Martin Feldstein puts a few more nails in the coffin of Pikettys argument, this time his interpretation of the US income data. Short version: Piketty ignores changes in US tax law that shifted income among the rich from catgories that he did not count to categories that he did, particularly from corporate to personal income. In other words, the data that Piketty uses to argue the rich have become very much richer dont show that at all. The income has always been there, but the changes in tax law caused people to shift it into forms that count in Pikettys data rather than ones that dont. Thats not an increase in income inequality. Its a shift in the type of income the rich are earning and tax law, not some iron law of capital, is the culprit. And folks? In case you dont know? Feldstein is one of the top tax economists in the world. (You may have to Google the title to get around the WSJ paywall.)
Posted on: Thu, 15 May 2014 23:51:45 +0000
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