Taxation, redistribution and debate about inequality

Capital and Ideology by Thomas Piketty contains fascinating descriptions of unknown historical uprisings against inequality such as Haitian revolution and describes societal system through the ages – slavery, serfdom, feudalism, communism, hypercapitalism, colonialism and caste, class collectively as “Inequality regimes” shaping the lives of billions and uses historical sources to chart the distribution of incomes and wealth and show how the situation today parallels those earlier detestable occurrences.

Capital and Ideology take us on a historical tour of the hypocrisy of elites, ranging from the punishments meted out to slaves in Mesopotamia to the cruelty of the Belle Epoque for a small number of white men.

Intellectuals such as the clergy in feudal Europe, Brahmins in Hindu India in the first millennium CE might have manipulated public beliefs to secure their place at the top of the society.  Inequality primarily stems from ideology, all the reformer has to do is to change the prevailing ideology.

 He asks the question why in modern democratic societies voters not do more to curb high and increasing levels of inequality. The Marxist explanation was “ false consciousness” – essentially working masses did not understand where their true interests lie.  He argues publication of statistics after the promulgation of a progressive inheritance tax in France in 1901 helped  “ undermine the idea of an egalitarian France” and showed “France bore no resemblance to the country of smallholders described the adversaries of progressivity”.

Piketty wants steeply progressive taxes on income, wealth, carbon emissions and if anyone has somehow managed to hold on to any wealth after all that, on bequests, he does not the state to hold all property. Small and medium businesses have an important role to play, “ temporary ownership by which successful business people will not accumulate wealth but will see it taxed away, giving others the chance to succeed. The government will use the revenues to create a more sizeable capital endowment to every young adult so that they can study more or open a business and ensure everyone has a minimum basic income of 60 per cent of average after-tax income.

If today’s rich work, the sky-high taxes Piketty wants could have serious adverse effects on effort, gross domestic product, and tax revenues. One virtue of the entrepreneurial rich retaining control over their wealth is that they have already demonstrated an ability to put resources to good use, which is why they are already wealthy. Temporary ownership may be detrimental to society’s productivity.

Capital and ideology by Thomas Piketty Translated by Arthur Goldhammer Belknap Press £31.95/ $39.95, 1, 104 pages.