By Heather Long
Experts at the Brookings Institute examined what would happen to the gap between the wealthy and the poor if the U.S. raised the income tax rate on the highest earners to 50%. (It’s currently 39.6%).
They found it would have a “trivial effect” on overall income inequality. The U.S. and Israel have theworst inequality in the developed world.
“That such a sizable increase in the top income tax rate leads to a strikingly limited reduction in overall income inequality speaks to the limitations of this particular approach to addressing the broader challenge,” wrote economists William Gale, Melissa Kearney and Peter Orszag.
Orszag served as President Obama’s budget director early in his first term and is now an executive at Citigroup.
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