More about Inequality and how is "equality" supposed to come about

I wrote a post about Inequality as "the big issue of our time" after Piketty's book inspired a lot of hang wringing over it.

This is a continuation and elaboration on the same.

I feel that because of the US Republican tax plan we are getting into another round of "Inequality" discussions.

And since I have written about it before and done some numbers, I wonder if people really have any idea what they are talking about when they are discussing inequality.

The first of those is is inequality a problem and if so for what reasons? Is it because it is unfair for some people to have more than others? Or is it because a prolonged and exacerbated inequality will create social conflict and things are going to end badly? Because depending on which of those you believe, the approach to lessening inequality could be very different.

So make up your mind - should a society mandate that no individual could make more than 15x what another person makes or have a 100x the Net Worth of the average person?

If you believe that, and you are a majority, I am moving out of your country. With respect. You can run your country as you wish but without me.

And if you do believe that, how are you going to accomplish this goal? What are the practical steps through which you can get to significantly more equality?

Because the tax code is not going to do it. If you work the numbers, a person who makes $300,000 a year and pays 50% tax on it is still going to end up with $150,000 in disposable income and a person making $50,000 and paying no tax at all will have only $50,000. So at the end of Year 1, person A will be more well off than person B and this will continue and grow every subsequent year.

The only way to "reverse" that would be a taxation rate of 83% (which would leave the 300K person only 50). And this rate would have to go higher from there so if a person has made $450,000 a year their tax rate should be 90%. If you were the person earning $450,000 would you stick around? I know I wouldn't for any amount of social services or single payer medical coverage.

The only other means to reduce inequality from growing would be for the state to tell every business that they cannot pay anyone more than X in salary. And if you are a sole proprietor you would have to send monthly checks to the Government to reduce your "excess income". Would you want to start a business in that country? Why?

And it is not much different on the Net Worth side - Gates, Bezos and Buffet have Net Worth of about $250 Billion. If you were to take all of that away from them tomorrow and re-distribute it among the "bottom 160 Million" this would mean a one time payment $1,625 to each of those people. That is it - one time and never again each person gets "Inequality buster" check of $1,625. Would that dramatically change the fabric of society and make it much more equal? How do you figure that?

So I am puzzled by all this talk of "inequality" not because I don't think that it does not exist but because I don't know what one can do about it.

And every time I ask people harping about inequality the above questions, with numbers, I get no response. It is as if they never thought it through.

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