Inequality in Europe is a difficult thing to measure. Some analysts warn that rising inequality is undermining democracy within the EU. Others, however, suggest that inequality has risen slowly in Europe compared to the United States, or even that inequality in the EU is decreasing.

The picture also changes depending on how we measure inequality: if you look at incomes, then inequality hasn’t necessarily worsened since the 2008 financial crisis. However, if you look at wealth inequality (e.g. including assets such as property, stocks, investments, etc.), then the difference between the most wealthy in society and the least is dramatic.

What do our readers think? We had a comment sent in from Julia, who argues the solution to cutting social inequality is simple to “tax the mega-rich”. Is it as easy as that?

To get a reaction, we put Julia’s comment to Gary Stevenson, an economist and former interest rate trader who writes about wealth inequality. How would he respond?

Well, I think Julia sounds like someone I could probably get along well with. If you’ve read any of the stuff that I’ve done, or seen the videos I’ve been putting up on YouTube, this is exactly basically what I’ve been pushing for.

In particular, what I want to point out is that the tax system that we have at the moment is very good at taxing high income – like if you’re a footballer or a banker, whether these guys are popular or not. But it’s really not good at taxing people who have very high wealth; these people who get their income through trusts or capital gains, our tax system is not really designed well to tax those people.

So, you might end up in a situation where someone from a poor background who is making a high income – 50,000 pounds, 100,000 euros – they’re paying a lot of tax, whereas you’ve got the Duke of Westminster who inherited 9 billion, he probably has never worked in his life and he’s paid no tax. So, if we have a situation where the very, very, very rich pay no tax, whereas ordinary working people pay high tax, inequality is going to get higher and higher. So, I really would agree completely with Julia. We need to look at taxing the very richest, particularly people that don’t get their income from work but are simply collecting and growing wealth over time.

For another perspective, we also spoke to Marc Morgan, an economist working at the World Inequality Lab, based at the Paris School of Economics. What would he say?

Yes, if the question is whether taxation is useful to reduce inequality, then it is a useful tool. Especially as it has direct and indirect effects on reducing a given individual’s income or wealth… But, directly, taxation takes income off people – if they pay themselves above a certain level then it will take a certain percentage off – and that’s the direct way of reducing income, especially if higher rates apply to those at the top of the distribution, with higher income.

But also, indirectly, high tax rates, especially at the top, can have the effect of dissuading top earners from actually paying themselves that much more, simply because – as research has found – if you’re in the context of very high tax rates, the difference between paying yourself a bit more when tax rates are so high, in the end, it doesn’t make that much of a difference when most of it is going to go to the government anyway. So, it actually dissuades people from increasing their incomes a lot…

So, mechanically taxes are a very good way to make the distribution more equal by taking more income off those that are earning more relative to those that are earning less… So, I think there’s ample scope to increase taxes on higher earners, not only on income but also on wealth and therefore the capital income that they derive from that wealth.

How would you cut social inequality in Europe? Would wealth taxes be an effective approach? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

IMAGE CREDITS: Flickr – (cc) ilirjan rrumbullaku


14 comments Post a commentcomment

What do YOU think?

  1. avatar
    Stop cutting down tropical rain-forests

    Remove income to politicians and allow volunteers to work in government who would work for making the world a better place,but not for money.

  2. avatar
    Христо

    The Gini coefficient that measures the economic inequality in Europe is still low compared to countries like the USA, Russia or China.

  3. avatar
    Mario

    what about same wages and same taxes all over europe?

  4. avatar
    Dave

    Only when everyone has nothing will equality be achieved

    • avatar
      catherine benning

      Dave

      Even then equality will not and cannot exist.

      First, we are not born equal. We are not all physically identical. Some are born with healthy and beautiful limbs, good looks, dramatically different intellects. Others with none at all or with so little in their favour being barely noticeable

      Some will have parents who have expectations, education, talent, aspirations, understanding of rapport, a happy spirit, a sense of humour, simpatico and on and on. Any, or all of these things will enable those to gain a high standard of living, as well as an advantageous social life. Shown by an instinctive know how to thrive. Others will have any and all these abilities but not know how to use them to advantage. Another group will not have any gifts, or, any knowledge of how to gain from the fact they have nothing much to play with.

      Some are born to illogical communal cultural stultification, others brainwashed from birth by their State in order to persuade each of their citizens to work against nature and go counter to an instinctive reasoning for advantage of fate. They would not see benefit it if it smacks them in the eye…. Ad infinitum.

      Additionally, equality of living standards, should such a thing be possible, which it is not, would be used by individuals either for further prosperity for themselves or against their prosperity. One would invest wisely for the future, others would make very bad choices and end up destitute, as their desire for a distinctly different outcome would be seen as prohibitive to their satisfaction. Equality does not exist and cannot, for satisfaction and desire are not equal in mankind.

      The problem lies in loading the dice in such a way that those who take risks and lose are them buoyed up by political chicanery and laws to keep them from reaping the loss from those poor choices, set up to manipulate advantage. The way banks were not allowed to fail and ended up bailed out to the point of corruption,. Whilst in many cases, those bailing them out (tax payers) were left to go to the wall in dire poverty, never able to raise themselves above mediocrity as it was blocked to ensure they failed to do so. A leg up to them had no place in the recovery plan.

      Disadvantaged by political idealism is not the same thing as political chicanery, which makes it impossible to thrive, carried out in order to keep one group from downfall. That is creating an imbalance in chances which, in turn, affect choices. In other words, setting one chosen group up to succeed, whilst instigating losses in another bunch in order to save the chosen from downfall. The favoured selected, usually found to be those who set the laws to thrive under their schemes which are meant to cushion their own fall should that occur.

  5. avatar
    Cláudia

    So wasn’t there social inequality in Europe before the 80s? That is laughable!

  6. avatar
    Anja

    Eine der größten Herausforderungen. Und Corona verschlimmert die Situation erheblich.

  7. avatar
    Rob

    Collect more corporate tax here in Ireland anyway

  8. avatar
    Yasmin

    Universal Basic Income of the same level across the EU, irrespective of country!!!

  9. avatar
    Παυλος

    1)Anti trust
    Anti monopoly
    Anti cartel legislation
    2) high quality public education that finally will teach among other things the youngsters how to manage properly their finances
    3) abolish all the legislation that allows for young people to work for a portion of the basic income, they are supposed to be there for helping them enter the work force but in reality it’s just an excuse for employers to exploit young people in desperate need of money
    4) common work legislation that will make “not worth it” for corporations to jump from country to country exploiting local laws or absence of any regulations

  10. avatar
    Yvonne

    a job for everyone..basic pay with pension and sick pay rights..set up an agency to allocate you a suitable job.!..a room to sleep for everyone..build special houses appartments for single sleepers..long or short term tennancies…thats just for starters !! This i believe is already set up in Germany..what about other countries?….it must be set up bureaucrattically in every city and be just an automatic thing..the problem with most countries..is people have no idea how the system works..and as a result the fall between the cracks…there should be social workers out there trawling the streets to find people and realy help them..voting rites for the homeless could be another thing to fix..in many countries if you have ” no fixed abode”..you dont get a vote without an address!!..that needs to be fixed..i dont know how to do that..many many things !!

  11. avatar
    Rick

    Social equality is a state of affairs in which all people within a specific society or isolated group have the same status in possibly all respects, possibly including civil rights, freedom of speech, property rights and equal access to certain social goods and social services.
    What specific social inequality needs cutting?

  12. avatar
    Olivier

    Inequality is between norther Europe and Southern Europe. The first benefit from Europe the second get poorer because of Europe

  13. avatar
    Gabor

    Well… that is quite a question. going socialist and not causing more harm is not an easy topic. See project Venus (Jacque Fresco) to get some answers. First of all we have to get rid of the current idea of work as a matter of survival and establishment of our lives, achieving this with proper automation (not to be confused by the productized BS that is being offered these days by tech companies). Proper automation will be something that everyone actually wants to have. The fear of loosing jobs because of automation is just a fear based on current understanding of survival, and exactly that is what we all have to change – our understanding of the social system. Another interesting topic is inequality caused by the personal qualities of given people. There will be always people who simply don’t want to comply to anything and just “lay in the mud”(get drunk, be generally destructive, etc.). No one can do anything with those people unless using force, but that is another sensitive topic…

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