The Egalitarian Earnings Subsidy Scheme
By: WHITE, Stuert
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ArticlePublisher: Cambridge : Cambridge University Press, October 1999British Journal of Political Science 29, 4, p. 601-622Abstract: How should society structure income redistribution so as to correct for ineliminable inequalities in marketable talent? This article explores the strengths and weakness of an 'egalitarian earnings subsidy scheme' (ESS) in which individuals receive (or pay) a subsidy (or tax) for each pound earned based on the difference between their earnings potential and their society's average earnings potential. ESS corrects for brute luck inequality in earnings potentials in a well-targeted fashion; implements an attractive conception of reciprocity; and in contrast to an alternative lump-sum tax proposal, does not entail the 'slavery of the talented'. However, any practicable version of ESS may undermine at least one other egalitarian objective - that of maintaining equality of status amongst unequally talented citizens. As a status-frisndly alternative, we might try to approximate ESS through a more conventional redistribution scheme using taxes and firm policy conclusions, it seems clear that the idea of talent-based taxes and subsidies on the model of ESS should occupy a more prominent place in our thinking about tax-benefits policy to tackle earnings inequality
How should society structure income redistribution so as to correct for ineliminable inequalities in marketable talent? This article explores the strengths and weakness of an 'egalitarian earnings subsidy scheme' (ESS) in which individuals receive (or pay) a subsidy (or tax) for each pound earned based on the difference between their earnings potential and their society's average earnings potential. ESS corrects for brute luck inequality in earnings potentials in a well-targeted fashion; implements an attractive conception of reciprocity; and in contrast to an alternative lump-sum tax proposal, does not entail the 'slavery of the talented'. However, any practicable version of ESS may undermine at least one other egalitarian objective - that of maintaining equality of status amongst unequally talented citizens. As a status-frisndly alternative, we might try to approximate ESS through a more conventional redistribution scheme using taxes and firm policy conclusions, it seems clear that the idea of talent-based taxes and subsidies on the model of ESS should occupy a more prominent place in our thinking about tax-benefits policy to tackle earnings inequality
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