The Robin Hood state: taxes are getting more progressive - Economist Podcasts Recap

Podcast: Economist Podcasts

Published: 2026-02-18

Duration: 22 min

Guests: Colin Williams

Summary

The episode discusses how global tax systems have become more progressive, redistributing wealth from the rich to the poor more than ever before, despite rising pre-tax inequality.

What Happened

The episode opens with an analysis of how tax systems globally are becoming more progressive, contrary to the common belief that inequality is getting worse. Colin Williams, a senior economics writer, explains that pre-welfare state inequality decreases significantly once the welfare state is implemented, with countries like America, Germany, and Japan seeing a marked increase in redistribution from the rich to the poor since the 1960s.

Williams highlights that seven out of ten countries have adopted more progressive tax systems since 1990. The discussion points out that even though pre-tax inequality has risen since the 1980s, post-tax inequality has not increased significantly, indicating effective redistribution efforts by governments.

The episode examines specific countries, noting that the welfare state in the US has become more progressive, while in Britain, France, and Japan, the richest 1% have seen stagnation or decline in income compared to the bottom 50%, who have experienced real income growth.

A significant shift has occurred in tax policy, with governments tightening loopholes that once allowed the rich to avoid taxes easily. This change, combined with higher headline rates in Europe, has contributed to increased tax contributions from the wealthy.

Despite stories of billionaires avoiding taxes, the episode argues that it is now harder for the super-rich to evade taxes due to these tighter regulations. However, some billionaires still exploit loopholes, such as taking income in forms that are taxed at lower rates.

At the lower end of the income scale, middle-income earners and below are paying less tax than in the past, and the redistribution of welfare benefits has increased, helping to reduce inequality.

The episode raises questions about the sustainability of these policies, noting potential negative effects, such as wealthy individuals moving out of high-tax states like California. However, it concludes that the trend is towards higher taxes on the rich.

Finally, the podcast touches on the broader implications of these trends, suggesting that if pre-tax inequality continues to rise, the welfare state may need to become even more redistributive.

Key Insights