ABSENCE OF THE PROFESSORS: Next time, let’s name their names!

FRIDAY, SEPTEMBER 23, 2011

EPILOGUE—PROFESSOR SPEAKS: In a nation crawling with professors, you'd think we’d read such work all the time.

Alas! As usual, the burden falls on Paul Krugman—though today’s column is one of his best.

Let’s get clear about one point Krugman makes. After that, let’s look ahead to the next step.

Krugman writes about the declining tax burden borne by society’s highest earners. Even as their incomes have massively grown, vastly outstripping income growth for the rubes, their tax rates have been dropping—a lot.

Yesterday, we linked you to the blog post which provides the background for this column. Today, Krugman summarizes his findings:
KRUGMAN (9/23/11): And one consequence of the shift of taxation away from wealth and toward work is the creation of many situations in which—just as Warren Buffett and Mr. Obama say—people with multimillion-dollar incomes, who typically derive much of that income from capital gains and other sources that face low taxes, end up paying a lower overall tax rate than middle-class workers. And we’re not talking about a few exceptional cases.

According to new estimates by the nonpartisan Tax Policy Center, one-fourth of those with incomes of more than $1 million a year pay income and payroll tax of 12.6 percent of their income or less, putting their tax burden below that of many in the middle class.
Wow! A lot of people with very high incomes pay federal taxes at a very low rate. They pay 12.6 percent of their income in incomes taxes and payroll taxes combined! Or less.

Very few voters—left, right or center—have ever been told such facts. The beautiful minds of the career liberal world rarely stoop to such labors. But as he continues, Krugman describes the types of claims legions of voters do encounter, on a daily basis:
KRUGMAN (continuing directly): Now, I know how the right will respond to these facts: with misleading statistics and dubious moral claims.

On one side, we have the claim that the rising share of taxes paid by the rich shows that their burden is rising, not falling. To point out the obvious, the rich are paying more taxes because they’re much richer than they used to be. When middle-class incomes barely grow while the incomes of the wealthiest rise by a factor of six, how could the tax share of the rich not go up, even if their tax rate is falling?
Krugman is right. For decades, voters have heard about “the rising share of taxes paid by the rich.” Krugman is right about something else—this is a “misleading statistic.” Krugman only has 800 words, so he doesn’t provide examples. But let’s make sure we’re clear about the sort of thing he means.

What sorts of “misleading statistics” is Krugman talking about? To cite one near-example, he is discussing the work of David Brooks in Tuesday’s very strange column. American voters have been hearing crap like this for decades. This isn’t precisely the type of claim Krugman describes, but it’s in the same ball park:
BROOKS (9/20/11): [Obama] claimed we can afford future Medicare costs if we raise taxes on the rich. He repeated the old half-truth about millionaires not paying as much in taxes as their secretaries. (In reality, the top 10 percent of earners pay nearly 70 percent of all income taxes, according to the I.R.S. …)
That highlighted claim is technically accurate—but it’s grossly misleading. As Timothy Noah quickly explained, that same ten percent of earners receives 50 percent of all income—and other taxes tend to erode the slight progressivity of the federal income tax. David Brooks—let’s say the name!—was pimping a "misleading statistic." But how strange! Brit Hume did the same damn thing on Special Report that night:
HUME (9/20/11): Say this for Warren Buffett—he knows how to make a big noise with a small point. A month ago, he argued in the New York Times that our tax code coddled the super-rich. He was talking, of course, about a small number of Americans with extremely high net worth whose income is mostly dividends and capital gains from their accumulated wealth.

Such income is taxed at about half the rate that is paid on the salaries that most Americans live on. True enough as far as it goes. But it doesn't go very far. For one thing, it ignores the fact that most dividends and capital gains are the result of corporate profits, on which regular income taxes have already been paid. So such money is actually taxed twice.

Indeed, the latest data shows that the richest one percent of U.S. taxpayers paid 38 percent of the income tax burden, and the top 10 percent paid nearly 70 percent. None of this has stopped the president, with considerable sleight-of-hand, from citing Buffett in arguing for higher tax rates that would hit countless people who are neither millionaires or billionaires.
Ignore the foolishness about being “taxed twice.” (The tools of the disinformation are many.) Hume pimped the same misleading (and irrelevant) statistic about that top ten percent!

Voters have heard these “misleading statistics” on a daily basis for decades. There are many such statistics and claims; they are broadcast on talk radio, on Fox TV, in op-ed columns by the bow-tied brigades who are making sweet careers by making mincemeat of us rubes. At this site, we have yelled and screamed for at least a decade, asking when the liberal world planned to tell the average voter that he is being fooled by such steady disinformation.

Alas! Asking the career liberal world to act is like asking baboons to jump right over the moon.

Krugman makes a very key point today. After describing remarkable changes in inequality and tax policy, he says this: “I know how the right will respond to these facts: with misleading statistics.” He discusses one type of misleading statistic—but their number is many.

The top 10 percent pay 70 percent! The highest earners pay a rising share of taxes! Very powerful media players keep pimping strings of such misleading facts. Voters hear such claims all the time. They rarely see the liberal world explaining how they’re being misled.

We liberals find voters dirty and stupid. We don’t like to speak to such people. We prefer to insult them for their very bad views. See post directly below.

The beautiful minds of our beautiful children have spent many hours in la-la land. The whole job can’t all be left to Paul Krugman. The liberal world has to get off its ass and tell the voters two key things:

You are being misled by misleading claims.

And also this:

The people who are paid to mislead you have names—names like Brooks and Hume.

Few voters have ever heard such facts. The professors have been in France. The children have been adorably sleeping. When awake, they tell each other how brilliant and moral they are.

6 comments:

  1. On the subject of professors and The Dumb....Please Howler and analysts and commenters, I am begging you: Give this a good working over. Perhaps the single dumbest piece of political writing I've seen in memory, and that's quite an achievement given the competition:

    http://www.thenation.com/article/163544/black-president-double-standard-why-white-liberals-are-abandoning-obama

    ReplyDelete
  2. The double taxation meme is both infuriating and plain wrong, yet I never hear it being refuted. It's very easy to point out that when an "average Joe" leaves a $5 tip at a restaurant with his after tax earnings, an "average Jill" the waitress still has to pay taxes on that income. Seems like it's a simple example to make, in order to illustrate a larger point about the nature of income tax.

    Then we have the "The top 10 percent pay 70 percent!" meme...of course, they probably receive about 95% of disposable income. Someone needs to explain that not every dollar of income is created equal. I know my high school history teacher was able to explain it quite clearly and I was just a 15 year old kid, fresh off the boat.

    ReplyDelete
  3. Brit Hume's foolish talk of being taxed twice should not be ignored, because corporate income taxes are INCLUDED in those numbers about the tax burden.

    That's right. If you own stock in a company, the CBO tax wonks attribute a fraction of that company's income tax to *you* when they compute those who-pays-the taxes charts.

    If you hear that the upper 1% of earners have a 30% overall tax rate, here is the breakdown from the CBO:

    19% Income tax
    2% Payroll tax
    9% Corporate income tax
    0% Excise tax

    (I am averaging up several years and rounding.)

    Excise taxes, such as the gas tax, come from a lot of sources, and aren't individually accounted. So what they do is guess how much of the gas the people in the lowest quintile use (for instance), and credit them with that fraction of the gas taxes.

    For corporate income taxes, the idea is that the tax was taken from shareholders' dividends and suchlike. So the CBO apportions the corporate income tax according to what fraction of all the dividends are reported by each slice of the population.

    Every group does something like that: the CBO, the Tax Foundation, the Tax Policy Center.

    (There are several ways to attribute corporate income tax. You can think of it as coming out of dividends, OR you can think of it as raising prices and the customers should get the credit. Economists try to split the difference using price elasticity, but that is hard to do for the entire economy.)

    But when you see those statistics about the rich pay x% of their income in taxes, keep in mind that a lot of that tax money was *attributed* to the rich, but was actually paid by corporations and could have been attributed elsewhere.

    And this isn't hidden. I know we all *think* of just the personal income tax, or maybe income plus payroll tax, when we see those charts. But look a little further in the report the chart came from, and you will see it broken down as I did above, with the explanation printed at the end.

    ReplyDelete
  4. @ Geoff Melissa Harris-Perry strikes again!

    ReplyDelete