John Nye says measured income inequality would not be reduced by the types of redistributive policies that I (and Elizabeth Anderson) have been discussing. He seems to think neither government transfers nor taxes are included in the data used to measure inequality.
It’s true that the Gini coefficients published by the Census Bureau in its annual report on income inequality are based on a measure of income that does not include the Earned Income Tax Credit or noncash transfers such as food stamps and does not subtract tax payments. But each year the Congressional Budget Office (CBO) publishes income data that address these limitations. The information about income inequality trends that I mentioned in a prior post in this exchange is based on the CBO data.
One other small point: John says I recommend raising the top marginal income tax rate, and that this might not do any good because the rich find ways to shelter their income to avoid it being subject to that top marginal rate. Actually I said I favor increasing the effective tax rate on top incomes. That can be done by increasing the marginal rate, or by reducing exemptions and deductions, or by improving enforcement of existing rules, or some combination of these.