The Economist magazine's website conducted an online poll on whether the rich should be taxed more. Anchor Marco Werman speaks with Economist correspondent Saugato Datta who moderated the poll.
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MARCO WERMAN: All societies have elites. And those elites are usually richer than anyone else. We're no different here in the United States. Every election season, politicians debate whether the rich should be taxed at a higher rate. That was certainly a hot topic during the presidential campaign. And then there was the anger over those bonuses for AIG executives. The Economist Magazine has just concluded an online debate about whether or not the rich should pay higher taxes. The result was fifty-one percent in favor, forty-nine percent against. Economics correspondent Saugato Datta moderated the online forum.
SAUGATO DATTA: The reason that we had this debate right now is because of all of this controversy about bonuses and whether they should be returned or whether there should be some kind of punitive tax trying to get these bonuses back. We also recently had one of our [INAUDIBLE] editor wrote a extensive survey of who are the rich, and how rich are the rich, and so-on. And one of the things that came out of that was that in countries like America and Britain there has been this remarkable explosion in income inequality over the last, roughly, two decades.
WERMAN: Right, well, income distribution and how it's evolved and there's some interesting statistics that you provide. For example, the top one tenth or one percent of Americans earned about twenty times what the bottom tenth did for much of the post-war era, but in the last couple of generations that multiple had nearly quadrupled to seventy seven times what the bottom ten percent is. That was by 2006. As one of your writers pointed out it seemed like a new guilded age.
DATTA: Yeah, I mean, it's difficult to look at a raw statistic like that and to be absolutely sure of what's driving it. But there has been a big growth, as we all know, in the financial sector. And much higher pay in the financial sector, even relative to the rest of the private sector. So, the crucial question then becomes the taxation. I mean, is this a reward, essentially, of doing well and being productive and generating value, and are you being rewarded for that by being paid a lot more? And that's a much trickier question. That's something that, at the moment, fewer people are sympathetic to than they might have been even a couple of years ago.
WERMAN: The debate was called resenting the rich and I'm just wondering what were the responses to the question on how tax policy would be a tool for addressing the inequality between the rich and the poor?
DATTA: One of the things I noticed was that there wasn't a huge amount of resentment. People were, you know, trying to look at these questions quite dispassionately and look at the evidence. And I think the main disagreement between people who supported higher taxation and those who didn't ended up being about two things. One was, what would the effect of higher taxation be on people's incentives to be productive. And related, what is the source of this higher income. In other words, is it something that you get because you've been extremely productive and it's your reward for that, or is it that there are a lot of people who are being rewarded in excess of what they are producing. And, so, that was the crux of the debate.
WERMAN: Don't you think the results to an online poll will be somewhat skewed since there is a digital divide around the world precisely omitting the bottom ten percent who would say let's tax the rich more?
DATTA: That's quite possibly true. I mean, not only that I would suspect that if you look at the amount of time and effort that people invest into, you know, putting up a comment on our debate, we're getting a pretty, sort-of well educated, probably reasonably well to do, segment of, even, the online population. And in that sense you might say, well, it's quite interesting that more than half of them ended up favoring taxing the rich more.
WERMAN: Saugato Datta has been moderating The Economist Magazine's online debate on whether the rich should pay higher taxes. You can find a link to the debate at theworld.org. Saugato, thank you very much.
transcript
The Economist's online debate