Possible Politics for Reducing of the Inequality

Stefan Yotov

Economic Studies journal, 2014, issue 4, 67-107

Abstract: The socioeconomic problem of increasing inequality in income and riches distribution is particularly actual around the world after the beginning of the global crisis of 2008. A number of international studies show that the more egalitarian societies are better positioned in terms of almost every index of health, prosperity and quality of life, and in addition enjoy higher and more sustainable economic growth. The major factors for growth of inequality after 1980 have been studied comparatively – globalization, technological developments, and political decisions (especially in taxes), which have been influenced by neoliberal ideas of domination of the market over the state. The market mechanisms however cannot deal with the concentration of riches and polarization of incomes. These can be managed only be state intervention – mostly through greater redistribution of national tax systems. So, a few possible measures for decreasing higher inequalities have been identified: higher tax rates for incomes of the rich, for luxury real estate, for biginheritances and capital incomes. Since inequality in Bulgaria is among the highest in the EU, and personal incomes and profits of firms can be concealed, a suitable tax target in our country could be more expensive lodgings and uninhabited real estates in the cities. À higher tax rate for those real estate categories is set up. Restriction of disproportions in incomes and riches could contribute to better overall goods and services demand in the economy, for higher growth, for decreasing the probability of financial crises, as well as for higher stability in politics and society.

JEL-codes: D31 D63 H22 Z13 (search for similar items in EconPapers)
Date: 2014
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