Secondly, assuming that the "inequality gap" is necessarily a bad thing, which I don't think anyone has shown...

Why do you assume that higher taxation will decrease the income inequality gap?

If anything, higher taxation means more money (ie power) in the hands of the government. More power in the hands of the government just leads to more crony capitalism that concentrates even more money and power into fewer hands. Worse, those companies that then have access to all that money and power are the worst sorts of companies that don't even need to provide good products and services to consumers. Instead they get more bang for the buck by sucking tax dollars out of the system.

Actually they have.

http://www.eurekalert.org/pub_releases/2012-05/osu-iil050812...

http://www.youtube.com/watch?v=cZ7LzE3u7Bw

In face increasing Gini coefficient for 0.01 increases mortality in state for 122% after 12 years. Yes, it is a bad thing in almost all recorded metrics.

- First of all, doesn't anyone see the correlation between increased government power (revenue/spending)

Nope. I think revenue spending isn't really good metric of government power and so far no one has proved that. You are free to test your hypothesis though. I'd wager that there is quite a bit of income inequality if your gov. revenue is low but they spend a lot of money.

I found the youtube to be more compelling than the OSU study. The OSU study contradicted lots of other studies that found nothing conclusive for nearly the same hypothesis. The author of the study managed to fit a curve that he was apparently looking for by allowing for enormous flexibility on the time axis. That's like finding pictures in clouds. You can see what you want to see if you look at something from enough angles. To be meaningful, you would need to apply those findings to lots of other data sets to see if you're just seeing what you want to see or if there's a real likelihood of a pattern. Science isn't finding one occurrence of something that you were looking for. Science is predicting where and how you'll find something and then having others find you're right over and over.

On the Youtube lecture: The statistics seem to show correlation, but causation? Is the inequality the cause of a lack of trust? Or is it the other way around? Furthermore, I saw lots of other correlations in the data they showed. Graph homogeneity of the population's ethnical background vs trust. Look at the states and countries that scored high trust. At a glance, they seemed to be the highly ethnically/religiously/culturally unified ones.

> Nope. I think revenue spending isn't really good metric of government power

Okay, what would you suggest... Watts?

> I'd wager that there is quite a bit of income inequality if your gov. revenue is low but they spend a lot of money.

Wait, your conjecture agrees with me. Spending is high and inequality is high. The gov. revenue is almost a non-factor in terms of government power. For the part of the curve where the currency hasn't been completely devalued because of over-borrowing and printing money, the amount the government spends is all that your really need to describe government power. Lack of revenue to back it up is just a ginormous credit card bill that no one seems to remember is out there.

Wouldn't a better solution be to increase the size of the middle class rather than decrease the size of the upper class?

Also, among the western european nations and the US, I suspect a strong correlation between immigration rates and the data on the chart.

Problem is, if income/wealth inequality is too severe, those guys are the only ones with money to contribute. So on some level, you need a certain level of income/wealth equality just to have multiple classes/brackets with enough excess income to contribute to the national welfare.

Assumptions don't get you anywhere.

Do you think they spend so much on lottery tickets because the rich so unfairly keep them out of derivative trading?

If all you can afford is ramen/bread/fast food, your body makes you overeat to get enough other nutrients (eg. vitamin C, B).

The second is that your insulin goes crazy with all those simple carbs and sugars (carbs are cheap, unlike protein, fish and vegetables, and get metabolised to glucose) so you get massive blood sugar swings. The low side of those makes you eat more and get fatter.

Lottery tickets are a strawman. Or, to quote a science fiction novel that I can't quite remember: "a tax on hope."

Vitamins pills and vegetables are reasonably cheap. And anyway if deficiencies caused obesity, the rate would drop off dramatically over some threshold income.

Lotteries matter because that's where poor Americans spend about 10% of their income. Taxing the rich to destruction will not fix that.

http://www.guardian.co.uk/commentisfree/2011/dec/14/obesity-...

http://www.huffingtonpost.com/dr-mark-hyman/not-having-enoug...

10% of a poor person's income turns out to be about $25/week according to this article: http://www.dailymail.co.uk/news/article-2123448/Poorest-peop.... Hardly earth shattering or likely to lift them out of poverty if they somehow manage to save it.

Re. lottery spending, they are losing $12 a week! That is $600 a year! That could buy premium multivitamins, an extra several eggs a day, rather a lot of cheese, with money left over for the occassional meal out.

The problem of most poor Americans is not resources, it is the deployment of them.

Hmm... the blatant gambling nature of both of those makes it a good analogy.

No, not at all. Who have you ever heard make such a claim?

The issue is the size of the inequality, its growth, and the fact that historical periods with less inequality and a stronger middle class seem to correlate with strong overall growth and prosperity.

There's another take on it here: http://www.quora.com/Economic-Inequality/How-is-income-inequ.... In, that link says that the degree of inequality matters in the us because in the us, the poor are desperately poor, and the rich are fantastically rich. In other words, if the poor had a pretty good standard of living and the rich were absurdly healthy, maybe that would be ok, but that's not the situation we have.

The blather about a strong middle class is misdirection. If the U.S. governing.g elite cared about the middle class, they would abolish the armies of bunny rabbit inspectors, No Child Left Behind functionaries, and so forth. The American middle class is being choked to death by regulators, not billionaires.

Massive gaping holes in income distribution are inherently anti-democratic. That might offend a person's capitalist sensibilities but it doesn't make it any less true.