Krugman brings in the load: How much of their income do very high earners pay in federal taxes? The question has been floating around all week. It has been driven along by Obama’s proposals, the AP’s incompetence, the ludicrous claims made on Fox.
For a bit of one-stop shopping, we recommend this blog post by Paul Krugman. At first glance, the table Krugman includes is a bit confusing. But he explains how to use it, and it’s quite intriguing.
Example: Among people who earn more than $1 million, twenty-five percent pay less than 12.6 percent in federal taxes. That’s federal income tax and payroll taxes combined.
After citing this example, Krugman offers the following summation. We call your attention to the highlighted statement:
KRUGMAN (9/22/11): This suggests that there are a lot of very-high-income guys paying a lower tax rate than their secretaries.The system is somewhat progressive, “but not as much as you might think.” Here's our question:
And that doesn’t even take into account state and local taxes, which are quite regressive.
Taken as a whole, the US tax system is probably somewhat progressive—but not as much as you might think, especially at the upper end, and very erratically. There are a lot of rich people basically free-riding on the system.
Why are we required to “think” X, Y and Z about federal taxes? Why can’t we be allowed to know about such basic matters? Why isn’t there a digest of user-friendly information where voters can learn basic facts?
The conservative world has spent decades churning disinformation about tax issues—disinformation and misleading statements. When does the liberal world plan to create a digest of actual information—information a non-specialist can access and understand?
When does the liberal world plan to do something? Rubes! Must a sane person ask?
Has it occurred to you that there are no "basic" facts? That the system is inherently complex? That obtaining a working knowledge of the actual facts might involve more than being spoon-fed sound-bites and info-graphics?
ReplyDeleteOr that even "basic" facts are no silver bullet?
Even the "basic" fact that among people who earn more than $1 million, twenty-five percent pay less than 12.6 percent in federal taxes, is barely informative and an opening to all kinds of counter-arguments about dollar amounts and percentages of total tax revenue.
Krugman seems to be referring to the CTJ report - "America’s Tax System Is Not as Progressive as You Think", which came out in April
ReplyDeletehttp://www.ctj.org/pdf/taxday2011.pdf
Glad to see your stuff now in byte sized chunks Bob. All the better to tweet out.
ReplyDeleteBob,
ReplyDeleteI've been following an example of tribal thinking this week that seems potentially of interest to you. Perhaps do a search of the usual journals and see how many accounts of the Troy Davis execution say there was "no physical evidence" linking Davis to the murder. This, despite the fact prosecutors DID present physical evidence: shell casings that matched shells used in a previous conviction.
Of course, I don't know the veracity of said physical evidence. And many people who believe there was "no physical evidence" might merely have been misled-- they're not necessarily trying to be deceptive. But to a reasonable observer, the claim that there was "no physical evidence" might tend to seem... well, not part of the reality-based community, that's for sure.
Just wanted to pass along the tip. It seems like another case where an argument I support ("Too Much Doubt") has been undercut by a dittohead-like need to embellish the truth.
Best,
Marc
You could always add economistsview.typepad.com to your blogroll.
ReplyDeleteBut as far as can tell, even this seemingly illuminating chart is misleading. It makes some of the highest earners seem like they aren't paying their "fair share," and therefore makes the tax code seem unjust. But setting aside illegal tax evaders, these people must simply be benefitting from deductions and credits (since the top rate on earned income is 35% and on the rate on capital gains is 15%). Well, deductions and credits are often put in place by government to encourage certain behaviors that BENEFIT society. For example, many wealthy people make large charitable donations, which are tax deductible. Or maybe a lot of the higest earners' income is from foreign sources and therefore already taxed overseas; such income is prevented from full double taxation due to the foreign income tax credit, which many people would think is perfectly just. So until it's determined exactly WHY the tax rate of some high earners is so low, you can't really say such a circumstance is wrong or unjust or bad for the country or whatever. (Although, I think nearly everyone would agree the capital gains tax rate needs to be increased. But even there, you would have to look at pros and cons, and not just ASSUME things.)
ReplyDeleteWe need the facts laid out clearly, in short, simple, super-understandable form.
ReplyDeleteThen we need just a very few short little narratives, almost soundbites, that hammer the most important facts and arguments into voters' heads. The person who hears these little stories should come away thinking, "Well, of course, that makes perfect sense." Construct the narratives so that almost every listener will be able to understand, remember, and repeat the story to others. Make it so the listener actually wants to repeat the story.
When these stories contradict the world view which a Republican listener has been taught to hold onto, the story must be polite, and the story must offer the Republican listener a face-saving way to change her or his mind.
Wish I could do this vital job, but I don't think I have the chops.