SPREADING THE WEALTH AROUND:REFLECTIONS INSPIRED BY JOE THE PLUMBER

This essay discusses the policy debate concerning optimal taxation and the distribution of income.It begins with a brief overview of trends in income inequality, the leading hypothesis to explain thesetrends, and the distribution of the tax burden. It then considers the framework that economists useto address the normative problem of designing tax systems. The conventional utilitarian approachis found to be wanting, as it leads to prescriptions that conflict with many individuals’ moral intuitions.The essay then explores an alternative normative framework, dubbed the Just Deserts Theory, accordingto which an individual’s compensation should reflect his or her social contribution....