A/HRC/31/60 legislation to ensure equal pay between genders. Moreover, it is crucial to safeguard sufficient bargaining power of the workforce. States should thus ensure that strong collective bargaining mechanisms are in place and may be used without interference. States should also make compliance with minimum wage and work conditions a precondition for eligibility to supply goods or services to public bodies. 94 In addition, in order to sustainably combat the widening of the wealth gap States should develop and strengthen frameworks encouraging and supporting small savings. 3. Fiscal policies 59. Inequalities can be reduced through taxation and transfers, the latter including in cash and in kind.95 In the field of taxation, there are numerous ways for addressing inequalities.16 To start with, it is crucial to rely more on direct than indirect taxes as the latter tend to be regressive or proportional to incomes. 96 This is particularly true for excise duties and taxes.97 60. Income taxation needs to be aligned with a number of principles. First and foremost, tax progressivity is an important factor in fostering increased equality and should therefore be a prominent guiding principle of income taxation. Trends in the most recent decades of decreasing progressivity have massively contributed to the widening of the wealth and income gap. Moreover, tax progressivity decreases the probability of financial crises and default. The top marginal income tax rate should thus be considerably higher than what is currently common. 98 The minimum taxable income must always be above the poverty line. 61. In general, States should take care that capital income does not receive privileged treatment compared to income from labour, as is currently prevalent in many States. Obviously, this may call for amendments to applicable tax laws, but changes in other parts of the States’ legal systems may also contribute to ending the special status of capital income, as described below. 62. Another important step towards increased equality should be to phase out certain tax deductions and excessive and unjustified tax privileges applicable to certain sources of income and sectors. Such privileges usually benefit the high earners disproportionally and thus foil progressive taxation. 94 95 96 97 98 See A. B. Atkinsons, Inequality: What can be done? (Cambridge, Massachusetts, Harvard University Press, 2015), pp. 147-153. See the report of the Secretary-General on the role of the United Nations in promoting a new global human order and an assessment of the implications of inequality for development (A/67/394), para. 56, in which he exhorts that governments “may wish to consider a combination of progressive income taxes and highly redistributive transfers to decrease income inequality and its impact on social development”. See “Fiscal policy and income”, IMF policy paper (January 2014), p. 18; C. O’Donoaghue, M. Baldini, and D. Mantovani, “Modelling the redistributive impact of indirect taxes in Europe: an application of EUROMOD”, Euromod working paper No. EM7/01 (Colchester, University of Essex, 2004); and S. Cnossen, Theory and Practice of Excise Taxation: Smoking, Drinking, Gambling, Polluting, and Driving (Oxford, Oxford University Press, 2005). See IMF, “Fiscal policy and income” (footnote 96). In J. Stiglitz, The Price of Inequality: How Today’s Divided Society Endangers Our Future (New York, W.W. Norton and Company, 2012) pp. 273 ff., the author suggests that the top marginal tax rate should be well in excess of 50 per cent and plausibly in excess of 70 per cent; in A.B. Atkinson, in “Inequality: What can be done?” (footnote 94), pp. 179 ff., the author promotes a top marginal tax rate of 65 per cent. 19