This article addresses the connection between redistributive taxes and income inequality, as we discussed in class. In class, we talked about the paradox that negatively links these two phenomenon: why would a country with higher income inequality have lower redistributive taxes/less welfare? The possible explanations we came up with in class was that the US has: high mobility, low “reciprocal altruism” or is highly racially diverse. All these factors in theory would make the US less likely to support welfare. The article comes up with a different point of view, using the Netherlands as an example. According to the author, the Netherlands, famous for having high equality and high redistributive taxes, might not have very redistributive taxes after all. The author therefore claims that the relationship between redistributive taxes and income inequality might not be what we thought. However, The author uses very little evidence to support this claim, and didn’t persuade me to agree with his argument.
http://www.economist.com/blogs/democracyinamerica/2011/12/inequality-and-taxes
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