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Income and wealth inequality is a corrosive blunder under the American saddle not because, as so many on the left believe, our economy is rigged by shady billionaires and their Republican maids, but because it is. the nature of our free-wheeling capitalist system and the genius of individual entrepreneurs. Spirited capitalism, married to inventive and energetic people, creates wealth by enriching our society with a multitude of services and devices. Civic freedom and due process combined with capitalism are the envy of our world and is one of the reasons we fight to control our borders.
So why is capitalism so troublesome if the wealth it accumulates is earned honestly, legally, and without depriving others in an improper way? On the one hand, as Ray Dalio notes (“Bridgewater’s Dalio Warns Inequality in the United States Risks Social Conflict,” FT.com, April 5), capitalists generally do not divide the pie in a way that maintains income and wealth gaps at tolerable levels, ensures real wage growth and economic mobility, and maintains public services for the poor of today to climb higher tomorrow.
The United States has long accepted the fundamental fairness of a progressive income tax system where higher incomes are taxed at higher marginal rates. The idea of a wealth tax on an annual basis, however, would be a radical change and cause as much controversy as the idea that the inheritance tax, largely a tax on previously taxed money, should be brought to confiscatory levels.
Mr. Dalio joined many others who believe that our economic status quo endangers the fabric of our society. Additional regulations are needed to preserve capitalism.
Cincinnati, Ohio, United States
Letter in response to this letter:
The wealth of landowners was not honestly earned / By Carol Wilcox, Christchurch, Dorset, UK