Inequality and Mobility at the Top of the Income Distribution

March 9, 2011


The left claims that economic mobility isn’t what it used to be, and complain about the fairness of a system that locks people in place based on their birth status. The right claims that this is nonsense; that economic mobility is alive and well in the US.

Well, let’s take the right at their word. I propose that we increase taxes on high income individuals (income taxes, payroll taxes, social security taxes) and lower them for the low income individuals since the right claims that these are just the same folks at different periods of their lives. It therefore all balances out since a single individual gets the benefits of low taxes early in life, which allows them to accumulate capital quickly so as to be more productive and engage in risk taking/wealth-generating activities earlier than they would otherwise.

And later, when they are reaping the benefits of their accumulated wealth, we raise their taxes so that we can extend the same courtesy to those coming up the ladder behind them.

If there is true mobility, no one should complain since they reap the benefit at one stage of their life and pay the costs at a later stage of life.

Very helpful thinking.

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