According to Joseph Stiglitz “High levels of economic inequality lead to imbalances in political power, as those at the top use their economic weight to shape our politics in ways that give them more economic power”, and according to Paul Polman “It is not possible to have a strong, functioning business in a world of increasing inequality, poverty, and climate change”. Inequality has been a pressing issue within the united states for its entire history, from the beginning with slavery and inequality between men and women to the current times of Economic inequality and poverty.
Throughout “A Tax System Stacked against the 99 percent” by Joseph Stiglitz he writes and argues how the tax system is unfair and how the tax fairness has increasingly decreased over the last 30 years. He makes arguable/supportable claims involving how the tax system is unfair, how America has the highest income inequality and the least equality of opportunity, and how the tax rates have encouraged rent seeking at the expense of wealth creation. Stiglitz also writes about a new, better tax system to replace the old one. I support Stiglitz’s argument when it comes to having an unfair tax system, Americans shockingly high-income inequality, how the tax rates encourage rent seeking instead of wealth creation as well as his idea of a new tax system.
First, the average salary for American workers rose only 17% from 2000 to 2018, that is an average of around 0.94% per annum. In relation, the inflation rate averaged out at 1.85% over the same period, this proving that the average salary increase in America has not kept pace with inflation. This is just one of many startling statistics that help support how the tax system is unfair. Stiglitz says “The richest 400 individual taxpayers, with an average income of more than $200 million, pay less than 20% of their income in taxes… and in 2009, 116 of the top 400 earners paid less than 15% of their income (Stiglitz 287). This is quite startling when considering how the tax system is supposed to work.
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A system set to encourage democracy, voluntary compliance, and fair wealth distribution when the system is actually making the rich richer and the poor poorer. Stiglitz also argues how America has the highest income inequality, and the least equality of opportunity. This issue is touching especially during the present day, with Covid-19 paralyzing the economy, the income inequality percentage will continue to increase alongside the equal opportunity percentage. Income inequality facts show that the top 1% earns forty times more than the bottom 90%. The big question asked is why do Americans believe the tax system is unfair? The question has many answers, but I think the best answer is simple; the poor see the rich getting away with loop-hooling the system with paying fewer taxes while making significantly higher incomes.
The theory that the current tax system has helped us become a rent-seeking society is also argued, Stiglitz argues that the tax system tilts the playing field and increases the net returns from engaging in these distasteful activities. Victoria Woodhull 1st women to run for president once said “it is not great wealth in a few individuals that proves a country is prosperous, but great general wealth evenly distributed among the people… it is the struggling masses who are the foundation; and if the foundation be rotten, the rest of the structure must eventually crumble”(Woodhull 1872).
Of course, many will probably disagree on the basis that the tax system is unfair, for example in 2011 Mitt Romney openly shared that he only paid 14% of his income in taxes. Though Mitt Romney has not broken any tax laws, his frighteningly low taxes paid violates most Americans basic sense of fairness. Yet Manuel Hinds challenges my view by insisting that Stiglitz basic reasons are invalid and weak. According to Hinds “In fact, inequality is the mechanism through which the market generates and spreads innovation, which in turn generates millions for individuals… the inequality, in turn, attracts new innovators, in the process generating many new opportunities(Hinds 2013). Hinds argues that without inequality there will be no growth. What Hinds does not see from Stiglitz’s and I’s view is that we understand inequality to an extent can be productive but there is a line where the productiveness turns unproductive.
Finally, throughout his writing Stiglitz talks about a new tax system that could out produce the old current system. Stiglitz’s idea for this new system encourages good things like hard work and thrift and discourage bad things like rent seeking, gambling, and financial speculation. Here at Mount Aloysius college we have 4 core values that guide us through our journey, I believe that to go with stiglitz’s ideas these values could work in hand and create a new fair, prosperous tax system. The 4 values include mercy, justice, hospitality, and service. The most influential value would be mercy. The value of mercy is “a willingness to enter the chaos of another’s experience in order to ease their pain, to bring one’s heart to their pain”. The implementation of the mercy value in a new tax system would be beneficial because it would give the system a sense of morality and ethics. These are the two biggest concerns when it comes to taxes, the tax system is a voluntary system that runs off honesty and integrity; without it the system will faulter.
To conclude, throughout “A Tax System Stacked against the 99 percent” by Joseph Stiglitz he argues how the tax system is unfair and how the tax fairness has increasingly decreased over the last 30 years. I support his claims involving how the tax system is unfair, how America has the highest income inequality and the least equality of opportunity, and how the tax rates have encouraged rent seeking at the expense of wealth creation. I also support his idea of a new, better tax system.
