A note on Piketty and diminishing returns to capital (2014) [pdf]
mit.edu
mit.edu
Asset prices inversely correlate the with interest rates. Rich folks own assets. Those have increased faster than the growth rate of the economy because interest rates have been trending down for 30+ years.
That being said, we've reached the end of that trade--mostly because interest rates don't have anywhere else to go but up. Overnight rates in most of G-7 are close to 0%.
So if interest rates reverse their course (even if only slightly), the asset owning rich will suffer, and earners will gain.
Plenty of middle class people own their own homes, so it sounds like your proposal would also hit them significantly. On the other hand, many rich people own companies (or parts of), which aren't exactly assets (not like a private jet or a mansion is).
I think that Piketty's book is valuable as a warning of the diminishing power of labor vs. people with large amounts of capital. You can nitpick about some of the data and models, but the overall message is right on.
The overall message of Piketty's book is that capital's share of income will rise due to the difference between capital returns and growth. It may be true that capital accumulation is and will continue to be driving inequality, and is certainly valuable to know if so, but you can't accept the assumptions on which that argument is based blindly.
This paper is not nitpicking a small point, but arguing against the main message of the book.
I do think that many mainstream economists don't like what Piketty says because of his criticisms of economists who have economic incentives that color their views and my first reaction was that this paper reflected this status quo loving point of view.