Whine & Cheese

Just as an aside - a large part of the problem isn;t even capitalism per se, regulated or otherwise. A very large part of the problem of wealth disparity is taxation - specifically unfair taxation rates.Just about every nation operates using a progressive taxation system, where the percentage of income tax scales along with the income itself. This means that the very poor in theory pay very little in income tax (yet pay a disproportionately large portion of their income through sales taxes, but that's another topic), while the wealthy pay the highest tax brackets.Unfortunately this breaks down when you reach the upper class, those who begin to receive a significant portion of their income through investments rather than a paycheck.Capital gains through investment are taxed at a far, far lower rate than "normal" income. This means that $1000 of income from investment will be taxed far lower than $1000 of income from a place of employment. The wealthy are rewarded for being wealthy at a rate significantly different from the reward everyone else receives from employment.Investment as a form of primary income is of course only available to those who are sufficiently wealthy - a poor person cannot invest enough money to receive a reasonable living on a return from investment. Even comfortably middle-class individuals cannot invest sufficient wealth to make a living on investment. Combined with the difference in taxation, we end up with a system that by far disproportionately rewards the wealthy simply for possessing wealth, even if they actually do little or nothing, while disproportionally taxing everyone else who receives their living wage from a paycheck for performing services to an employer.The more wealth you have, the more the disparity grows. Wealth generates more wealth through investment and receives an absurdly low tax rate.This isn't a purely capitalist problem - its a problem caused by unequal taxation for an income source predisposed to a single class of individual because the barrier to entry is far too great for the average citizen to surpass. It's absurd that, as Warren Buffet likes to point out, that he should pay a lower percentage of his income in taxes than his secretary. It is absurd that Mitt Romney should pay a percentage of his income that is around half of what most middle-class Americans pay.Unfortunately, while income from investment is impractical for all but the very wealthy, investment is used as a primary source of income for retirement savings. This means that any effort to increase capital gains taxes to level the playing field for the wealthy will disproportionally hurt the middle class in their retirement savings as well - making capital gains tax reform politically unpopular.My suggestion would be a very progressive tax rate on capital gains. If you make only a few thousand (or even tens of thousands) dollars in a year from interest on investments, your tax rate should be very low - you're saving for retirement, this should be encouraged, and the barrier to saving in this manner should be as low as possible. If you make millions each year on interest from investments alone, you are clearly using investment interest as your primary form of income, and should be taxed accordingly at a rate more consistent with regular income tax in the same amounts.The wealthy will still invest heavily because the sort of wealth generation possible though investment, even with higher tax rates, far exceeds the potential income one can achieve through other forms of income, like a day job (not to mention the fact that one can hire an account manager to handle one's investments and so generate wealth without actually working for the money at all, ever, which is a distinct advantage over the way the rest of us have to make money).

Do you have numbers to support this assertion? I'd like to see evidence that the wealthy actually pay more tax dollars than the middle and lower classes.It sounds like "common sense," but as with most "common sense" ideas, I don't think it's actually true. The tax bracket may be highest for the wealthy, but they don't generate most of their income through normal income, they do so through investments. Meanwhile the middle and lower classes pay disproportionately more of their income in sales taxes, as the wealthy don't use nearly as much of their income for consumption of taxable goods and services.