CAP en Español
Small CAP Banner

Idea of the Day: The Government Is Subsidizing Wealth Inequality

  • print icon
  • SHARE:
  • Facebook icon
  • Twitter icon
  • Share on Google+
  • Email icon

idea light bulb

Renowned French economist Thomas Piketty’s Capital in the Twenty-First Century thoroughly documents how those at the very top of the income distribution are pulling away from the rest of us. In the United States, wealth inequality has skyrocketed to levels not seen since the 1920s, with the top 0.01 percent of Americans owning more than 10 percent of all national wealth. As sobering as that is, Piketty argues that economic inequality will grow even worse over time, based on his contention that the rate of return on capital will exceed the overall growth rate for the economy. If capital, or wealth, grows faster than the economy, then the owners of that capital and their heirs will amass an even larger share of total national wealth over time. To reverse this trend, Piketty advocates a global wealth tax.

A new CAP issue brief puts aside the question of whether new policies, such as a global wealth tax, should be enacted to reduce economic inequality. Instead, it explores two existing policies that actually subsidize wealth inequality. First, reduced tax rates on capital gains and dividends increase the after-tax rate of return on wealth, which makes it more likely that the rate of return on capital will exceed the overall economic growth rate. Second, capital gains are never subject to the income tax at all if the investor dies, which subsidizes wealth concentration within a family dynasty.

For more on this topic, please see:

To speak with our experts on this topic, please contact:

Print: Liz Bartolomeo (poverty, health care)
202.481.8151 or

Print: Tom Caiazza (foreign policy, energy and environment, LGBT issues, gun-violence prevention)
202.481.7141 or

Print: Allison Preiss (economy, education)
202.478.6331 or

Print: Tanya Arditi (immigration, Progress 2050, race issues, demographics, criminal justice, Legal Progress)
202.741.6258 or

Print: Chelsea Kiene (women's issues,, faith)
202.478.5328 or

Print: Beatriz Lopez (Center for American Progress Action Fund)
202.741.6255 or

Spanish-language and ethnic media: Rafael Medina
202.478.5313 or

TV: Rachel Rosen
202.483.2675 or

Radio: Sally Tucker
202.481.8103 or


This is part of a regular column: Idea of the Day

For more from the same column, click here