Here's tax indexation idea to reverse rising inequality: index tax rates to the Gini coefficient measure of inequality:
Since I'm an angel investor in ten startups, don't accuse me of socialism. The dead-end of socialism does not justify the failures of the outdated American version of capitalism, glaringly deficient in health, education, security and mental health policy outcomes compared to the Nordic, Canadian, Aussie, NZ, Dutch, Estonian and French versions.
Gini indexation is far easier to pass than a wealth tax. Work backwards from a desired policy outcome: restoring in ten years the USA's Gini coefficient of .36 that prevailed in 1967. The USA's current Gini is .485. To reach .36 requires lowering Gini by .0125/year.
Also apply that benchmark to intra-company Ginis for companies with a market cap of >$500m or that employ more than 500 people, whether publicly traded or not.
Large employers' owners and mgt will have an incentive to raise lower level employee wages or restrain the executive compensation arms race, or both if Gini indexation is applied to individual companies and industries as well as to the economy as a whole. Shareholders and asset managers who must meet ESG performance benchmarks will like the restraints on executive compensation, which will help obtain investor class buy-in.
Failure to reach the first year's Gini decrease goal of .4725 (.485-.0125), for individual companies, a sector or the overall economy, which equals a decrease in the Gini coefficient of 2.577%, would trigger a tax rate increase of 2.577%, or 5.155% with a hypothetical coefficient of 2, or 7.73% with a coefficient multiplier of 3. The coefficient should be high enough for the incentives against wage suppression to work, without imposing tax rates that would stifle investment. An aside: high top marginal rates don't suppress growth, as the example of the high tax, high growth Nordic countries shows (https://www.nytimes.com/2019/10/11/opinion/sunday/wealth-income-tax-rate.html). Company managements will choose whether to pay in the form of higher wages or higher taxes.
Given how heavily wage suppression would be taxed, company managements would have a big incentive to raise wages to avoid tax increases. Big employers like Walmart (1.2m workers), Amazon and Costco could move the macroeconomy's Gini all by themselves, and would have an incentive to do so if Gini indexation were applied to specific, high inequality, low wage sectors like retail and home healthcare. They would have a big incentive to form a wage-raising cartel to avoid losing workers to competitors. Higher earners in sectors like nursing homes and home healthcare agencies, that chronically underpay workers, would have an incentive to raise wages to avoid losing them to other sectors. Instead of a race to the bottom, you'd see a race to the top increasing labor's share of national income, with increased purchasing power.
Call it fiscal Keynesianism without the need for government to directly hire millions of un and underemployed workers to replace anemic private demand with public demand economics.
Why put what is, in effect, a wealth tax in a technocratic wrapper? Political and psychological cover. Look at how Steve Schwarzman compared taking away his carried interest tax break to the German invasion of France. Or how Leon Cooperman teared up at the "vilification of billionaires" when speaking out against Warren's 2% wealth tax (https://www.cnbc.com/2019/11/04/leon-cooperman-tears-up-talking-about-america-elizabeth-warren.html ). Outsized narcissistic egos will fight tooth and nail and buy half of Congress against what they view as a confiscatory wealth tax. But give them what looks like a choice deploying market incentives in pursuit of the laudable long term goal of reducing inequality, which everybody agrees on in principle, and they might buy in to a stealth wealth tax that accomplishes the same thing while far easier to implement.
The overall objective: sustainable capitalism because if the system doesn't share enough crumbs, nobody gets to eat any cake. Ray Dalio is right.
About indexing the thresholds for tax bands: introducing more complexity gives opponents more targets to shoot at. KISS (Keep It Short and Simple) works best. Stick to the top marginal rate for the top 1% of earners. I'd use the pre-Trump personal income tax rate of 28% (33% with the Alternative Minimum Tax) as the starting line. It's likely to return anyway.
Feel free to write back with questions, criticism, scepticism.
