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Thoma on Reynolds on Inequality

By Matthew Yglesias

"Thoma on Reynolds on Inequality"

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I’ve been recommended these two (one, two) Mark Thoma posts on Alan Reynolds’ views about inequality. Thoma makes several points including the important one that the Census Bureau’s Current Population Survey uses $999,999 as the maximum income that can be coded so that a person making $1 million, a person making $10 million, and a person making $100 million will all register as earning $999,999. This is a serious flaw in the data’s utility as a measure of inequality. He also notes that Piketty and Saez argue, in a manner that most economists seem to me to regard as perfectly credible, that “fiscal manipulation” in response to changes in the tax code could be responsible for short-term errors in the IRS data but not for problems with the long-term trend.

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