South By North Strategies, Ltd.

Jared Bernstein points out that the rise in inequality has to do with more than just taxes and results in part from other policy choices that shape how the benefits of economic growth are distributed.

One more biggie: full employment.  It’s very much a policy variable and one, in fact, that used to be the law for the Federal Reserve—so-called Humphrey Hawkins Act mandated full employment as a policy goal of the Fed.  As I stress here, the fact that our job market has run with so much slack over the very period when inequality grew so quickly is no coincidence (and visa-versa: when inequality was flat or falling, we were more likely to be at full employment).
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And of course, in recession, like now, by dithering on stimulus, we’re disproportionately hurting the wage, incomes, and living standards of the folks who’ve been losing income share over the years shown in the figure above.
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In other words, there are a lot of policy measures that have considerable impact on how the benefits of growth are distributed—before taxes even show up on the scene.  When representatives of the wealthy squeal about “class warfare,” they’re not just talking about shielding their treasure from the tax system.  They’re also protecting and endorsing a policy agenda that’s helped tilt growth their way for a long time.