Comments on: charts can be deceiving

By: Lies, Damned Lies, and Statistics (4): Manipulating the Y-axis Scale in Graphs « P.A.P. Blog – Politics, Art and Philosophy

Sun, 02 Aug 2009 09:59:07 +0000

[...] Kain of The League of Ordinary Gentlemen believes he has spotted a real-life example of this kind of manipulation. While it’s not [...]

By: Why Shouldn’t We Have More Tax Brackets? « The United States of Jamerica

Mon, 20 Jul 2009 20:33:24 +0000

[...] wouldn’t be a huge burden on the wealthy; in most cases, it would just bring them back to Clinton-era levels of taxation. Of course, it might not be enough to deal with the structural deficits built into Obama’s [...]

By: Mark

Mark — Sat, 18 Jul 2009 22:38:42 +0000

You’re right. There are some loopholes for self-employed/small business owners, but Medicare tax is flat. Total FICA is regressive because of the Social Security tax. But why not simply make Social Security flat? Rich people like to complain about entitlements, but they pay no more into them than the rest of us do (and a smaller proportion of their total income at that.) A flat tax would surely be more just in this case!

By: Sully Fick

Sully Fick — Fri, 17 Jul 2009 21:36:15 +0000

Using the HDI (http://hdrstats.undp.org/en/indicators/10.html), the US and Canada have the following (US first line, Canada second line):

1975 1980 1985 1990 1995 2000 2005
0.870 0.890 0.904 0.919 0.931 0.942 0.951
0.873 0.888 0.911 0.931 0.936 0.946 0.961

These look very close, and Canada hasn’t had nearly the same increase in disparity over the same time period. So, overall, I’d say that we’re wealthier, but the disparity has hurt the overall standard of living of those who have gotten the worst of the disparity.

By: E.D. Kain

E.D. Kain — Fri, 17 Jul 2009 21:07:13 +0000

Disparity has indeed grown between the very wealthy and the rest of us. But a better question would look at the overall standards of living – have they gone up even as the wealthy have gotten more wealthy? Are we, on average, wealthier than we were in the 1970’s?

By: Sully Fick

Sully Fick — Fri, 17 Jul 2009 19:28:13 +0000

Ok, let’s talk about revenue – and trying to increase tax revenues. Let’s use net worth for our calculations, since it’s more honest.

Top 1% in US have 34.3% of the wealth.
Next top 4% have 24.6% of the wealth.
Next top 5% have 12.3% of the wealth.
Next top 10% have 13.4% of the wealth.
Next top 20% have 11.3% of the wealth.
Next top 20% have 3.8% of the wealth.
Bottom 40% have 0.2% of the wealth.

If we increase taxes by 5% on everyone:
Top 1% increases total revenues by 1.715%
Next 4% increases total revenues by 1.23%
Next 5% increases total revenues by 0.615%
Next 10% increases total revenues by 0.67%
Next 20% increases total revenues by 0.565%
Next 20% increases total revenues by 0.19%
Next 40% increases total revenues by 0.01%

For a total increase in revenues of 4.995% (rounding errors).

If you only increased taxes by 5% on the bottom 80%, then you would only increase revenues by 0.765% (or 15.3% of the total 4.995%).

If you only increased taxes by 5% on the top 20%, then you would increase revenues by 4.23% (or 84.7% of the total 4.995%).

If you only increased taxes by 5% on the top 5%, then you would increase revenues by 2.945% (or 58.9% of the total 4.995%).

I think we could safely call the top 20% “rich”. We can definitely call the top 5% “rich”.

So, while you are correct that “there’s only so much revenue that can be raised by taxing [the rich] while doling out services to the rest of the population”, your lie comes in your omission of context about how much money the “rich” really have that could be taxed.

You’re right that we can only get “so much” from the rich, we can get pretty close to 90% from the rich. To me, saying 90% is almost identical to saying “all of it”.

And, this does not even discuss how the disparity (or inequality, if you will) in net worth has gotten worse for 80-90% of the population since Reagan was first elected.

(source: Edward N. Wolff, New York University (2007))

Yes, your thinking is ordinary, not extraordinary, gentlemen.

By: Jim Higgins

Jim Higgins — Fri, 17 Jul 2009 15:29:44 +0000

.. so overall this Effective Rate graph is a tease. Better to work from the marginal rates and then make “corrections” for the effect of items you might take issue with (e.g. mortgage deductions, charitable contributions)

By: Jim Higgins

Jim Higgins — Fri, 17 Jul 2009 15:11:09 +0000

Apart from the deficiency in measuring using Effective Tax Rate , I am hearing that the rich have made use of the lower rate on capital gains. But even if that is the reason the rate descends, these gains represent the difference in perceived after-corporate-tax value of a public company to its owner, a value fed only by public assessments of that company’s (again, after-corporate-tax) future income.

The corporation owners thus still pay the corporate tax (and then their own). It would be correct (impossible but correct) to add and attribute the implied corporate taxes to individuals, by bracket, and that would even out the historical graph (boy, would it, corporate taxes are 35%).

It is somewhat ( a little bit) analogous to the handling of tax-free investments (e.g. muni bonds). Yeah, there is “no tax” but at least you have to figure a “tax” in that the return given by the govt is lower than parellel taxable investments

By: E.D. Kain

E.D. Kain — Fri, 17 Jul 2009 15:04:01 +0000

I was under the impression that the Medicare tax was flat already. This CNN Money bit gives that impression as well. I may be wrong. Once again, though, my larger point is that we need to think in terms of practical revenue - not merely tax rates. A broader revenue base will become necessary as entitlements grow.

By: The Battle Of The Charts, Top Marginal Tax Rate Edition « Around The Sphere

The Battle Of The Charts, Top Marginal Tax Rate Edition « Around The Sphere — Fri, 17 Jul 2009 14:58:26 +0000

[...] to the Conor Clarke chart, E.D. Kain comes up with a new [...]