Monday, 24 September 2018

Meade on property

This seems pretty relevant today - a small snippet from Efficiency, Equality and the Ownership of Property that addresses the need to think about ownership of property in addition to taxation when looking at inequality.

"(i) If, in the automated world we are envisaging, a really substantial equalisation of incomes is to be achieved solely by redistributive income taxes and subsidies, the rates of income tax would have to quite exceptionally progressive; and such a highly progressive income taxation is bound to affect adversely incentives to work, save, innovate, and take risks...The system unquestionably involved inefficiencies, though it may be debatable how great those inefficiencies would be.

"(ii) The system could be used to equalise incomes; but it would not directly equalise property ownership. Extreme inequalities in the ownership of property are in my view uliesndesirable quite apart from any inequalities of income which they may imply.

"A man with much property has great bargaining strength and a great sense of security, independence and freedom; and he enjoys these things not only vis-a-vis his propertyless fellow citizens but also vis-s-vis the public authorities. He can snap his fingers at those on whom he relies for an income; for he can always live for a time on his capital. The propertyless man must continuously and without interruption acquire his income by working for an employer or by qualifying to receive it from a public authority. An unequal distribution of property means an unequal distribution of power and status even if it is prevented from causing too unequal a distribution of income."  

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