Friday, October 03, 2014

Piketty's response to the Bankman-Shaviro paper

Points that he made in his comments included the following:

--While Bankman and I discuss the seeming gap between the book's approach and that of tax policy literatures such as optimal income taxation, his 2013 article, co-authored with Emmanuel Saez, addresses optimal capital taxation in light of the inequality issues.  But he sees only so much value in these sorts of mathematical workings out of underlying objectives.

--He sees a wealth tax as not a very radical idea given the widespread use, including by U.S. state and local governments, of real property taxes.  He doesn't see those taxes as meaningfully related to local amenities.  A real property tax becomes a wealth tax if you broaden it to all property and make it a tax on net rather than gross wealth.  But he seemed to agree that, given these differences, existing real property taxes are a very different instrument than wealth taxes.

--He favors moderate use of lots of different tax instruments, rather than primary reliance on just one.  E.g., given the shortcomings in practice of capital income taxes, inheritance taxes, and wealth taxes, why not have some of each rather than just one.  (David Gamage, who gave an NYU Tax Policy Colloquium paper this past year taking such a stance will no doubt be pleased to hear this.)

--As effectively a Rawlsian, his main normative concern is with the worst-off individuals, so he might not greatly object to extreme high-end inequality per se, except for its leading to capture of the political system by the wealthy, with the result that popular control is undermined and policy just serves their interests.

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