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States with Better 'Business Climates' Also Have Higher Inequality

There's a clear connection between economic inequality and low-tax, pro-business policies.
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REUTERS/Chip East

Economic inequality has risen substantially in the United States over the past several decades, but its rise has been uneven across the 50 states. According to my own analysis here on CityLab, more than half of states—26, plus Washington, D.C.—saw inequality increase at a higher rate than the national average between 1979 and 2012.

Inequality has mainly been tied to big economic shifts like globalization, technology, and rising returns to capital. Some commentators have also highlighted the role of national policies like changes in the income tax or the rate of taxation on capital gains. But what if changes in policy at lower levels of government have contributed to the rise in income inequality as well?