16. Piketty owes readers more reconciliation of his claim that "r" is so high that r>g, with observed fact of extremely low interest rates on savings accounts, Treasury securities, etc.
E. Piketty's policy conclusions
1. Like Henry George, Piketty sees a solution to Marxian doom, and the two proposals even bear a superficial likeness. George, as is well known, proposed abating all taxes but one, a tax at a high rate based on the value of land -- all forms of land. Piketty proposes a similar tax on the base of ALL forms of private wealth.
2. Piketty's case was strengthened by a movement much bruited about in the 1970s, calling itself "The New View" of property tax incidence. In this "new view" property taxes on capital are not shifted forward to consumers, but lodge on the owners of capital. This depends on assuming that the tax is universal, or at least uniform over a vast nation like the U.S.A. This assumption somewhat fits Piketty's more ambitious proposal for a worldwide property tax. (Aaron, 1975; Gaffney 1977). The academic buzz ended abruptly when California passed its "Prop. 13" in 1978, but the intellectual foundations are still there to support Piketty.
3. Piketty's proposal will not withstand the predictable attacks for at least three reasons
a. It includes all forms of wealth, mobile as well as immobile.
b. It is to be worldwide, to avoid evasion maneuvers. But there is no worldwide government nor will there be in the foreseeable future.
c. It cannot impose a very high rate, because mobile capital will either never be formed, or will be consumed and dissipated, or find ways to emigrate.
d. It is to be "progressive", i.e. graduated upwards. This has been tried in many times and places for just one kind of wealth, i.e. real estate, and proven impossible. Real estate is held in dozens of ways, direct and indirect, but always in rem, not in personam, so there is no way to make existing taxes in personam. Even personal incomes, supposedly tracked by persons, are not really recorded that way except for low-paid blue-collar or pink-collar workers with one source of income recorded on payrolls.
3. George's land tax is free of those problems
a. It is only on land, which cannot move between nations, oven towns and counties and school districts.
b. It is to be national or even subnational. The needed governments and collection institutions already exist.
c. It can be levied at very high rates, because land cannot move out of a taxing jurisdiction, which is DEFINED as an area of land.
d. Thus George's tax makes up by its very high rate for its less comprehensive base.
e. Untaxing capital and labor enhance the value of the land-tax base within the jurisdiction that untaxes them.