To the editor:
Rep. Dick Ames of Jaffrey is proposing $100 million dollars in tax increases to solve the problem of income inequality. He is basing this on the discredited ideas of the French economist Thomas Piketty. Piketty’s analysis of inequality is wrong for many reasons.
1) His view that capital always increases faster than GDP is unproven.
2) Piketty confuses wealth with income.
3) He does not count as wealth real estate, i.e., land, rental property and houses.
4) He does not add governmental income in kind to income: entitlements, earned income tax credits, free school lunches, subsidized housing.
5) He leaves out the value of future governmental social security and pension obligations, which are worth trillions of dollars.
6) Piketty forgot about increases in wealth of IRAs.
7) He is unaware of tax code changes which give the appearance of increasing income inequality, e.g., people can count business income as personal income (Subchapter S corporations)
8) Piketty believes that the fictional Leonardo DiCaprio character in the movie “Titanic” was based on a real person. He draws economic conclusions from that.
9) He believes that wealth is perpetuated over generations by a permanent class of wealthy. In fact, 17 out of 20 of the wealthiest Americans are self-made, mostly from technological innovations, (Forbes 2013). People move back and forth amongst income quintiles. Sixty-one percent of households reach the top quintile of income at some point in their lives (economists Mark Rank and Thomas Hirsch).
10) The poor today are better off than he poor in 1972-3. Sixty percent of the poor than had no cars. Today 75 percent own one or more cars, and per capita living space is much higher.
A French economist living in an elegant apartment in a fancy Parisian arrondissement should not be an idea source for New Hampshire tax increases.
Rick Sirvint
Rindge