Net: Higher redistribution of wealth (through taxation) leads to longer lasting economic growth. No one is suggesting that the U.S. federal government institute policies similar to that of Denmark or Sweden. While those countries have some of the happiest citizens on the planet, they also have very high income taxes which many of us would find objectionable. But, its clear to me that the current state of wealth imbalance in the U.S. is not good for our country - economically as well as sociologically. Heres a short and simple article on economic inequality and growth from The Economist. It turns out that redistribution of wealth (through taxation) actually has a positive effect on economic growth - within limits. The article references two recent IMF studies which show the impact of redistribution on economic growth. The width of the band between the two dots (market income and net income) is proportional the amount of restribution in a given country. The U.S. does much more redistribution and Indonesia, Venezuela, etc. and does less than Denmark, Germany, Sweden, etc. Interestingly, the countries in the red section at the bottom of the chart engage in greater redistribution and experience greater long term growth. economist/news/finance-and-economics/21597931-up-point-redistributing-income-fight-inequality-can-lift-growth-inequality
Posted on: Mon, 10 Mar 2014 14:57:15 +0000
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