You are right. That figure absolutely is a sign of income inequality. The idea that the wealthy's tax burden should increase as a result of that is ridiculous, however.
> X increasing is an indicator that Y is increasing. Therefore we need to increase X more in order to make Y decrease.
> The idea that the wealthy's tax burden should increase as a result of [growing income inequality] is ridiculous, however.
The issue is that inequality is growing to a point that there is a potential for social, economic, and political destabilization. How do you propose the issue be addressed? Because it should be apparent that trickle-down economics isn't occuring, and I don't see how things can improve without some sort of wealth redistribution.
Wait, are you implying that the logic in that last sentence is false? That makes perfect sense given what X and Y actually signify. That's like saying "The faster the boat fills with water, the faster you try to bail out! And you think bailing out even faster will somehow be a good thing?"
Yeah, I spent a few minutes going over the last sentence in tengbretson's comment.
I would actually recharacterize Piketty's (and the author of this chart) argument as:
"X increasing is a symptom that Y is increasing. Let's implement policy A. This may temporarily increase X, but it will stop Y from increasing, which will in turn stop X from increasing in the long run."
> X increasing is an indicator that Y is increasing. Therefore we need to increase X more in order to make Y decrease.