July 09, 2006
A disproportionate share of income taxes...
PowerLine has a lot of fun with this NYT article, Surprising Jump in Tax Revenues Is Curbing Deficit, which tries to diminish any foolish tendency people might have to think that that title might be good news.
One thing that caught my eye:
...One reason for the increased volatility may be that, contrary to a popular assumption, a disproportionate share of income taxes is paid by wealthy households, and their incomes are based much more on the swings of the stock market than on wages and salaries. About one-third of all income taxes are paid by households in the top 1 percent of income earners, who make more than about $300,000 a year. Because those households also earn the overwhelming share of taxable investment income and executive bonuses, both their incomes and their tax liabilities swing sharply in bull and bear markets...[My emphasis].
In simple terms: If you cut tax rates, the rich pay more of the taxes. You might define "liberal" as someone whose immune system rejects that fact like an alien infection. I remember trying to tell this to a squashy liberal after Reagan's tax cuts, more than 20 years ago. Without success. I bet the dear girl still thinks the rich are escaping their "fair share," and are paying less and less.
And statistics like this are something one often hears from Rush Limbaugh. To which liberals have no (logical) reply. When you hear that Rush is a "hatemonger," this kind of stuff is what they are really complaining about.
Posted by John Weidner at July 9, 2006 06:52 AMHale Stewart punctured this balloon pretty effectively, concluding with this summation:
"So - once again - Larry and legions of mindless idiot followers have used classic Republican misdirection (convenient time frame, not adjusting for inflation, mismatching numbers) to tell everybody things are great and wonderful. Except for those 80% of the US population who have seen tepid job growth, no pay increases, escalating health costs... you get the idea. All these guys really care about is their individual tax cuts and making sure they stay that way for a long time."
I don't much care for his invective, but his economics are hard to argue with.
Posted by: Dave Trowbridge at July 10, 2006 08:30 PMActually, I suppose it's a bit unfair to merely post his peroration, especially since he's responding to a someone else talking about the same article Powerline and you reference.
But as regards any so-called decline in the budget deficit, the fact is that for the first nine months of 2006, the National Debt has increased $487.3 billion, near the record high of fiscal 2004. As noted here, "The annual increase in the debt is running around 4.5% to 5.0% of GDP. This is a classic "structural budget deficit" or "high employment deficit" - something most economists believe should be avoided."
And, if you follow the link in that article, you'll find an excellent explanation of why using the Unified Budget deficit, as administration apologists do, instead of the General Fund deficit (as required by law!), you'll find that the President has made no progress at all in reducing the deficit. This is what really matters, not some apparent short-term reduction in the deficit based on number juggling.
Even more important, in my opinion, is the fact that, for the majority of the American people, the "economic expansion" is a sham, with average wages actually declining when inflation is taken into account. So much for "trickle-down" economics.
Posted by: Dave Trowbridge at July 10, 2006 09:37 PMWell, I've never mentioned Kudlow's piece, the post refers to an article in the NYT. [I don't mind, feel free to take a whack at Mr Kudlow here.] But the economists I trust agree that Kudlow is wrong to use nominal data, and that the actual increase since 6-2003 is 11.5%. Which is respectable economic growth. Also, that slow wage growth is a myth that comes from comparing median wages at two different points in time and not recognizing that different people are in the two samples. If one used longitudinal data, where the same people are tracked through time, the picture would be different.
And where do you get "tepid job growth for 80%?" Sound like a Pelosi talking-point to me. Unemployment stats continue to decline, and we are starting to hear stories of employers having to compete for workers.
But more importantly to me, this is a typical Dave T comment. "Oooh, you made a mistake! Gotcha gotcha gotcha!". That's OK now and then, but you seem to think it is, by itself, a respect-worthy form of argument. It's not.
Every economy that's ever existed, and every economic argument has some flaws one can point to. So what.
If you want to argue economics, you need to state YOUR economic beliefs. Your system. What are YOUR benchmarks? Your goals? And why are they the ones we should pursue? What are the methods you favor, and why would they work better?
I think you are just being an opportunist. There's a Republican in the White House, plus budget deficits, so you are arguing as if you believe deficits are an evil. (Or, intellectually worse, as if you believe deficits are already generally agreed to be an evil.) Not everyone agrees. I don't agree. The difference is that I've explained WHY I don't agree, several times in this blog. In my own words, in language anyone can understand and argue with.
You've never done anything of the sort. If you have any economic system you believe in, it's never shown itself. I don't think you have one. You appear to be running on the big-government-liberal default settings from when your brain gelled back in the early 70's. And you can't defend them as a system, because they are indefensible. Because the entire experience of the developed world since then has been that these ideas have failed.
In fact your comments have the same flavor as the NYT piece I referenced. The numbers are undeniably good, so they have to grasp for any problem to offset them. The article says things are actually bad, not good, because there is a looming crisis in Social Security! (Which is hilarious since when Bush wanted to enact reforms, they argued that SS's problems were minimal. And they will argue so again the instant he re-introduces those reforms. As will you, probably.)
Posted by: John Weidner at July 11, 2006 09:04 AM
