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In this paper consequences of a rising income inequality for state activities and the role of economic policy are discussed. Using a simple model it is shown that an increasing income inequality leads to a higher government’s share of GDP though the state does not take over more responsibilities, and a higher tax share though rates of taxation are not increased. That forces economic politicians to act. If they want to prevent an increase of the tax share, transfer share and / or government’s share of GDP, they must move away from socially accepted value judgments upon social standards, the degree of redistribution by taxes and / or an adequate supply with public good.

review of economics

„Does Distribution Matter?”: Ein Diskussionsbeitrag zu den Auswirkungen der Konzentration der Einkommensverteilung auf die Staatstätigkeit und die ihr zugrundeliegenden Wertvorstellungen