REPOST: Free markets will do more for equality than high tax

How do we minimize, if not eradicate, income inequality? Is a major tax reform really the best solution to address such issue? Read this article on The Telegraph for some insights:

 

We need more superstar companies like Apple which will make more rich employees | CREDIT: JUSTIN SULLIVAN/GETTY IMAGES

 

Income tax rates of 50pc or more; a mansion tax and far higher inheritance and wealth taxes; more generous benefits to redistribute wealth to the poor – there are lots of ideas out there about how we can reduce inequality, and just about all of them involve a bigger role for the state.

But hold on. Is that really the right direction?

Some of the latest research suggests that what we really need is more competition.

Why? Because the only reason inequality has been rising in most developed countries is because a small group of “super-star” companies have broken away from the pack and kick-started dramatic rises in productivity and pay for their staff.

If that is true, then the only fix is to encourage more of those stars – and a tough, free-market competition policy is the best way to do that.

Continue reading HERE.

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