In new research, Valentino Larcinese and Alberto Parmigiani find that the 1986 Reagan tax cuts led to greater campaign spending from wealthy individuals, who benefited the most from this policy. The authors argue that a very permissive system of political finance, combined with the erosion of tax progressivity, created the conditions for the mutual reinforcement of economic and political disparities. The result was an inequality spiral hardly compatible with democratic ideals.
Politicians and governments in the United States and elsewhere have recently proposed or implemented wealth taxes to supplement revenue and reduce wealth inequality. In a new study, Samira Marti, Isabel Z. Martínez, and Florian Scheuer show how decreases in wealth taxes led to increases in wealth inequality in Switzerland, though they find that these decreases alone are not enough to explain the magnitude of widening disparities.
The publication of the Stigler Center at
The University of Chicago Booth School of Business
ProMarket is dedicated to discussing how competition tends to be subverted by special interests.
The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
For more information, please visit ProMarket Policy.