Working Paper: NBER ID: w20871
Authors: Alan J. Auerbach; Kevin Hassett
Abstract: In his influential book, Capital in the 21st Century, Thomas Piketty argues forcefully that rising wealth and wealth inequality is an inherent characteristic of capitalist economies and calls for strong policy responses, in particular a substantial wealth tax implemented globally. This paper takes issue with the facts, logic, and policy conclusions in Piketty’s book, suggesting that the factors needed to support the inexorable rise in capital’s share and concentration are lacking and that among tax policy reforms aimed at dealing with economic inequality a wealth tax finds little support either in Piketty’s own work or elsewhere in the literature.
Keywords: capital taxation; wealth tax; economic inequality; Piketty
JEL Codes: H21; P17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cyclical economic factors (E32) | Fluctuations in wealth distribution (D39) |
| Labor income (J39) | Increase in income inequality (D31) |
| Wealth tax (H24) | Address economic inequality (F63) |
| Rate of return on capital (r) (D33) | Economic growth (g) (O49) |
| Starting years for analysis (C41) | Trends in wealth inequality (D31) |