There’s Only One Sensible Way to Measure Economic Inequality
26th April 2014
Hint: Consumption spending.
I’ve been somewhat dismayed to see so many economists debate the economic inequality issue using highly flawed income and wealth data, instead of consumption inequality data. Recently I was listening to an interview with Thomas Piketty when he suddenly said something that caught my attention. He advocated a progressive property tax. That sounds like a great idea, as the consumption value of housing is probably closely correlated with the market value. And then he ruined everything by adding that it should not be levied on the gross value of property, but rather the net value after mortgage debt was subtracted. That defeats the entire purpose of a progressive consumption tax!