In the last few days, I’ve come across a couple of intriguing tax proposals aimed at reducing the gap between the 1% and everyone else.
We already index taxes for inflation, so Yale economist Robert Shiller wants to know why we can’t index them for inequality as well — and tax the rich at higher rates as the nation’s income becomes more concentrated at the top.
Shiller and his colleague Leonard Burman suggest a plan that would offset the loss in tax revenue that occurs when we index for inflation by imposing higher tax rates on income falling in the top tax brackets. (Shiller, clearly an optimist, thinks this approach might even be achievable in the current political environment.)
Shiller thinks we need to see our income taxes “as a colossal insurance system, guarding against extreme income inequality.”
Good idea, but I’m not as optimistic as Shiller–I don’t think such a proposal would survive the displeasure of the guys who pay the lobbyists.
A bill I really like has somewhat better prospects, and has actually been introduced in California.
Corporations in California currently face an 8.84 percent tax on their profits. The DeSaulnier-Hancock legislation would up that rate to 13 percent for companies that pay their top execs over 400 times what their typical workers are making.
The same legislation lowers the state corporate tax rate to 7 percent on companies with a CEO-worker pay divide less than 25-to-1. Under the bill, all firms with a ratio under 100-to-1 would end up with a tax cut, all above with a hike.
Carrots and sticks….