"Because evidence suggests that higher dividend- and capital-gains taxes are capitalized in equity values, increasing those tax rates will reduce stock prices and the wealth of millions of Americans," he said. A rise would discourage investment, "leading to lower productivity, wages and output."
Saez and Picketty also have faced criticism for their research on income inequality. Using tax returns, the two academic economists concluded that the top 1 percent of U.S. earners have more than doubled their share of income during the last half century, to about 20 percent in 2010 from less than 10 percent in the 1970s.
Fluctuations In Earnings
The research says more about fluctuations in earnings reported for tax purposes in response to changes in the tax code than it does about inequality, Cato's Reynolds said.
Another critic, Scott Winship, said he has become less skeptical of Saez and Picketty's work as other studies show income differences widening -- albeit perhaps not to the extent the academics do.
"The general trend is still toward increasing inequality," said Winship, a fellow at the Brookings Institution in Washington.
The Congressional Budget Office said in an October report that the share of income received by the top 1 percent grew from about 8 percent in 1979 to over 17 percent in 2007.
In its calculations, the Washington-based CBO takes account of government transfer payments, primarily from Social Security, and company-paid health-insurance benefits, neither of which Saez and Picketty consider.
Growing Inequality
Even after those adjustments, the rapid growth of income for the top 1 percent remains "a major factor" contributing to growing inequality, the CBO report said.
That's reflected in the Occupy Wall Street protest movement's motto, "We are the 99 percent," and its calls for a more even distribution of wealth. Demonstrators plan marches worldwide today to call attention to what they say are abuses of power and wealth.