Taxes really, really matter for inequality. In fact, differences in tax and spending policies are the only reason the US has substantially greater inequality than countries like Sweden, Norway, Finland, or Germany. And in the US, we tend to do a lot of our spending through the tax code, making taxes in particular even more crucial.
In the above video, veteran economic reporter David Wessel, now director of the Hutchins Center at the Brookings Institution, explains how federal taxes — income, payroll, etc. — alter the distribution of income. Overall, the tax code reduces inequality, but a big gap still remains.
The most striking thing is that the video can’t even depict the top 1 percent: they’re just too rich. Each brick is $10,000, and the average one-percenter makes over $2 million before taxes, meaning you’d need 200 Lego bricks to show their income — way more than will fit on the screen. Even after taxes, you’d need 130 bricks.
The rich are different from you and me. They get more Legos.