On A Maximum Income:
Wealth Redistribution Using A Maximum Income Policy
The Oxfam charity has revealed that the richest 1% of the population now earn more than the the rest of us put together, and it is time that we looked at the concept of a maximum earning level again.
Kahneman and Deaton:"We suspect that this means, in part, that when people have a lot more money, they can buy a lot more pleasures, but there are some indications that when you have a lot of money, you will savour each pleasure less," said Kahneman, "Perhaps $75,000 is a threshold beyond which further increases in income no longer improve individuals' ability to do what matters most to their emotional well-being, such as spending time with people they like, avoiding pain and disease, and enjoying leisure." We thus have a level for a maximum wage beyond which there is no point in earning any more.
The rich, who hold the strings to power, may not appreciate a simple limit to income, but we can improve the package by saying that any excess income over a level, say twenty times above the minimum level, would be given to charity. A 2008 study by Harvard Business School professor Michael Norton and colleagues found that giving money to someone else lifted participants' happiness more that spending it on themselves (despite participants' prediction that spending on themselves would make them happier). Other reasons for the donor to be happier include improved health in the donor, promotes cooperation and social connection, all boosted by gratitude.
Such a policy will thus both improve the life of the rich, and the poor as well.
Altruism would be boosted by such a policy because if the rich wanted a wage increase of £20.00, they would have to campaign for the poor to have a wage increase of £1.00.