Land of opportunity can fight inequality: Progressives argue that widening inequality jeopardises the legitimacy of our political and economic system… a time when the market is generating more inequality is no time to shift tax burdens from those with the highest incomes to the middle class… [little] social value [is] associated with the activities behind many… fortunes, especially in finance…. Conservatives argue that… high tax rates run more risk than they once did of driving businesses and jobs overseas… policy measures taken to combat inequality directly will have perverse side effects.
Unfortunately, the points on both sides of the argument have considerable force…. I support moves to make the tax system more progressive… [but] inequality is likely to remain high and continue to rise even in the face of all that can responsibly be done….
Where does this leave the public policy agenda?… [T]he focus needs to shift… to inequalities in opportunity…. By definition, the number of children not born in to the top 1 per cent who move into the top 1 per cent must equal the number of those born into the top 1 per cent who move out… promot[ing] equal opportunity must both seek to enhance opportunity for those not in wealthy families, and to address some of the advantages enjoyed by the children of the fortunate.
The most important step that can be taken to enhance opportunity is to strengthen public education…. The leading universities have in the past 40 years, with the encouragement and support of the federal government, made a significant effort to recruit and support students from ethnic minorities. This should continue…. It is time the best institutions undertook the kind of commitment to economic diversity that they have long mounted towards racial diversity….
Parents always seek to help their children…. But there is no reason why the estate tax should decrease… when great fortunes are increasingly dominant. Nor should tax-planning techniques that are de facto tax cuts only for those with millions of dollars of income and tens of millions in wealth continue to be legal.