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also must be their redistributive effects. This does not mean that they do no harm. On the contrary. The yield is so low partly because some of the most competent men in the country devote their energies to devising ways to keep it so low; and because many other men shape their activities with one eye on tax effects. All this is sheer waste. And what do we get for it? At most, a feeling of satisfaction on the part of some that the state is redistributing income. And even this feeling is founded on ignorance of the actual effects of the graduated tax structure, and would surely evaporate if the facts were known. |
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To return to the distribution of income, there is a clear justification for social action of a very different kind than taxation to affect the distribution of income. Much of the actual inequality derives from imperfections of the market. Many of these have themselves been created by government action or could be removed by government action. There is every reason to adjust the rules of the game so as to eliminate these sources of inequality. For example, special monopoly privileges granted by government, tariffs, and other legal enactments benefiting particular groups, are a source of inequality. The removal of these, the liberal will welcome. The extension and widening of educational opportunities has been a major factor tending to reduce inequalities. Measures such as these have the operational virtue that they strike at the sources of inequality rather than simply alleviating the symptoms. |
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The distribution of income is still another area in which government has been doing more harm by one set of measures than it has been able to undo by others. It is another example of the justification of government intervention in terms of alleged defects of the private enterprise system when many of the phenomena of which champions of big government complain are themselves the creation of government, big and small. |
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