A couple of weeks ago, we pointed to some analysis by Martin Feldstein on the inequality argument put forth by Thomas Piketty in his book Capital in the Twenty-First Century. Feldstein had pointed out that Piketty was looking at U.S. income tax return data, which is misleading because the tax reforms of 1986 encouraged high earners to increase the amount of income reported on individual income tax returns. The income didn’t change so much as how it was counted on tax forms.
Dr. Feldstein has let us know that his article, originally published behind a paywall at Wall Street Journal, is now available ungated at www.nber.org/feldstein/wsj05152014.pdf.
Piketty’s book, we see, is still in the news—perhaps more so this week than in previous weeks—because of some questions about his data. Those who are following the argument should be sure to read Dr. Feldstein’s contribution.