Welcome to Cato Daily Podcast for Wednesday January 3rd.

Thomas Pickety of a Gal Norma Superior in Paris and Emmanuel Siz of the University of California at Berkeley

have estimated that the top 1% of taxpayers accounted for 16.1% of reported income in 2004.

Their estimates are behind much of the clamor about the ever widening income divide in America. Today senior fellow Alan Reynolds

dissects those numbers.

Your recent op-ed in the Wall Street Journal argued that frequent complaints about the

top 1% in America taking in an overwhelming

portion of national income are actually false. What accounts for this

exaggeration? They're not counting all of income. Most obviously leaving out Social Security, leaving out not leaving out people who don't file a tax return legally or illegally.

There's some of each and leaving out the fact that not everybody tells the exact total truth

about how much money they make on a tax return.

We have a measure of income, it's called personal income, and it is 34% larger than the measure used in the denominator of these 1% ratios, which are not government numbers anyway.

They're just a private study.

Are government transfer payments such as Social Security

included in the Pickety Sia's numbers?

No, they're not.

That's the point.

See, you're counting, I mean, obviously,

most transfer payments go to people far below 1% get very little of that.

Some Social Security checks, but it's a small tiny piece of their income.

So by leaving them out, pretending Social Security is not income even though it's taxable even

though people live on it you are automatically overstating the share going to the

...