What a load of bollocks. Typical welfare minded piece.

So I guess you guys in line for reasonable inheritances then ;)

If you are going to tax something, why not inheritances? It has less of an impact on peoples work incentives than an income tax. If the point of tax is to "redistribute" wealth this is a lot more direct than trying to redistribute annual income as well!

David - referring to:

"For example, they find that people living in countries where incomes are more evenly distributed are more likely to have longer lives and lower rates of obesity, delinquency, depression, and teenage pregnancy than those living in richer countries but where there is more income disparity."

I've not read the book, but did they look at the incidence of these outcomes over time, perhaps going back a few decades, maybe a generation or two, to correlate this incidence with income distribution in the past? I'm asking because I'm thinking maybe these kind of outcomes might just as well be related to aggregate change in character and personal values over time, noting that these kinds of outcomes are in the main a result of personal choice. It might be interesting to see if an apparent lack of choice made any difference in these outcomes in the past. Before I go on, for one of my Uni courses I decided to do a project on teenage pregnancy and although I did not look at the impact of income distribution itself, given Holland, I assume, has essentially a similar income distribution shape to the UK and US, it was interesting to find Holland's teenage pregnancy rate was much lower than UK and US, notwithstanding a supposed more liberal society. That was, supposedly, because in Holland people simply see teenage pregnancy as much less acceptable.

As for inheritance tax, I'm not infavour of that because of the stress it results in for families who end up having to sell farms, homes and business for no other reason than loved one passed away. Seems kind of mercenary to me.

I am however in favour of phasing in an unambiguous capital gains tax, especially if it could be aligned with, an aligned corporate, trust and income tax - because keeping the tax take neutral would very probably mean the latter could all be lower. However my main reason would be to see more investment flow to the productive sector and many might welcome the positive impact on housing affordability, and the fact that the subsidy of those deriving wealth from passive use of an assets is terminated, to the benefit of corporate, trust and income tax payers.

There are simpler more effective ways to avoid "obesity, delinquency, depression, and teenage pregnancy" than introduce taxation that many will see as being based more on envy than growth focused economic policy.

The following are causes of increasing inequality and decreasing social mobility.
Breakdown in traditional marriage. The obvious thing is the disadvantage to children brought up without a father, or with a string of perverse male role models in their lives. But also, marriage across socio-economic groups, and subsequent "inheritance", were powerful reducers of inequality.

Provision of services, etc, with public money, that primarily benefit the wealthy, and the neglect of infrastructure that was a greater benefit, proportionally, to lower income earners. The neglect of roads, and time wasted in congestion, has a disparate impact on the poor, who tend to depend more on motor vehicle use than middle class people who can choose where they live and can organise their life around public transport. The subsidy of cultural centres and art galleries benefits the wealthy at the expense of the poor. New Orleans was a classic illustration of the consequences of concentration on trendy cultural vibrancy and the like, by the local administration, at the expense of vital infrastructure that was fought tooth and nail by chardonnay greenies and NIMBY-ists.

Worth a specific mention, are "free" public goods like Water (in some jurisdictions). In so far as poorer people use a lot less and yet pay for the resource, and wealthier people use a lot more, the cost burden falls disproportionately on the poor in comparison to politically unfashionable "user pays" systems.

Background reading: "Back To Basics", by Joel Kotkin
http://www.joelkotkin.com/Urban_Affairs/NAF_GrowthStrategy.pdf

The "conservation" of land, and restrictive zoning, has a disparate impact on the poor, on the young and those who do not own properties, in favour of the more well-off who maintain their nice views and surroundings, while property values escalate out of reach of all who are not already on the gravy boat. An excellent article in this respect, is "Green Disparate Impact", by Thomas Sowell. (The "poor" population of California is actually being driven out of state by escalating property values).
http://www.townhall.com/columnists/ThomasSowell/2008/01/15/green_dispara...

Also, in "The Housing Bubble and the Boomer Generation", Robert Bruegmann argues that this phenomenon has resulted in "the greatest wealth transfer in history", in favour of older, existing home owners, at the expense of young, first home buyers.
http://www.newgeography.com/content/00452-the-housing-bubble-and-boomer-...

Increases in regulatory expense, like RMA costs, and the costs of obtaining licenses for commercial activity and the like, tend to inequality. A James Wattie could start up a food canning business in his garage. These "rags to riches" stories, are no longer possible, except perhaps in the entertainment industry.
This phenomenon is well covered in the book "The Mystery of Capital" by Hernando DeSoto. Interestingly, well-established larger businesses like this phenomenon, as it keeps competition to a minimum, hence the little-publicised support of many wealthy people for regulatory, socialist politics. Incidentally, that is not "Capitalism" although the cunning socialists "spin" the issues so it gets blamed on "Capitalism". (The correct term is Socialist Parasitism). More recommended reading: "Intellectual Class Wars", by David Horowitz, "Freedom of Opportunity, Not Equality of Opportunity" by George Reisman, and "Scratching By: How Government Creates Poverty as We Know it", By Charles Johnson:
http://www.fee.org/publications/the-freeman/article.asp?aid=8204

The subsidy of tertiary education with public money. Tertiary education itself, tends to increase inequality. To use taxes, which must remain necessarily high on low income earners, to subsidise this, only worsens the situation. An outright free market situation with all students paying fees, and a broader use of direct student-based "scholarships", would actually produce less inequality than the system we have now, and would produce much better results in terms of relevant qualifications. I suggest too, that many of the poorer folk who do make it to Uni under the current system, could be tending to make poorer choices of qualification, which would be eliminated by better guidance under a scholarship-based system especially scholarships funded by private enterprise which knows of its needs for people with certain qualifications.

California is probably the outstanding illustration. Its government is avowed Liberal Left, and yet a recent article made this comment:

"....As recently as the 1980s, Californians generally got richer faster than other Americans did. Now, median household income growth trails the national average while the already large divide between the social classes"”often bemoaned by the state's political left"”grows faster than in the rest of the country....."

http://www.american.com/archive/2008/november-december-magazine/sundown-...

Lastly, the trend for wealthier people to have children later in life, and have less of them, while poorer people still have larger families, tend to start earlier, and the worst of all are, sadly, early-starting solo mothers; this is a guaranteed recipe for cross-generational poverty.

Les, Phil, interesting comments - I will send them to David to have a read.

Robert - I think that deep down the purpose of the article was to show that a uniform tax on capital could be a better way to raise the revenue government spends than an income tax. He wasn't arguing that we should do it anyway. The government determines spending - we are then stuck trying to set tax policy to meet a dual mandate of "fairness" as determined by the government and getting the money that is being spent. Its ugly to have to think of things this way - but David was just trying to show a way it could be improved from where it is now.

A review of the Wilkinson and Pickett book here:

http://www.guardian.co.uk/commentisfree/2009/mar/15/equality-economy-wil...