CATO has put out a much-improved version of my "Wealth and Taxes" series on wealth inequality and the wealth tax. Html here and pdf here. Many thanks to Chris Edwards and the CATO staff for editing and formatting it, and getting it out in this nice format.
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Alan Reynolds wrote with interesting comments. Among others,
the $18+ trillion now invested in retirement, education and health savings accounts has gradually made middle-income investment income more and more invisible in tax returns as time moved on. Exemption of $500,000 of capital gains on home sales further reduced the IRS-reported capital income of all but the top 1%.
...the Saez-Zucman methodology is sure to show the rich having a larger and larger share of taxable income from capital, and therefore of wealth based on that taxable income, because income from the savings of middle-income taxpayers has become increasingly unreported.Bottom line:
Because tax laws exempted a rising share of investment income (and residential capital gains) of the bottom 95%, the visible portion left showing for the top 1% must appear as a rising share (of a meaningless total).
I still like my 2006 WSJ title: "The Top 1% of WHAT?" Pre-tax, pre-transfer income reported on individual income tax returns was never meaningful, and capital income on those tax returns is incomparable over time.
