Obama’s Other Task: Stimulating Equality (Jakarta Post, INDONESIA)

With unemployment climbing in the US and other OECD countries, job creation is a key objective for policymakers. President Obama recently proposed to increase public spending by about $600 billion over the next two years to create an additional four million jobs. But Obama is also concerned with reversing a sharp rise in income inequality. Is it possible for leaders to do both at the same time?

The answer is unequivocally yes, but only if they focus on government spending rather than reforming their tax systems. America’s tax system has surprisingly little redistributional punch. Using a measure of “comprehensive income” – money income, total capital gains on wealth, imputed rent on owner-occupied housing, non-cash government benefits, and public consumption – income taxes are generally progressive.

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