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Quotation of the Day…

… is from page 114 of economists Phil Gramm’s, Robert Ekelund’s, and John Early’s important and data-rich 2022 book, The Myth of American Inequality: How Government Biases Policy Debate (footnote deleted):

The [Thomas] Piketty income data do not include transfer payments, which make up a majority of the income of the bottom 40 percent of the [U.S.] population. His data also overestimate the income of higher-income individuals by imputing to them income such as unrealized capital gains, which they do not actually receive.

His calculations show a dramatic increase in income inequality in postwar America because he ignores the massive infusion of transfer payments to the low end of the income distribution and imputes income that was never received to the high-end households. If he had included transfer payments as income to the recipients and counted only income that high-income taxpayers actually received after taxes, his empirical evidence of growing income inequality in postwar America would have collapsed.