Wealth Distribution

This topic has been bugging me quite a bit lately, with Republicans wanting the tax cuts on the wealth to be preserved, and any mention of limiting compensation or increasing taxes on the wealth being shot down as promoting socialism through wealth redistribution.

I came across an interesting article that reworked the view on the issue, such that wealth will always be redistributed as long as taxes are in place. By having low taxes on the wealthy, we have redistributed income to the wealthy (Link). Similarly, if income taxes were abolished and a national sales tax were implemented, would we redistribute wealth from the spenders to the savers (usually the wealthy, since they save more of their income). Would a flat tax also redistribute wealth, since the wealthy also save more of their income, producing additional income for them?

What started me down the path towards examining wealth redistribution was the idea that asset bubbles are a result of the widening gap in earnings between the middle class and the wealthy (Link). This goes back to the idea of the wealthy being savers. As they continue to search for ways to increase their earnings potential, they move assets away from places that create jobs (banks, treasuries) with low return and risk to speculative areas with higher rates of return (stocks, tulips, houses, oil, and now even chocolate).

One simple solution is to raise taxes on people earning over $250,000. The argument presented against this one is that it will hurt small business owners similar to comment 52 here. Without seeing the books, it would seem that he is complaining about the rate he is taxed at, while recording essentially $1.8 million in personal income. Although I'm not an accountant or tax lawyer, it might be time he looked at his corporate structure, or hiring more American workers to reduce his profit levels. Most small businesses owners would be happy to have profits of $250,000 or more and be taxed on it (myself included).

The other solution I've seen recently and favor is the discretization of the income scale into finer levels. Tax rates for $250,000, $500,000, $1million, $10million, etc. (Link). This may even allow rates to be further cut for the lower and middle class. And since the lower 95% composes about 67% of the spending in our country, having more money in their hands would give our economy a nice boost.