The repeal of the Corn Laws in 1846 was one of the great policy changes of 19th century Britain. It had the effect of lowering the incomes of wealthy landowners and raising the real incomes of most other people by lowering the cost of grain. Since it allowed Britons to buy grain from the places where it was cheapest to grow and concentrate on producing the goods where Britain had a comparative advantage, it was good for the overall economy.
If we see inequality as a problem, we should concentrate on policies that similarly increase the pie at the same time we redistribute income.
My candidates:
Reduce copyright term to the Berne Convention minimum. Current law is an expensive and inefficient way to hand excessive monopoly rents to a relatively small number of individuals.
Reduce or eliminate entirely the number of patents granted for software: again, this is a very expensive way to grant monopoly rents.
Lower the cap on the mortgage interest deduction: it's regressive and distorts the housing market.
Cap the tax exclusion of employer provided health insurance: it's regressive and distorting. Better yet, replace it with a tax credit of the same total value.
Reduce and eventually eliminate agricultural subsidies and tariffs: they're regressive and distorting.
Charge market rates for all Federal mineral rights.
Reform immigration and zoning.
These are all policies that would be good for equality and good for the economy.
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4 comments:
Excellent ideas, though I fear they mostly illustrate that nobody's actually interested in equality, per se.
I'm pretty sure there's already a cap on tax exclusion for employer provided health insurance. I started seeing extra taxes deducted from my paychecks a while ago, specifically for the fact that my employer's healthcare plan exceeded some threshold. It was part of the AHCA, I believe. I could be confused.
Here's a discussion of the thing I'm thinking of: http://www.nytimes.com/2013/05/28/business/cadillac-tax-health-insurance.html?pagewanted=all&_r=0
The "Cadillac Tax" is somewhat like a tax exclusion cap, but there are significant differences in the details of the impact. In my opinion, a simple exclusion cap would be more elegant, more equitable, and better.
All of the policies I propose will be difficult to execute. Mostly, not because nobody is really interested in inequality, but because concentrated interests that benefit from the status quo will defend their current benefits passionately.
The people trying to repeal the Corn Laws had the same problem. That's why they had to fnght for decades
Eliminate the income cap on the Social Security payroll tax, thereby allowing a reduction in the rate.
Tax all kinds of income at the same rates (possibly for the SS tax as well as income tax).
Re-steepen the graduated income tax scale.
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