“After Piketty”, 12 policy proposes to reduce inequality of outcomes
“The media storm surrounding the publication of Thomas Piketty’s remarkable Capital in the Twenty-First Century (2014) has ensured that inequality is now in the forefront of public debate. But what next?”
Thus begins an essay in The British Journal of Sociology by the dean of inequality studies, A. B. Atkinson of Oxford University. This is a must read for anyone interested in public policy addressed to the growing inequality in the rich countries.
Professor Atkinson’s focus is on the United Kingdom, but his far-reaching set of policy prescriptions address many aspects of public policy (not just tax and transfer policy), and have relevance well beyond the European context.
Tony Atkinson is an economist of the highest order who has been studying and contributing to the economics of inequality since the 1960s. In this paper he offers 12 proposals that, he says, “could bring about a genuine shift in the distribution of income towards less inequality.”
“Inequality is embedded in our social structure, and the search for a significant reduction requires us to examine all aspects of our society.” So here, taken directly from the article, are his proposals:
What can we do about the division of income between capital and earnings?
- The direction of technological change should be an explicit concern of policy-makers, encouraging innovation that increases the employability of workers, notably by emphasizing the human dimension of service provision.
- Public policy should aim to reduce market power in consumer markets, and to re-balance bargaining power between employers and workers, contribute to reducing the share of capital.
What can we do about the distribution of earnings, and the concentration of wealth?
- Return to a more progressive rate structure for the personal income tax, with a top rate of 65 per cent on the top 1 per cent of incomes.
- The government should offer guaranteed employment at the living wage to everyone who seeks it.
- Employers should adopt ethical pay policies that share common principles, and the adoption of such a policy should be a pre-condition for eligibility to supply goods or services to public bodies.
- Increased taxation of investment income via the re-introduction of earned income relief in the personal income tax, so that earnings are taxed at a lower rate over an initial range.
- A fresh examination of the case for an annual wealth tax, and the prerequisites for its successful introduction.
- All receipts of inheritance and gifts inter vivos to be taxed either under a lifetime capital receipts tax or under the personal income tax, with appropriate averaging provisions and thresholds.
- The government via National Savings should return to offering a guaranteed positive (and possibly subsidised) real rate of interest on savings, up to a maximum per person.
- The encouragement of institutions to represent the interests of savers and to provide alternative outlets for saving not driven by shareholder interests, aided by the establishment of a publicly-funded money advice service providing independent guidance free to all savers.
- A capital endowment for all, either at adulthood or at a later date.
What can we do about security for all?
- An EU initiative for a participation income as a basis for social protection, starting with a universal basic income for children.