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Wednesday, February 20, 2013

Providing special tax status to wealth and not wages biggest driver of inequality over past 15 years

I've said before and will say again, inequality in and of itself is not an issue. The problem is not that the rich make too much, but that the poor and middle class don't make enough.

That problem has grown worse because we tax wages - what most Americans earn in a weekly or bi-weekly paycheck of some sort - at a much higher rate than we tax interest income and dividends, which are not the exclusive domain of the wealthy but primarily benefit the richest among us.

In other words, our tax code has been redistributing wealth - upwards. This shouldn't be surprising to anyone who has been looking at the issue the past few years. Another study just confirmed it.

Study: The single greatest driver of income inequality over a recent 15 year period was runaway income from capital gains and dividends.

That article includes stuff about the sequester and makes a policy point, though the study is the key piece of information.

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