The Great Divergence

[kandrathe]

Your example only seems unfair because Person A is the son of some previously productive person A*, who apparently preferred to transfer his wealth to his ne'er do well son rather than spend it on champagne and foot massages.

Or, in other words, this is not really income for Person A. It is income for his parent, who transferred the wealth to him. Presumably, you want to encourage his father, no? Assuming he earned the wealth legitimately, and didn't even bother to spend it, he's surely an Ayn Rand dream entrepreneur.

If you really want to stop that from happening, tax the crap out of estates. Death taxes FTW. I'm all for a great levelling after death - the children of the rich are already born with three aces, no particular reason to deal them a fourth.

I'm fine with inheritance. It dissipates across generations, and their spending is probably more important than whatever mismanagement the government might invent. They may do as Bill Gates and Warren Buffet intend, to donate the bulk of their wealth to a benevolent foundation that actually helps people more than any government run entitlement program ever could.

You missed the greater point perhaps. We are not starting on an even playing field, and we need to address the lumpy Himalayas as they really exist. Many have nothing, many more have a little, a few have enough, and a very few have 90% of the wealth. The false dialectic is in setting those that earn a middle class, or lower middle class wage against those that earn an above middle class wage. They are all wage earners building capital for the wealthy investment class who don't pay taxes on the capital we build for them. They only pay taxes when they convert their capital into income, and for their own conspicuous consumption.