Today’s Inequality Could Easily Become Tomorrow’s Catastrophe

2016/09/02 wwchu 其他

One way to judge the likely outcome is to look at what has happened in the past. In their new book “Taxing the Rich: A History of Fiscal Fairness in the United States and Europe” (Princeton 2016), Kenneth Scheve of Stanford and David Stasavage of New York University looked at 20 countries over two centuries to see how societies have responded to the less fortunate. Their primary finding may seem disheartening: Taxes on the rich generally have not gone up when inequality and economic hardship have increased.

Instead, they found that taxes tend to rise when warfare increases, largely “because war mobilization changed beliefs about tax fairness.” These tax changes were generally aimed at ensuring national survival, not correcting economic inequalities.

Professor Scheve and Professor Stasavage found that democratic countries have not consistently embraced more redistributive tax policies, and most people do not vote strictly in their narrow self-interest. As the right to vote broadened through the centuries, for example, and people without property began to vote, they did not consistently act to tax the rich. These findings run counter to a popular narrative. Recall that in 2012, Mitt Romney said that in a democracy, a candidate who offers tax breaks to the less well-off at the expense of the rich will win mass support “no matter what.” That claim does not appear to be supported by the historical record.

Instead, it appears that, for better or for worse, the majority of people share simple notions of entitlement and fairness. Professor Scheve, Professor Stasavage and their colleagues found that in 2014, when people in the United States were asked what marginal tax rates they would “most like to see” on family incomes of $375,000, the median answer was 30 percent, with the bulk of answers ranging from 20 percent to 40 percent. (The federal marginal tax rate for that income is 33 percent.)

This is consistent with my own survey results, which focused on inheritance taxes. In 1990, Maxim Boycko, then with a Moscow think tank, the Institute of World Economy and International Relations, and I asked both New Yorkers and Muscovites: “In your opinion, what inheritance tax rate for really wealthy people do you think we should have?” The average answers in the two cities were virtually identical: 37 percent in New York, 39 percent in Moscow. Taxing around a third of wealth, more or less, seemed fair to people. And perhaps it is reasonable, in the abstract, yet what will we do in the future if this degree of taxation won’t produce enough revenue to meaningfully help the very poor as well as the sagging middle class?