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Matthew Hoy currently works as a metro page designer at the San Diego Union-Tribune.

The opinions presented here do not represent those of the Union-Tribune and are solely those of the author.

If you have any opinions or comments, please e-mail the author at: hoystory -at- cox -dot- net.

Dec. 7, 2001
Christian Coalition Challenged
Hoystory interviews al Qaeda
Fisking Fritz
Politicizing Prescription Drugs

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Friday, October 18, 2002
Life imitates the Family Circus: The New York Times' Paul Krugman identifies who is to blame for all of the nastiness in Washington, D.C. -- President Bush. Like little Jeffy in Bill Keane's sappy comic, anytime something is amiss it's Bush's fault. In Jeffy's words --- "Not Me" did it.

[Y]ou may recall that George W. Bush promised, among other things, to change the tone in Washington. He made good on that promise: the tone has certainly changed.

As far as I know, in the past it wasn't considered appropriate for the occupant of the White House to declare that members of the opposition party weren't interested in the nation's security. And it certainly wasn't usual to compare anyone who wants to tax the rich ? or even anyone who estimates the share of last year's tax cut that went to the wealthy ? to Adolf Hitler.

O.K., maybe we should discount remarks by Senator Phil Gramm. When Mr. Gramm declared that a proposal to impose a one-time capital gains levy on people who renounce U.S. citizenship in order to avoid paying taxes was "right out of Nazi Germany," even the ranking Republican on the Senate Finance Committee, Charles Grassley, objected to the comparison.

See, Bush is responsible for what Gramm says. Not only is he responsible for what Gramm, a Republican says, he's probably responsible for what Daschle says too. After all, if the tone in Washington hasn't changed, it's all Bush's fault. In Krugman's highly-partisan world, it takes one to tango.

As far as politicizing any subject having to do with, well, politics -- I've expressed my opinion satirically before. I'll say it plainly now. Anything that is left to congressmen, senators or the president (aka politicians) to decide is inherently political. It's as silly for Democrats to call national security off-limits to politics as it would be for Republicans to call Social Security off-limits to political debate.

But Mr. Grassley must have thought better of his objection, since just a few weeks later he decided to use the Hitler analogy himself: "I am sure voters will get their fill of statistics claiming that the Bush tax cut hands out 40 percent of its benefits to the top 1 percent of taxpayers. This is not merely misleading, it is outright false. Some folks must be under the impression that as long as something is repeated often enough, it will become true. That was how Adolf Hitler got to the top."

Look, I'm with Jonah Goldberg on requiring a high standard for likening someone to Adolf Hitler: They must be advocating genocide, racial superiority and fascism. But it takes a serious stretch to blame Bush for what Gramm and Grassley say.

But Krugman's complaint isn't really about the tone in Washington -- it's (surprise!) the Bush tax cut. Apparently not enough of it goes to the poor (many of whom don't pay income taxes).

For the record, Robert McIntyre of Citizens for Tax Justice ? the original source of that 40 percent estimate ? is no Adolf Hitler. The amazing thing is that Mr. Grassley is sometimes described as a moderate. His remarks are just one more indicator that we have entered an era of extreme partisanship ? one that leaves no room for the acknowledgment of politically inconvenient facts. For the claim that Mr. Grassley describes as "outright false" is, in fact, almost certainly true; in a rational world it wouldn't even be a matter for argument.

For the record, Citizens for Tax Justice is, according to Roll Call's Morton Kondracke, a liberal group. That's something that I would normally just assume, knowing the Times and Krugman as I do, but it's always good to make sure.

You might imagine that Mr. Grassley has in hand an alternative answer to the question "How much of the tax cut will go to the top 1 percent?" ? that the administration has, at some point, produced a number showing that the wealthy aren't getting a big share of the benefits. In fact, however, administration officials have never answered that question. When pressed, they have always insisted on answering some other question.

But last year the Treasury Department did release a table showing, somewhat inadvertently, that more than 25 percent of the income tax cut will go to people making more than $200,000 per year. This number doesn't include the effects of estate tax repeal; in 1999 only 2 percent of estates paid any tax, and half of that tax was paid by only 0.16 percent of estates. The number also probably doesn't take account of the alternative minimum tax, which will snatch away most of the income tax cut for upper-middle-class families, but won't affect the rich.

Put all this together and it becomes clear that, sure enough, something like 40 percent of the tax cut ? it could be a bit less, but probably it's considerably more ? will go to 1 percent of the population. And the administration's systematic evasiveness on the question of who benefits from the tax cut amounts to a plea of nolo contendere.

Well, people making $200,000+ a year actually pay about 35 percent of the tax burden, so if you're going to have a tax cut, you'll do better by giving people who actually pay taxes a break.

Besides, I don't think anyone who cares enough to follow the issue doubts that the rich benefit more from a tax cut. It's obvious on its face.

At the time this tax cut was really being debated (is Krugman running out of more current ideas?) Bruce Bartlett made some good points about Krugman's little complaint.

First, it is important to know that a very large percentage of Americans pay no income taxes whatsoever, owing to various features of the tax code such as the standard deduction and the Earned Income Tax Credit. According to the JCT, this year 48.6 million Americans will file tax returns, meaning that they had income, but pay no income taxes. This constitutes 34 percent of the 142 million returns that will be filed. Although the bulk of these people have incomes below $20,000, almost 10 percent of all nontaxable returns reported incomes between $30,000 and $50,000.

Second, our tax system is very steeply progressive. In the aggregate, all those with incomes below $20,000 have a negative tax liability, meaning that they receive tax refunds even though they pay no income taxes. Those with incomes between $20,000 and $30,000 pay just 1.9 percent in income taxes. From there, effective tax rates rise sharply to 23.9 percent on those with incomes over $200,000.

Looking at incomes in percentage terms, the top 10 percent of tax filers pay 20 percent of their income in federal income taxes, the top 5 percent pay 22.3 percent, and the top 1 percent pay 25.7 percent.

Third, as a consequence of these high tax rates, the share of total income taxes paid by those with upper incomes is overwhelming. The top 10 percent of tax filers pay 68.2 percent of all federal income taxes, the top 5 percent pay more than half, and the top 1 percent pay 35.9 percent of the total income-tax burden. For reference, it should be noted that the top 1 percent of tax filers reported only 17.2 percent of total income.

These figures explain why just about any tax cut benefits the rich more than the poor. The poor don't pay income taxes, while the rich pay a lot. It is impossible to give any kind of income tax cut to those not currently paying income taxes, except by having some sort of spending program for such people that is simply called a tax cut. That is what the EITC is. And it is equally impossible to have a tax-rate reduction for all taxpayers without a considerable share of the benefits going to the rich, because they pay such a large share of all income taxes.

But the tax cut complaint is really about income redistribution. That was the point Krugman was trying to obfuscate in a column just a couple of weeks ago.

One of Krugman's solutions to kickstart the economy was a tax cut. Not just any tax cut -- because, as Bartlett points out, income tax cuts go to the rich -- but a payroll tax cut. Payroll taxes are the biggest tax on the working poor, but a payroll tax cut jeopardizes Social Security. Curious how Krugman thinks a tax cut works as long as it's his type of tax cut.

Which brings us back to the new tone in Washington.

When Ronald Reagan cut taxes on rich people, he didn't deny that that was what he was doing. You could agree or disagree with the supply-side economic theory he used to justify his actions, but he didn't pretend that he was increasing the progressivity of the tax system.

The strategy used to sell the Bush tax cut was simply to deny the facts ? and to lash out at anyone who tried to point them out. And it's a strategy that, having worked there, is now being applied across the board.

Michael Kinsley recently wrote that "The Bush campaign for war against Iraq has been insulting to American citizens, not just because it has been dishonest, but because it has been unserious. A lie is insulting; an obvious lie is doubly insulting." All I can say is, now he notices? It's been like that all along on economic policy.

You see, some folks must be under the impression that as long as something is repeated often enough, it will become true. That was how George W. Bush got to the top.

When Democrats spin it's good politics. When Bush spins he's a liar. It all depends on your point of view.

Of course, Krugman spends all of his time assailing Bush, calling him a thief, an opportunist and a liar.

And some people actually think Krugman is an excellent columnist. If something is repeated often enough, it will become true. That's how Paul Krugman got to the top.

1:54 AM

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