Capital in the Twenty-First Century

To make democratic societies less unequal and avoid the threat to their foundations that extreme and unjustified inequality brings, a progressive income tax and a modernized social state is required. However, as Piketty says, “If democracy is to regain control over the globalized financial capitalism of this century, it must also invent new tools, adapted to today’s challenges” (663). The most essential of these, discussed in the final two chapters, are a progressive tax on global capital and increased international financial transparency.

Piketty proposes “a progressive annual tax on individual wealth” (665). This would include all asset types, real estate, financial assets, and business assets, not just real estate as under current tax regimes. Further, it would be progressive in so far as the wealthiest would pay a higher proportion. Piketty provisionally suggests a zero percent rate on assets below one million euros, two percent above five million, and between five and ten percent for assets over one billion euros. For this tax to work several conditions must be met. There would need to be financial transparency and sharing of information between nations. Relatedly, there would need to be a high level of international cooperation to globally enforce this tax and redistribute the revenues.