Endowment and Inequality

Abstract

Neither income, consumption, nor wealth is an "ideal" tax base, or one that plausibly identifies what one really should want to tax. Rather, they are best justified as imperfect stand-ins for some underlying (but unobservable) metric of inequality that may be relevant to distributive justice under a variety of normative views.This paper examines a more fundamental inequality measure that we might call "endowment," "ability," or "wage rate," and explores its relevance to distribution policy under welfarist and liberal egalitarian approaches to distributive justice. It argues that, while endowment taxation is not practically feasible, conventional rejections of it as an orienting idea, sometimes explained on the ground that it would require enslaving a beachcomber who could have been a Wall Street lawyer, are in key respects confused.