Thomas Piketty’s Capital in The Twenty First Century, has spawned a cottage industry of dissent.  Piketty uses masses of data to illuminate a growth in inequality, that he surmises is an inevitable result of capitalism and can only be resolved by painfully high taxes on the rich. For the left it is a pivotal work that brings data and credentialism to their ideology that capitalism is so flawed that it requires constant and strong control from the state.

Anti-Piketty is a collection of noted economists and political thinkers that find significant flaws with Piketty’s work.  These critiques include serious flaws with the data itself and how it is used, the difficulty of measuring the forms of income and inequality itself, conclusions that are not supported by the data, and a philosophically flawed concept of wealth, growth and capitalism.

From   Chapter 13 of Anti-Piketty. The Financial Times vs. Piketty,   by Chris Giles

The point is true, but it’s also misleading. Piketty and Saez answer the technical question of how taxable income earned by tax units (i.e., a single filer or a married couple filing jointly, unadjusted for the number of dependents) has changed over time. But that answer has vastly different real-world implications from the answer to this question: How has the access of American households to after-tax resources changed over time?

Consider these points: government-provided Social Security benefits and the Earned Income Tax Credit flow in much greater proportion to lower-income Americans than those in upper-income quintiles; and our income tax system takes progressively more from higher-income households. Fringe benefits and non-wage compensation (employer-provided health insurance, for example) have also become a much larger portion of workers’ compensation, as have the value of Medicare and Medicaid health insurance for the aging and the poor.

Because Piketty and Saez’s numbers focus on only taxable market income, they miss those additional sources of income and the progressive effects of our tax system on after-tax resources. And, by focusing their analysis on individual tax filing units, unadjusted for the number of persons residing within them, they miss changes in the composition of American households (i.e., an increasing number of households are made up of unmarried single tax filers who share their income).