Friday, May 16, 2014

Martin Feldstein: Piketty's Number Don't Add Up

Ignoring dramatic changes in tax rules since 1980 creates the false impression that income inequality is rising:
Thomas Piketty has recently attracted widespread attention for his claim that capitalism will now lead inexorably to an increasing inequality of income and wealth unless there are radical changes in taxation. Although his book, "Capital in the Twenty-First Century," has been praised by those who advocate income redistribution, his thesis rests on a false theory of wealth evolves in a market economy, a flawed interpretation of U.S. income-tax data, and a misunderstanding of the current nature of household wealth.
Update: Piketty's Book -- Just Another Excuse For Legal Plunder And Expanding The State:
...Those responses to Piketty, accurate though they are, do little to blunt his message that the rich are already too rich and will keep getting richer unless government steps in to impose substantially higher taxes on them. Arguing against Piketty on the grounds that inequality isn’t as great as he says is futile. It’s like trying to file down the tip on your dueling opponent’s sword – the darned thing will still be lethal.

Rather than going after Piketty’s numbers, we need to go after his philosophy...
UpdateData problems with Capital in the 21st Century

Update: Why Piketty's Wealth Data Are Worthless:
...Private retirement plans rose to $12.4 trillion in 2012 from $875 billion in 1984. None of it is reported on tax returns....

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