Asking rich to contribute more is just practical

I thank Associate Professor Nitin Pangarkar for his comments on my recent articles for The Straits Times on inequality (Focus on right measures of income inequality; Aug 8).

In my articles, I had reviewed the recent global economic literature on the subject to distil its policy relevance for Singapore, where the Government has identified inequality as a national priority.

My articles were not meant to be a comprehensive empirical study of poverty, inequality and social mobility in Singapore.

I believe the analytical conclusions I drew are valid, and would like to challenge just a couple of points Prof Pangarkar made.

First, it hardly bears noting that in every country, high-income recipients pay a much larger share of total tax revenues than the lower-income group.

This arises simply because so much of the total income goes to them, and most tax systems are progressive.

The more unequally distributed income is, the higher the proportion of total tax revenues the rich will end up paying - it's just mathematics.

Second, nowhere in my articles did I suggest "bringing down the rich", much less "punitive taxation".

Raising Singapore's current internationally low rates of taxation on the highest-income earners, so that their post-tax income rises less rapidly, is not "bringing down the rich".

It directly reduces inequality, especially where, as some of the research I reviewed shows, it is increases in the wealthy which raises inequality.

Asking the rich to contribute slightly more of their bounties for, what Prof Pangarkar calls, "pulling up the poor" is simply a practical fiscal measure with (as research shows) no economic detriment.

Linda Lim (Dr)

Join ST's Telegram channel and get the latest breaking news delivered to you.

A version of this article appeared in the print edition of The Straits Times on August 14, 2018, with the headline Asking rich to contribute more is just practical. Subscribe