"To be effective they must also raise the incomes of the middle class and the poor. Tax reform has a major role to play. The current tax code is so badly designed that it is very likely to be having the effect of reducing economic growth. It also allows the rich to shield a far greater proportion of their income from taxation than the poor. For example, last year's increase in the stock market represented an increase in wealth of about $6 trillion, of which the lion's share went to the very wealthy," he added.
Obama used his State of the Union address last month to highlight the growing disparity between America's richest and poorest citizens, saying that, after four years of economic growth with sky-high corporate profits and stock prices, average wages had not changed.
"Those at the top have never done better. But average wages have barely budged. Inequality has deepened. Upward mobility has stalled," he said.
(Read more: Why government probably can't close the rich-poor gap)
"The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead. And too many still aren't working at all," he added.
In his Financial Times piece, Summers suggested closing loopholes enjoyed by the wealthy, which would enable taxes to be cut elsewhere. He suggested measures such as earned income tax credit, which could raise the incomes of the poor and middle class by more than they cost the Treasury, by giving people incentives to work and save.
He said it was ironic that advocates of the free market are often those that are least in favour of curbing tax benefits for the rich, and sooner or later inequality needs to be addressed.
However policies that aim instead to thwart market forces rarely work, he said, and usually "fall victim to the law of unintended consequences," said Summers.
—By CNBC's Jenny Cosgrave. Follow her on Twitter