The political left’s love affair with steep progressive taxation bought a tutorial enhance with the publication of Thomas Piketty’s bestselling 2014 e book, “Capital within the Twenty-First Century.” Interesting to the New Deal period, Mr. Piketty proposed a easy clarification and treatment for rising financial inequality: The focus of earnings among the many prime 1% may very well be mitigated by strategically focusing on wealth with the tax system.
Mr. Piketty primarily based his concept on a historic argument taken from his personal empirical work with fellow economist Emmanuel Saez. When Congress and President Franklin D. Roosevelt hiked the highest marginal income-tax price to 91% throughout the New Deal and World Battle II, they allegedly broke up the focus of the capital inventory on the prime of the earnings ladder. Inequality declined to a midcentury trough, the place it remained till the Reagan tax cuts within the Nineteen Eighties. Inequality then rebounded to type a centurylong U-shaped sample. The answer, then, is to revive tax charges to their FDR ranges.
