one potential policy response: an increase in the top personal income tax rate. We conduct a simulation analysis using the Tax Policy Center (TPC) microsimulation model to determine how much of a reduction in income inequality would be achieved from increasing the top individual tax rate to as much as 50 percent. We calculate the resulting change in income inequality assuming an explicit redistribution of all new revenue to households in the bottom 20 percent of the income distribution. The resulting effects on overall income inequality are exceedingly modest.

That such a sizable increase in top income tax rates leads to such a limited reduction in income inequality speaks to the limitations of this particular approach to addressing the broader challenge. To be sure, our results do not speak to the general desirability of a more progressive tax-and-transfer schedule, just to the fact that even a significant tax increase on high-income households and corresponding transfer to low-income households has a small effect on overall inequality.

http://www.brookings.edu/research/p...y-alter-income-inequality-gale-kearney-orszag

 

[Tom Sawyer]

It makes for a good first step.

 

[ksen]

High top income tax bracket rates by themselves do not do much to address inequality.

How you spend the extra revenue has much more impact on income inequality.

 

[Jimmy Higgins]

Does raising the minimum wage reduce threats of extinction to condors?

 

[Loren Pechtel]

High top income tax bracket rates by themselves do not do much to address inequality.

How you spend the extra revenue has much more impact on income inequality.

Read the fucking article!

The model specifically assumed 100% redistribution.

 

[dismal]

I dunno this interesting data suggests there is a pretty poor relationship between tax rates and inequality within the US.

Seems like the main driver of inequality is living near leftists.

Rising wage inequality in recent years has brought increased focus on the disparity between the highest wage earners and the lowest wage earners. Less attention, however, has been paid to how wage inequality varies by location or area. By one measure—the ratio of the 90th wage percentile to the 10th wage percentile, sometimes called the “90–10” ratio, inequality increased by 7 percent in the United States between 2003 and 2013.

...

The largest 90–10 ratios are concentrated in the northeastern United States and along the West Coast, while the smallest ratios are found along the nation’s southern tier, throughout the Midwest, and in the Rocky Mountain states.

http://www.bls.gov/opub/mlr/2015/ar...hin-and-across-metropolitan-areas-2003-13.htm

 

[ksen]

I am shocked to learn that the places with the most wealthy people have the highest income inequality.

Maybe one should ask why rich people don't want to live near rightists.

 

[dismal]

I am shocked to learn that the places with the most wealthy people have the highest income inequality.

Maybe one should ask why rich people don't want to live near rightists.

Too much income equality.

 

[ksen]

:hmmm: