One of the most dramatic changes in the US over the last 35 years has been the distribution of wealth between the middle class and the top 1%. From a gap clearly in favor of the middle class, the number now puts the top 1% at more than 25% of total wealth.
The cause of this gap reversal may be twofold. Low interest rates support those with higher wealth tied to equity risk. Low interest rates harm those with cash deposits rather than risky assets. Second, significant wealth has been created through innovation, benefiting entrepreneurs and venture capital investors. The first is based on the choice of monetary policy. The second is based on capitalism. It is not obvious that tax policy can reverse this if the impact is to drive down the price of risky assets.
Any adjustment to this distribution should be driven solely by what will best increase economic growth through risk-taking.
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