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April 9, 2012

The Real Causes of Income Inequality: Any analysis of taxes paid in high tax-and-spend countries shows that the U.S. has the most progressive income tax system in the world

Phil Gramm & Steve McMillin:

In the stagnant days of the Carter administration, when inflation was approaching 13.5% and interest rates were peaking at 21.5%, income was more evenly distributed than in any period in 20th-century America. Since the days of that equality in misery, the measured income of the top 1% of income tax filers has risen over three and a half times as fast as the income of the population as a whole.

This growth in income inequality is largely the result of three dynamics:

1) Changes in the way Americans pay taxes and manage their investments, which were a direct result of reductions in marginal tax rates.

2) A dynamic shift in the labor-capital ratio, resulting from the adoption of market-based economies around the world.

Posted by Jim Zellmer at April 9, 2012 1:02 AM
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