TCF fellow Ed Kleinbard joined The Diane Rehm show with Senator Elizabeth Warren and economists Scott Winship of the Manhattan Institute and Dean Baker of the Center for Economic and Policy Research to discuss what’s driving economic inequality and what, if anything, we should do about it.
Wonkblog’s Puneet Kollipara lists TCF fellow Mark Thoma’sThe Fiscal Times article on economic inequality as the day’s top opinion. Thoma:
So my approach to fighting inequality in the short-run is to use taxation and corrective redistribution to ensure that workers receive the income they deserve, to fix the distributional problems that have allowed those at the top to capture more than their fair share of income, and enact supply-side incentives that have been shown to work as soon as possible. The hope is that the supply-side policies and corrections to the distribution of income will produce the types of jobs and equitable compensation that are needed to solve the inequality problem in the longer run. But there’s a chance that no matter what we do, the inequality problem will persist.
Bowing to pressure from U.S. and European officials, Ireland will phase out a notorious loophole that helps multinational corporations legally dodge billions of dollars in taxes in their homelands.
A tax maneuver known as the Double Irish has allowed major U.S. technology companies such as Google Inc. to funnel income through subsidiaries in Ireland to slash their tax bills at home.
The decision to close that loophole won't affect Ireland's low corporate tax rate or other special tax breaks that have lured the likes of tech giants Apple, Facebook, Microsoft and Oracle, all of which have set up Irish subsidiaries to help them shelter foreign profits from U.S. taxes.
Read the full article.
A debate over the use of progressive taxation and redistribution as a means of solving the problem of rising inequality erupted in the last week or so. The debate began with three publications, one from Edward Kleinbard, one from Nezih Guner, Martin Lopez-Daneri, and Gustavo Ventura, and one from Cathie Jo Martin and Alexander Hertel-Fernandez.
They argue in turn that “progressive fiscal outcomes do not require particularly progressive tax systems,” “making taxes more progressive taxes won’t raise much revenue,” and “The way a tax system fights inequality isn't just redistribution. It's by generating enough revenue to fund programs and benefits that help middle class, working class, and poor people participate and succeed in the economy. While talk of taxing top earners may make for good political rhetoric on the left, relying on such taxes cannot pay the bills.”
Read the full article.
Edward Kleinbard knows as much about taxation in America as anyone alive. He was a tax partner at the law firm Cleary Gottlieb Steen & Hamilton, then chief of staff of U.S. Congress’s Joint Committee on Taxation, and is now a professor at the University of Southern California’s law school. But when he set out to write a book about how to fix the American tax system, it made him realize that the problem wasn’t the tax system; it’s everyone’s fixation on the tax system.
Republican obsession with taxes is the more explicit: They want simply to cut them. Kleinbard is a staunch Democrat, and his new book, We Are Better Than This, has little patience with the economic and philosophical tenets of modern American conservativism. But Democrats have their own tax obsession, as he sees it: They want to aim taxes at the wealthy, to make them pay a greater share of the take. They rail against companies that figure out ways to minimize their corporate taxes. That focus, Kleinbard argues, is misguided.
In recent decades, and especially since 2000, the richest Americans have enjoyed soaring income and wealth while the rest of the population's living standards have stagnated. The Century Foundation was one of the first institutions to raise serious concerns about these trends and propose ideas for improving economic conditions for all Americans- not just the fortunate few.
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