What is the major argument in the case for income equality?

Question

What will be an ideal response?

Answer 1

The major argument in the case for income equality is based on utility maximization. An equal distribution of income is necessary if consumer satisfaction or utility is to be maximized in a market economy. In a simple two-person example, the argument assumes that two consumers have identical diminishing marginal utility curves from spending income. When income is distributed unequally, then the marginal utility for the last dollar spent for the higher-spending consumer will be less than the marginal utility for the last dollar spent by the lower-spending consumer. To maximize utility, income should be reallocated so the rich consumer would spend less and the poor consumer would spend more. Marginal utility would fall for the rich consumer and rise for the poor consumer until the marginal utilities for the last dollar spent by both consumers were equal. At this point, total utility for the two consumers would be maximized.