Changes to the tax code certainly could reduce inequality, but the real question is whether we should try to reduce it. There is little evidence that we should.
Are American levels of inequality harmful? Some analysts claim that they hurt middle-class incomes or increase poverty. But child poverty is at an all-time low, and middle-class incomes are also at historic highs. Across developed countries, those with higher inequality have slightly higher middle-class incomes and less poverty.
Others argue -- based on mobility measures constructed to look worse when inequality rises -- that higher inequality causes lower economic mobility or leads to political inequality. In fact, research claiming that the rich get their way in Congress over other voters has been debunked; in truth, across most issues, rich, middle-class and poor Americans have similar policy preferences. And in the United States, mobility has remained flat while inequality has risen over the past generation. Areas of the United States with more income concentration at the top have no worse mobility than areas with low inequality. The same is trueacross countries -- the best research indicates that low-inequality Sweden is no more mobile than the United States.
Still others, such as Nobel laureate Joseph Stiglitz, claim that higher inequality saps economic growth. The research on this question is all over the map, but studies by experts including Thomas Piketty and Emmanuel Saez indicate that countries with higher inequality growth tend to have higher economic growth too. Paul Krugman, another Nobel Prize-winning economist...