ABSTRACT
By this I mean the taxation of the incomes of the rich to subsidize directly or indirectly the incomes of the poor. I shall not describe the many possible variants of this principle. The whole system is one which is much discussed these days and with which we are all fairly familiar. In my view it could have one great and decisive advantage over the Trade Union—Minimum-Wage method. It could be combined with a real wage rate which was as low as considerations of efficiency demanded, so that labour-intensive activities were in no way inhibited; but at the same time the gross inequalities of income that would otherwise result would be avoided. There would remain, however, two defects in the system, (i) one from the point of view of efficiency and (ii) the other from the point of view of distribution.
If, in the automated world we are envisaging, a really substantial equalization of individual incomes is to be achieved solely by redistributive income taxes and subsidies, the rates of income tax would have to be quite exceptionally progressive; and such highly progressive income taxation is bound to affect adversely incentives to work, save, innovate, and take risks. This subject is a controversial but nevertheless familiar one. I do not wish to develop it in these pages. The system unquestionably involves inefficiencies, though it may be debatable how great those inefficiencies would be.
The system could be used to equalize incomes; but it would not directly equalize property ownership. Extreme inequalities in the ownership of property are in my view undesirable quite apart from any inequalities of income which they may imply. A man with much property has great bargaining strength and a great sense of security, independence, and freedom; and he enjoys these things not only vis-a-vis his propertyless fellow citizens but also vis-a-vis the public authorities. He can snap his fingers at those on whom he must rely for an income; for he can always live for a time on his capital. The propertyless man must continuously and without interruption acquire his income by working for an employer or by qualifying to receive it from a public authority. An unequal distribution of property means an unequal dis-ibution of power and status even if it is prevent from causing too unequal a distribution of income.
