An inheritance tax makes perfect sense, says Thomas Piketty.
Among the lighter moments of Thomas Piketty's talk at the Sydney Opera House were the economist's references to Australia's low inheritance tax, this being 'zero', as he noted several times with a wry smile, to the obvious amusement of the audience.
By and large, Piketty's talk stuck close to the thesis of his international bestseller, Capital in the Twenty-First Century. There were plenty of powerpoint slides, lots of facts, figures and charts, the delivery was at a fast pace and absent showmanship, and came through a pronounced French accent. The strangest thing about the whole event was that such a technically laden and unadorned performance on a sunny Sydney Sunday afternoon kept a full house in thrall.
Piketty's coherence is testimony to how well-honed his pitch has become since his book rocketed up the bestseller lists almost three years ago. Among the few departure's from his earlier text, he now refers to the 'capital-income' ratio at the centre his comparative methodology as a 'wealth-income' ratio, which has the advantage of side-stepping some of the theoretical debates triggered by Capital in the Twenty-First Century.
Piketty has also added work that goes beyond the Western boundaries within which his book largely falls. For those familiar with the tome, the most interesting parts of the talk presented new research on inequality in Brazil, South Africa, and especially the Middle East, which is the most economically unequal place on earth.
For an international bestselling author playing to full houses, Piketty's visit has attracted surprisingly little mainsteam media attention. His only television appearance to date has been on ABC-TV's Lateline progam, where he reprised his bemusement at the absence of an inheritance tax in Australia.
Speaking to Emma Alberiici, Piketty highlighted the oddity of imposing no tax on people who bequeath multi-million-dollar properties, while the United States and Europe apply taxes of between 40 and 45 per cent.
'Japan just raised its top inheritance tax rate from 45 to 55 per cent last year,' Piketty said. 'This was under a right-wing government by the way, and I don't hear Angela Merkel or I didn't hear Cameron in Britain say he wanted to reduce the inheritance tax of 40 per cent to the Australian level of 0 per cent, so this is very unusual.'
Piketty made it clear that he wasn't talking about small inheritances of $100,000 or $200,000, which could remain tax free, but 'it made perfect sense to levy tax on property transfers worth millions of dollars'.