Should the Law Do Anything About Economic Inequality

  title={Should the Law Do Anything About Economic Inequality},
  author={Matthew Dimick},
  journal={Cornell Journal of Law and Public Policy},
  • Matthew Dimick
  • Published 2016
  • Economics
  • Cornell Journal of Law and Public Policy
What should be done about rising income and wealth inequality? Should the design and adoption of legal rules take into account their effects on the distribution of income and wealth? Or should the tax-and-transfer system be the exclusive means to address concerns about inequality? A widely-held view argues for the latter: only the tax system, and not the legal system, should be used to redistribute income. While this argument comes in a variety of normative arguments and has support across the… Expand
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Another failing of the Pareto preference ordering is that it is not always able to compare alternative states. In formal terms, it does not provide a complete ordering of states
    If the preference order were indifferent between two states, then they are judged as equally good. Incomparability means the pair of states simply cannot be ranked
      In order for a tax to be lump sum, the consumer on whom the tax is levied must not be able to affect the size of the tax by changing their behavior
      at 428-29 (describing how the calculation of the optimal lump-sum transfers requires knowledge of both preferences and endowments)
        discussing how each of these examples-income tax, commodity tax, and estate tax-fail to act like lump-sum taxes)
          discussing how the UK Poll Tax came close to working, but still failed to work, as a lump-sum tax)
            the taxes will be highly differentiated across consumers. Since even uniform lump-sum taxes are implemented with difficulty, the use of differentiated taxes presents even greater problems
            • the role of lump-sum taxes
            though an allocation is Pareto efficient, there is no implication that it need be good in terms of equity