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Taxing the Rich More Won't Solve the Problems with Income Inequality darreng“it nevertheless strikes me as fundamentally wrong-headed to say that simply by taxing the rich we’d solve the inequality problem.”E.D. Kain, ContributorI’m certainly not trying to straw man anybody here. I take pains to voice my support of the movement. But I always say the best friend of any movement is a [...]trumwillIt won’t solve wealth inequality (though might for income, depending on how you look at it), but it’ll make us feel better. Which I suspect is half the poi [...]E.D. Kain, ContributorThanks trumwill. I agree, it’s not without merit. I’ve read about Sweden’s wealth inequality. Felix Salmon wrote a post about it recently. I think the impo [...]omaryakTaxes alone may not solve the problem of inequality, but they could help reduce the corrupting influence of money on those who are already wealthy by reini [...]E.D. Kain, ContributorMaybe, maybe not. It strikes me that the most heavily regulated industries are also the most in bed with government. The financial and health and defense s [...]medicalquackHere’s a solution folks may not have thought about, license and tax those companies selling our data and profiles and have a public registry for them to li [...]E.D. Kain, ContributorNot a bad idea, since the costs would likely be passed to purchasers of the data rather than to other consumers. I find most discussions of taxation mind-numbingly stupid. We have a terrible tax code. It’s full of bad incentives. It’s written by people in the thrall of public opinion or pledged to Grover Norquist’s silly no-new-taxes pledge. It’s an ad hoc disaster that makes many tax lawyers and tax software people very rich. Many people have suggested ways to simplify the tax code – some good, some not so good. Rick Perry has recently come out with a flat tax agenda, and Herman Cain has a similar tax reform idea in his 9-9-9 plan. Others have floated the flat tax before, including Steve Forbes when he ran for president. There are problems with a flat tax. It’s not politically viable, for one thing. In order to make up the lost revenue you’d have to basically raise taxes on the vast majority of Americans. That would be met with all sorts of outrage by the general public, whatever other merits a flat tax might possess. On the other side of the tax discussion we have Occupy Wall Street. While I do believe income inequality is a problem in our economy – the extent of the inequality and the nature of that inequality are certainly not good for broad economic prosperity – it nevertheless strikes me as fundamentally wrong-headed to say that simply by taxing the rich we’d solve the inequality problem. Now, if we have to choose between cutting a vital service for the poor or jacking up taxes on the wealthiest Americans, I go with jacking up taxes because I’m a bleeding heart. But is that really the extent of our choices? We spend nearly a trillion dollars a year on defense for one thing. Is this a wise way to spend taxpayer dollars? Could some of that money be better spent by taxpayers themselves here at home? We spend even more on health care. Could a simplified healthcare program help save money? I think it could. (I have a follow-up post in the cooker that will detail my tax-and-healthcare plans in the near future.) I think a progressive tax structure is the best option out there and the most politically viable by far, but I don’t think simply saying “tax the rich” does us much good. If we tax the rich more and then use that money to simply expand the military or the war on drugs then we’re using taxes for evil. We’re taxing the rich, sure, but if we just use their money to build more bombs than we’ve failed. Furthermore taxes aren’t a remedy for the underlying problem. They’re a bandage for a fever. Corporate welfare and cronyism are the real problems, and it’s going to take a lot more than taxing the rich to fix the deep structural issues that have gotten us to this point. 2011 Forbes.com LLC™ All Rights Reserved