What is the best way to redistribute wealth?
Jon Tyson, Unsplash

You might have guessed by now that I enjoy talking about taxes.

My interest is justified because taxes are an important tool for redistribution, and help reduce the levels of inequality. Back in 2020 (before the coronavirus was labelled a global pandemic), the United Nations sounded the alarm on the world’s growing inequality levels. According to the World Special Report 2020, economic inequality is growing within many countries as fewer people get richer, while more people fall into poverty. This was an important period to show that addressing inequality matters. People living in poorer neighbourhoods had a greater risk of contracting the disease because they were more likely to be employed in jobs that could not be done remotely. So some people end up being in a better position than others.

 

Key takeaways:

  • Taxes can help level the playing field for those who are poorer by redistributing income. This is important in today’s world given the rising levels of inequality.

  • Inequality of opportunity is particularly important to address because this kind of inequality is both unfair and inefficient. It is inefficient because a person being born in the wrong place at the wrong time cannot realise their full potential, which reduces overall productivity.

  • Societies with higher levels of inequality of opportunity tend to be politically unstable, which also has a negative impact on the wider society. While existing measures of growth and development do not fully account for the negative impact of inequality, its economic costs are high and must be addressed.

 

That brings us back to taxes. Economists agree that the reduction of economic inequality is one of

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Fadekemi Abiru

Fadekemi Abiru

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