I was thinking of the income tax but what you say
brings up the problem of progressive nature of the tax system as a whole. It is true that income from capital gains can be taxed at a much lower rate than say income from wages--or even not at all. Also incomes
from gifts and from estates might not be taxed at all which can make for even more inequality and regressiveness in the total tax system. I was thinking
of income tax from wages investments etc. rather than capital gains. In considering the progressive or regressive nature of a total tax system we would need to consider taxes not based upon income at all such as the sales tax.
In Canada we do have taxes that are certainly not progressive such as the sales tax. Its impact on lower income people is greater than on high income people since they pay the same rate.
The fact that some places with progressive taxes are more unequal than some that do not even if true which has not been shownby references does not mean that progressive taxation does not decrease inequality while the flat tax does nothing to remedy it. Other factors could be causing the inequality. As noted often there are all sorts of loopholes in a progressive system. There can be all sorts of tax incentives for corporations etc.
To use a favored dodge ceteris paribus a progressive tax system should reduce income inequality and a flat tax do nothing to reduce it. I consider support for the flat tax a right wing position. Surely they are the ones that have been trying to replace progressive taxation by flat taxes and also to neutralise the redistributive effects of progressive taxations through loopholes exceptions etc.
Cheers, Ken Hanly
--- Robert Wrubel <bobwrubel at yahoo.com> wrote:
>
> --- ken hanly <northsunm at yahoo.com> wrote:
> "How on earth is the flat tax supposed to help
> reduce
> income inequality? It does the opposite by doing
> away
> with a progressive tax system"
>
> As I understand it, we already have a regressive tax
> system (you and I paying 35% while capital gains are
> only taxed at 15%.) A flat tax could be an
> improvement
> on that. Further there are so many loopholes,
> write-offs and deductions in what's left of the
> "progressive" system, the net effect of it may be
> nil.
>
> The serpent in the flat tax system may be that they
> want it AND the write-offs and deductions too!
>
> BobW
> >
> > This guy is a Harvard economist. Does he belong to
> > the
> > flat earth society as well as the flat tax
> society?
> > As China illustrates opening markets far from
> > solving the inequality of wealth distribution in
> > China
> > has made it much worse, so much according to the
> > article that inequality is greater in China than
> the
> > US.
> > How on earth is the flat tax supposed to help
> > reduce
> > income inequality? It does the opposite by doing
> > away
> > with a progressive tax system..
> > The URL is...
> >
>
http://commentisfree.guardian.co.uk/kenneth_rogoff/2007/11/to_have_and_to_have_not.html
> >
> > Cheers, Ken Hanly
> >
> >
> > To have and to have not
> > Fundamental tax reforms and open markets are
> needed
> > to
> > balance the global distribution of wealth. It
> > doesn't
> > look likely in our lifetime.
> > Kenneth Rogoff
> >
> > Lately, I have been trying to explain to my
> > 11-year-old son Gabriel the astronomical
> differences
> > between people's income.
> >
> > Microsoft founder Bill Gates first penetrated
> > Gabriel's consciousness a couple of years ago,
> when
> > his father served as a warm-up act to Gates at a
> > large
> > conference sponsored by the Danish government.
> Ever
> > since, Gabriel has been fascinated by the
> seemingly
> > infinite possibilities of having $60bn.
> >
> > For example, whenever I tell Gabriel that
> something
> > is
> > unbelievably valuable (even, say, a great painting
> > in
> > a museum), he invariably says, "But Bill Gates
> could
> > buy it, right?" Yes, Gates could buy the whole
> > museum.
> > But then he would just turn around and give it
> back
> > so
> > everyone else can see it, so there is no point.
> > Gabriel is not entirely convinced.
> >
> > Gabriel has decided that if he can't become a
> > professional basketball player when he grows up,
> > then
> > he'd like to buy a team. As an economics
> professor,
> > I
> > cannot help but ask him if he knows that it costs
> > $300-500m to buy a National Basketball Association
> > team. "But Bill Gates could do it. He could buy
> all
> > the teams in the league, right?" Yes, I say. But
> if
> > Bill Gates were to own the entire NBA, how would
> he
> > decide which team to root for? Gabriel concedes
> the
> > point, but I can tell that again he is not
> > convinced.
> >
> > Gates is not the only one who can easily buy teams
> > and
> > paintings. The latest Forbes list of America's
> > wealthiest individuals showed that last year's
> > highest
> > nine earners, whose ranks include New York City's
> > mayor, Michael Bloomberg, managed to increase
> their
> > wealth by $5-9bn last year. Yes, that is just the
> > annual increase in their wealth. Collectively,
> their
> > $55bn in earnings outstripped the entire national
> > income of more than 100 countries.
> >
> > To put these astronomical numbers in perspective,
> I
> > had Gabriel try to confirm that to be among the
> top
> > nine earners in the US, you had to pull in at
> least
> > $150 per second, including time spent eating and
> > sleeping. That is $9,000 per minute, or $540,000
> per
> > hour.
> >
> > How much do America's highest income earners make
> > compared to the world's billion poorest
> individuals?
> > Well, if the top nine donated their earnings, it
> > would
> > be the equivalent of about three months' income
> for
> > the bottom billion. (Gabriel knows, of course,
> that
> > Bill Gates and Warren Buffet have donated tens of
> > billions already.)
> >
> > As for the other nine months, given that the US
> > accounts for only 25% of world income, it is a
> fair
> > guess that there are some very wealthy individuals
> > elsewhere who might be able to kick in. (Mexican
> > telephone magnate Carlos Slim, for example, is a
> > close
> > competitor to Gates for the title of the world's
> > richest man.)
> >
> > Mind you, the idea that the ultra-rich could
> easily
> > solve poverty is stupefyingly naive. Most serious
> > academic research strongly supports the view that
> > rich
> > countries can best help poor regions like Africa
> by
> > opening their markets, and by providing assistance
> > in
> > building physical and institutional
> infrastructures.
> >
> >
> > The greatest successes in fighting global poverty
> > have
> > come from China and India, two countries that have
> > largely pulled themselves up by their own
> > bootstraps.
> > But this seems too complicated to explain to
> Gabriel
> > just yet. So I retreat to the simplistic rock
> > star/UN
> > view of how great it would be if we could give
> more
> > money.
> >
> > Are massive income and wealth differences an
> > inevitable outcome of fast growth? By and large,
> the
> > answer from history is "yes". China, whose growth
> > performance since 1970 has now broken every
> record,
> > is
> > well on its way to having the world's most unequal
> > income distribution. Indeed, China has passed the
> US
> > and is nearing Latin American levels of
> inequality.
> >
> > Policy solutions are not easy. Many super-earners
> > are
> > also super-creative and bring enormous value.
> Places
> > like the UK actively court wealthy foreign
> nationals
> > through extraordinary preferential treatment of
> > their
> > investment income. The ultra-rich are an
> > ultra-mobile
> > group, too. If you are earning $540,000 an hour,
> it
>
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