Natural limits of wealth inequality and the effectiveness of tax policy Scott S. Condie, Richard W. Evans and Kerk L. Phillips
By: Condie, Scott S
.
Contributor(s): Evans, Richard W | Phillips, Kerk L.
Material type: 
ArticlePublisher: 2019Subject(s): RENTA | DISTRIBUCION | DESIGUALDAD | IMPUESTOS | POLITICA FISCAL | MODELOS ECONOMETRICOSOnline resources: Click here to access online
In:
Public Finance Review v. 47, n. 1, January 2019, p. 32-57Summary: This article examines Thomas Piketty’s thesis that there are no natural limits on the accumulation of wealth. We undertake our examination in the context of a simple general equilibrium model with infinitely lived dynasties. We show that extreme wealth accumulation does not happen in general equilibrium unless capital and labor are substitutes, an assumption which
also leads to unbalanced growth. We also show that even with unbalanced growth, differences in rates of return and effective labor are not sufficient to cause unbounded inequality. Only permanent savings rate differences can lead to extreme wealth concentration. Finally, we show that while a flat wealth tax will not eliminate extreme wealth concentration, both a graduated
wealth tax and a flat income tax will.
| Item type | Current location | Home library | Call number | URL | Status | Date due | Barcode |
|---|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 581/2019/1-2 (Browse shelf) | https://journals.sagepub.com/doi/pdf/10.1177/1091142117707970 | Available | OP 581/2019/1-2 |
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This article examines Thomas Piketty’s thesis that there are no natural limits on the accumulation of wealth. We undertake our examination in the context of a simple general equilibrium model with infinitely lived dynasties. We show that extreme wealth accumulation does not happen in general equilibrium unless capital and labor are substitutes, an assumption which
also leads to unbalanced growth. We also show that even with unbalanced growth, differences in rates of return and effective labor are not sufficient to cause unbounded inequality. Only permanent savings rate differences can lead to extreme wealth concentration. Finally, we show that while a flat wealth tax will not eliminate extreme wealth concentration, both a graduated
wealth tax and a flat income tax will.
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