The redistributive effect of taxes is a feature, not a bug. Inequality distorts political and social dynamics. One of the functions of taxation is to make rich people less rich, and we shouldn't run from that.
The goal is to mitigate inequality not eliminate it. Someone making 10x as much as the average person has minimal impact, 100x isn’t a big deal, but you keep adding zeros especially with passive income and there’s significant repercussions.
US inequality increased significantly after the top tax rates, long term capital gains, etc declined significantly. There’s no question those are related, it was explicitly the intended effect.
It doesn't seem to have the intended effects in other countries. Income inequality has gone up in other places such as Europe too. The real driver seems to be the modernization of jobs with the job types moving from secondary to tertiary types, especially knowledge work. The main reason the wealth is uneven here more so than in other countries is because of the big tech companies that we have and others don't. All those unrealized gains from company ownership are the main driver of the extra 20-30% the top people have vs the top people of other countries.
Again it’s a question of scale. There’s a bunch of countries with higher levels of wealth inequality than the US like Zambia and Russia so it’s the result of lots of forces.
Wealth inequality can increase from trends which are net positive but that doesn’t change the fact it’s a net negative. Thus, changes to the tax code specifically designed to increase wealth inequality working shouldn’t be surprising even if other factors are also in play.
