THE QUEST for ways to reduce inequality begins with taxation. Unlike spending programs, redistribution through taxation is administratively simple; besides, putting money directly into people's pockets allows them to spend it on whatever they need most. But the tax tool has been wielded badly. Rather than using it to offset rising inequality, politicians have contrived to do the opposite. The Bush administration refuses to acknowledge this extraordinary fact. It argues that the tax system has grown more progressive because the rich provide a larger share of government revenue than in the past. But this isn't because tax rates for the...