Kotlikoff Debates Piketty: Do We Need A Wealth Tax?

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Thomas Piketty:

  1. The rate of return to investors (r) is higher than the growth rate of the economy (g).
  2. That is producing increasing inequality.
  3. We need a wealth tax.

Laurence Kotlikoff:

  1. The basic thesis is false: r > g does not imply increasing inequality. That is inconsistent with well-known, well-tested economic theory.
  2. Rich people accumulating capital is good for the poor. More capital leads to higher wages.
  3. There is a lot of mobility among the wealthy. About 60% of the people on the Forbes 400 list were not there in 2001. More than 25% of the list in 2001 were not there three years earlier.
  4. Bill Gates and Warren Buffett are two two richest people the country. They are giving almost all their wealth to the poorest people in the world. That’s not bad thing.
  5. The claim that there is rising inequality ignores implied wealth from government transfer programs and generally ignores private pension assets as well.