The Height of Inequality: A Policy Perspective

33 Pages Posted: 8 Apr 2021 Last revised: 29 Jun 2021

Date Written: March 21, 2021

Abstract

Income households’ share of national income has grown dramatically since 1970 while the bottom 80 percent has seen their share decline. This paper examines economic, social, and demographic changes that almost assure that the income would be increasingly concentrated at the top. Occupations that dominate the top 1 percent of households nevertheless are getting unearned rents because corporate boards do not control executive compensation, medical, dental and law professions undermine competition, and a long-standing finance premium has favored that occupation. Progressivity of the tax code stops at an income level far below the $1.66 million average income for the top 1 percent of taxpayers. Higher taxes on top incomes can make the system fairer and the increased revenues can be devoted to programs that enhance economic growth and benefit lower income households.

Keywords: income inequality, progressive taxation, Laffer curve, occupational licensing, rents, executive compensation, trade associations

JEL Classification: D31, D63, D72, H24, I24, J38, J44

Suggested Citation

Rasmussen, David W., The Height of Inequality: A Policy Perspective (March 21, 2021). Available at SSRN: https://ssrn.com/abstract=3809144 or http://dx.doi.org/10.2139/ssrn.3809144

David W. Rasmussen (Contact Author)

Florida State University ( email )

Tallahasse, FL 32306
United States
850 556 0537 (Phone)

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