Summary
We support:
- A progressive tax system at approximately current levels
- Taxing unrealized capital gains at death
- Tightening estate tax rules to limit long-term wealth concentration
- Limiting the use of charitable trusts to avoid estate taxation
- Public policies that promote social mobility and equality of opportunity
We oppose:
- Significantly increasing the progressivity of the current tax system
- Policies aimed primarily at equalizing outcomes rather than expanding opportunity
If you have already made up your mind, then scroll to the bottom of the page and take the poll to let us know how you feel. If you need to hear more, please read the background section below.
Curious how your views compare? Early input has a meaningful impact—vote below (scroll down) to see the current results.
Your input helps us refine these policy positions.
Background
In recent years, increased attention has been directed toward the rise of income and wealth inequality. This has contributed to growing calls for government to play a larger role in redistributing income and wealth.
In a democratic society, some degree of redistribution through taxes and government spending is both inevitable and appropriate. The central policy question is not whether redistribution should occur, but how much is desirable from the perspective of society as a whole.
The philosopher John Rawls suggested that a just society would answer this question by considering what rules people would choose if they did not know their own future position within that society. In practice, however, individuals and political actors tend to evaluate policy changes based on their impact on themselves and their constituencies.
Rather than expecting a purely philosophical approach, we believe public policy should aim for a form of enlightened self-interest—one that avoids both excessive redistribution and the social tensions created by extreme inequality.
Income Redistribution and the Tax System
Democratic systems do not naturally evolve toward unlimited redistribution. In theory, democratic systems could drift toward excessive redistribution, but in practice a range of economic and political constraints tends to prevent this outcome. Several factors help maintain balance.
Many individuals expect that they or their children may move up the economic ladder and therefore resist policies that would heavily penalize success. In addition, most people understand that economic output is not fixed. Excessive taxation can weaken incentives for work, investment, and innovation, ultimately reducing overall prosperity.
Economic resources also translate into political influence. While this raises legitimate concerns, it can also serve as a partial counterbalance to pressures for excessive redistribution. At the same time, many people—across income levels—view highly confiscatory taxation as fundamentally unfair.
We draw several conclusions from these considerations:
- A tax system can become too progressive. Increasing progressivity significantly beyond current levels risks reducing economic growth and is therefore counterproductive.
- Large and persistent concentrations of wealth can undermine confidence in the fairness of the system. We support policies that limit the ability of wealth to accumulate indefinitely across generations. These include taxing unrealized capital gains at death and requiring private or donor-directed charitable trusts to distribute their assets within a defined period (e.g., 10 to 20 years). We also support limiting the charitable deduction for contributions to such trusts to 50% of the amount contributed.
- A healthy tax system should ensure that most citizens contribute something toward the cost of government. When large groups are insulated from those costs, it can distort policy preferences and lead to inefficient outcomes.
- At the same time, tax rates should not be so high that they materially distort incentives for work, saving, and investment. A balance must be maintained, and reasonable people can disagree about where that balance lies.
Policies that materially weaken incentives for work, saving, and investment ultimately reduce the resources available for redistribution itself.
While repealing the estate tax has some philosophical appeal, we believe it remains an important tool for moderating long-term inequality and is unlikely to be eliminated in practice.
Social Mobility and Equality of Opportunity
We believe that social mobility and equality of opportunity are more important policy goals than equalizing income or wealth outcomes.
In a purely market-driven system, disparities in wealth and income would persist and often compound across generations. This dynamic can tilt the playing field in ways that are inconsistent with widely held notions of fairness.
Public policy should therefore focus on expanding opportunity rather than attempting to equalize outcomes directly. This approach has the additional advantage of being economically constructive, increasing overall productivity while improving individual prospects.
Education as a Driver of Mobility
The most effective way to promote social mobility is through access to high-quality education.
Public investment in education has long been a cornerstone of American economic success. However, outcomes depend not only on funding levels but also on how effectively resources are used. Improving the efficiency and effectiveness of education spending should be a central policy priority.
Health Care and Economic Opportunity
We support government programs that expand access to health care, on the grounds that health is a key determinant of economic opportunity.
A system that achieves near-universal coverage—potentially supported by enforceable participation requirements—can improve workforce participation, reduce financial insecurity, and enhance long-term economic mobility.
Sources of Income and Wealth Inequality
Income and wealth inequality arise from a wide range of factors, including differences in ability, effort, education, risk-taking, and luck. These factors have always existed and do not, by themselves, explain recent increases in inequality.
Technology and Globalization
Technological change and globalization have significantly amplified the returns to skill and success. Modern communications and global markets allow top performers in many fields to reach vastly larger audiences, increasing the rewards for being among the best.
At the same time, these forces can widen the gap between top performers and average workers. While this contributes to inequality, it has also driven innovation and produced substantial benefits for consumers.
Changing Family Income Patterns
Another contributing factor is the increasing tendency of high-income individuals to marry one another. This pattern amplifies household income disparities and contributes to rising inequality over time. Progressive taxation partially offsets this effect.
Why Inequality Matters
Income inequality becomes a policy concern when it limits social mobility or creates entrenched economic classes.
If individuals can move upward over time, even substantial inequality may be socially acceptable. However, if economic outcomes become fixed across generations, inequality can undermine confidence in the system and create the conditions for social and political conflict.
Policies that promote mobility and opportunity are therefore more effective and sustainable than those that attempt to directly compress income differences.
Global Competition and Tax Policy
In a globalized economy, capital and talent are mobile. Excessively high tax rates can discourage investment and encourage individuals and businesses to relocate to more favorable environments.
Efforts to reduce inequality through taxation must therefore take into account the risk of driving economic activity—and tax revenue—elsewhere.
Competition and Consumer Benefits
While successful innovators can earn substantial rewards, competitive markets tend to erode these advantages over time. New entrants introduce better or lower-cost alternatives, shifting the long-term benefits of innovation to consumers.
Public policy should focus on preserving competition and preventing dominant firms from using their position to block new entrants.
Non-Competitive Behavior and Crony Capitalism
Concerns about inequality are often intensified by perceptions that economic success is reinforced through political influence rather than market competition.
We support strong enforcement of antitrust laws to limit anti-competitive behavior. We also believe that limiting the scope of government intervention in the economy can reduce opportunities for businesses to seek preferential treatment through political channels.
Need for Better Data
Understanding inequality requires better data. Current measures often fail to capture lifetime income patterns, the effects of taxation and transfers, and intergenerational mobility.
Improved data would allow for more informed policy decisions and a clearer understanding of the true extent and nature of inequality.
Total Redistributive Impact
Estimates of the total redistributive impact of the U.S. tax and transfer system vary depending on methodology, but most analyses suggest that federal, state, and local policies significantly reduce income inequality relative to pre-tax, pre-transfer levels.
This reflects the combined effects of progressive taxation and government programs such as Social Security, Medicare, Medicaid, and income support programs.
While there is ongoing debate about whether redistribution should be increased or reduced, it is important to recognize that the United States already engages in substantial redistribution. Policy discussions should therefore focus not only on the level of redistribution, but also on its effectiveness, efficiency, and impact on economic incentives.
Go to the Table of Contents or to the Next Policy Position
Ready to weigh in? At this stage, each vote has a meaningful impact—see the current results after voting.
Your input helps us refine these policy positions.