Original Steelman
Prioritizing income-inequality reduction can be defended as a focus on social stability, equal opportunity, and long-run economic performance. High inequality may weaken social mobility, concentrate political influence, and reduce trust in institutions, which can undermine democratic legitimacy and policy effectiveness. From an economic perspective, directing resources toward lower-income households can raise aggregate demand because marginal propensity to consume is higher at the bottom, potentially supporting growth. Inequality reduction can also be framed as risk management: broader access to health, education, and housing can improve human capital and productivity, reducing costly downstream problems (crime, poor health, underemployment). In contrast, cutting taxes on high earners may deliver relatively small welfare gains per dollar of foregone revenue if those gains accrue to people with lower marginal utility of income, and it can constrain budgets for public goods that benefit everyone. Thus, a government aiming to maximize inclusive prosperity and social cohesion could rationally prioritize inequality reduction over top-end tax cuts.
Counter-Argument Steelman
Prioritizing inequality reduction over cutting taxes on high earners assumes redistribution is the most effective lever for broad welfare. A competing view is that lowering top marginal tax rates can increase investment, entrepreneurship, and labor supply among high earners, potentially expanding the tax base and raising overall growth. If growth effects are strong, the resulting job creation and wage gains could benefit lower- and middle-income households more sustainably than transfers. Additionally, inequality metrics may not capture absolute living standards; a policy focus on inequality could lead to higher taxes that reduce capital formation or encourage avoidance, yielding less revenue than expected and limiting funds for social programs. Governments also face administrative and political constraints: targeted inequality programs can be complex, prone to misallocation, and may create dependency or distort incentives. Finally, in some contexts fiscal consolidation or competitiveness concerns may make tax cuts (or at least avoiding tax increases) a higher priority to prevent capital flight and retain high-skilled workers, especially in small open economies.