Why Inequality Matters

If you want the highlights, this economist article does as decent a job of summarizing 400+ pages as you can hope for in 4 paragraphs.

http://www.economist.com/blogs/economist-explains/2014/05/ec...

As for the content, the main take away, is his r > g argument which is illustrated by the following chart:

http://piketty.pse.ens.fr/files/capital21c/en/pdf/F10.9.pdf

One of his other big ideas Bill hits on is his tax on captial. Bill proposes a tax on consumption instead.

> But rather than move to a progressive tax on capital, as Piketty would like, I think we’d be best off with a progressive tax on consumption.

Maybe not surprisingly since I work in finance, most of my colleges are on Bill's side and not Piketty's here. To be fair to Piketty, he chose a tax on capital because he's coming from a perspective of how do we prevent the accumulation of wealth over generations, where as Bill is coming at it from how do we raise enough taxes to pay for the the services the government needs to provide.

I would recommend reading this book, its clearly a labor of love for him and he's spent the time to back it up with data, just don't expect to agree with all his conclusions.

    I fully agree that we don’t want to live in an aristocratic society in which 
    already-wealthy families get richer simply by sitting on their laurels and 
    collecting what Piketty calls “rentier income”—that is, the returns people earn 
    when they let others use their money, land, or other property. But I don’t think 
    America is anything close to that.
    Take a look at the Forbes 400 list of the wealthiest Americans. About half
    the people on the list are entrepreneurs whose companies did very well 
    (thanks to hard work as well as a lot of luck). Contrary to Piketty’s 
    rentier hypothesis, I don’t see anyone on the list whose ancestors bought a 
    great parcel of land in 1780 and have been accumulating family wealth by 
    collecting rents ever since. In America, that old money is long gone—through 
    instability, inflation, taxes, philanthropy, and spending.

Gates rightly (and self-servingly) also points out that Piketty does not consider philanthropy as a means to correct some of capitalism's imbalances. Here's a few of Gates' conclusions:

> Piketty is right that there are forces that can lead to snowballing wealth (including the fact that the children of wealthy people often get access to networks that can help them land internships, jobs, etc.). However, there are also forces that contribute to the decay of wealth, and Capital doesn’t give enough weight to them.

> I am also disappointed that Piketty focused heavily on data on wealth and income while neglecting consumption altogether. Consumption data represent the goods and services that people buy—including food, clothing, housing, education, and health—and can add a lot of depth to our understanding of how people actually live. Particularly in rich societies, the income lens really doesn’t give you the sense of what needs to be fixed.

> Piketty’s favorite solution is a progressive annual tax on capital, rather than income. He argues that this kind of tax “will make it possible to avoid an endless inegalitarian spiral while preserving competition and incentives for new instances of primitive accumulation.”

> I agree that taxation should shift away from taxing labor. It doesn’t make any sense that labor in the United States is taxed so heavily relative to capital. It will make even less sense in the coming years, as robots and other forms of automation come to perform more and more of the skills that human laborers do today.

But rather than move to a progressive tax on capital, as Piketty would like, I think we’d be best off with a progressive tax on consumption. Think about the three wealthy people I described earlier: One investing in companies, one in philanthropy, and one in a lavish lifestyle. There’s nothing wrong with the last guy, but I think he should pay more taxes than the others. As Piketty pointed out when we spoke, it's hard to measure consumption (for example, should political donations count?). But then, almost every tax system—including a wealth tax—has similar challenges.

Like Piketty, I’m also a big believer in the estate tax. Letting inheritors consume or allocate capital disproportionately simply based on the lottery of birth is not a smart or fair way to allocate resources. As Warren Buffett likes to say, that’s like “choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics.” I believe we should maintain the estate tax and invest the proceeds in education and research—the best way to strengthen our country for the future.