Specifically, I suggest that much of the increase in inequality is associated with the growth in rents — including land and exploitation rents (e.g., arising from monopoly power and political influence).

…

Finally, I want to link this discussion with the earlier analysis of increases in wealth inequality, which showed that the increases are closely related to increases in land prices. Piketty’s recent book noted the enormous increases in the wealth-output ratio in most capitalist countries in the last third of a century. But these increases have been partly, and in some cases largely, related to increases in the value of land. A tax on the return to land, and even more so, on the capital gains from land, would reduce inequality and, by encouraging more investment into real capital, actually enhance growth. This is, of course, an old idea, promoted most famously by Henry George (1879).