Great Moments in Economic History
By David Henderson
I’m working on a talk on economic inequality that I’m giving in Zurich next week and so I’ve been paying particular attention to what Thomas Piketty has written since his book came out. In the latest New York Review of Books, which a friend who follows it more closely tells me is also sometimes referred to as the New York Review of Our Friends’ Books, Thomas Piketty reviews Anthony B. Atkinson’s latest book, Inequality: What Can Be Done? Piketty’s article is titled “A Practical Vision of a More Equal Society.”
In a discussion of Margaret Thatcher’s cut in the marginal tax rate on “earned” income from 83% to 40% and of Reagan’s cuts in the top marginal tax rate from 70% when he entered office to 28% by the time he left office, Piketty writes:
This break with a half-century of progressive tax policy in the United Kingdom was Thatcherism’s distinctive achievement (just as the Tax Reform Act of 1986, which cut the upper tax rate in the US to 28 percent, was the distinctive achievement of Reaganism). It would never really be called into question by New Labour during the years of Tony Blair (for whom Atkinson has no special fondness), any more than Reagan’s tax cuts were by the Democrats during the Clinton or Obama years.
Although he doesn’t quite say it, Piketty seems to be getting at the idea that Democrats didn’t vociferously question the Reagan tax cuts. Hmmm. I wonder, then, how Clinton got away with raising the top rate to 39.6% after Reagan’s read-my-lips successor had raised it to 31%.