Lies, damned lies, and the right-wing use of income statistics
from David Ruccio
The right-wing wants desperately to show—against all the evidence—that the rich are being taxed to death and that income inequality has dramatically decreased.
WTF?!
So, up steps William McBride to do their bidding. He uses Congressional Budget Office data to attempt to show (a) the federal tax burden has continued to shift toward individuals at the top of the income distribution, who now carry the lion’s share of the tax burden, and (b) income inequality has lessened and is now no better than it was in the mid-1990s.
The first problem, and a not-insignificant one, is that the data McBride is using stop in 2009. And, it’s true, inequality went down during the Great Recession (because of declines in capital gains for those at the very top), but now it’s starting to return to its former obscene levels (as corporate profits and capital gains have rebounded).
Second, McBride fails to mention income shares in his discussion of taxes. So, yes, while the federal tax burden of the highest quintile (20 percent of households) was 67.9 percent in 2009 (up from 55.3 percent in 1979), their share of before-tax income was 50.8 percent (up from 44.9 percent in 1979).
The third problem is, McBride focuses on federal income taxes but forgets about all other federal taxes, such as social insurance taxes, corporate income taxes, and excise taxes. So, the figure he cites—the top quintile pays 94.1 percent of all federal income taxes—falls to 67.9 percent when all federal taxes are included.
As for his claim of record progressivity of the federal tax code, he really is cherry-picking. The tax progressivity of all federal taxes based on the equalization of the distribution of income (calculated as the difference between the Gini indexes for income before and after federal taxes) was in 2009 exactly what it was in 1979.
So, as a real measure of what has happened to inequality in the United States, I decided to consult the latest data (from the World Top Incomes Database) and I came up with the chart above. Notice anything about the trend? While the average income of the bottom 90 percent of the population remained relatively constant from 1979 to 2010 (actually falling from $32.9 thousand to $29.4 thousand, in 2010 dollars) , the average income of the top 1 percent soared (from $340.6 thousand to $857.5 thousand).
So, beyond the lies, damned lies, and the right-wing use of statistics to attempt to show inequality has decreased in the United States, there’s one incontrovertible fact: the rich are getting rich and everyone else is falling further and further behind.
NICE JOB…!!!! We need a systemic overhaul based upon this kind of critical assessment at every spin and turn.
Reblogged this on Reality-based World View.
Would you be willing to submit this to Washington Post or NY Times as an Op-Ed? I would love to see it in either of those places.
Thanks for the compliment, Peter. I hadn’t thought of it but, now that you mention it, I certainly will consider it.
Why are the rich getting richer, etc. That is the question you must confront. Could it be that the rich control the distribution of wealth in America and distribute it mostly to themselves, and that is not the case in other capitalist countries. Explanations and remedies please.
“WHY are the rich getting richer”, Robert? Thanks for the question! An unexpected answer popped into my head a few days ago, and this seems a better context than our rich discussion of David Ruccio’s ‘Mainstream Versus Heterodox Economics’ (Older archive, [15th] July 2012). It’s not about faulty theory leading to badly structured practice, nor just about Jungian personality biasses distorting theory. Looking back through history wondering “Why has it always been so”? I found myself back with “the birds and the bees”, Freudian sexual psychology, and Chesterton’s focus on the neglected differences between men and women in ‘Whats Wrong with the World’.
So why do so many of the rich want to get richer? Here then is my ‘hypothesis’! The fellows normally want to attract a woman and secure her love by providing for her, but a minority want to show off by attracting beautiful women and securing them by providing for them extravagantly. Most of the women are grateful enough for that, but a minority are “gold-diggers” and not a few are anxiously jealous and need ostentatious reassurance of their security. Those with the ability to pursue riches are more likely to acquire them, but providing for one’s ladies [including daughters] “in the style to which they have become accustomed” implies that those who have acquired or inherited riches will want to arrange or maintain an economic system which keeps things that way
Veblen in The Theory of the Leisure Class called it “conspicious consumption.” President Hollande seems to want to reverse it by making people who pay 75% of excess income as tax into patriots. It doesn’t seem to be universal. Indians in California made it a virtue to give gifts (Potlasch) And Purtains made abstinence a duty. If we assume that the rich will flaunt their wealth either by ammasing it or through conspicuous consumption, then a way has to be found to divert it to the more needy.
Yes, of course! Never having come across Veblen in UK bookshops first hand, I can’t dust him off and remind myself of what he wrote, but looking at what’s available in Amazon (US), its surely time “we” did.
One can hardly find a commendation of Veblen more pertinant than this: http://www.amazon.co.uk/review/RT4NMT6O93ZLO/ref=ep_wk_cr_helpful#RT4NMT6O93ZLO.
And the same reviewer elsewhere: “In an age where even ‘leftists’ consider capitalism as an economically efficient, indeed rational, system, and where apologists for plutocracy shamelessly lavish praise on entrepreneurs, markets and other odious idols, it is more imperative than ever to dispel the delusion. For only once this is done will meaningful social change [your 'diverting wealth to the more needy'] be possible”.
Or this in the original PAE context:
http://www.amazon.co.uk/review/RUSFMGZ4XK702/ref=ep_wk_cr_helpful#RUSFMGZ4XK702
Veblen’s language was erudite and done tongue-in-cheek but frequently his phraesology is nothing but brillant. I read him in the 1950s when he was present on all undergraduate reading lists in history. Since he died in 1929 and was a great critic of business “civilization” he was popular in the great depression. But when the manager became the hero in America, in Alfred D. Chandler Jrs’ works beginning in the 1960s and neoclassical economics .’wrested control in business schools and in economics, he was pushed aside. It is certainly time to read him again.
So was J K Galbraith’s, most of which I have read. Would you like to comment on what sound to me like similarities?
Robert, Thanks for the opp to shed some light on the mammoth [sic] elephant in the room: pandemic narcissistic solipsism aggravated by systemic corruption. Remember, the Chinese word (dual-pictogram) for “corruption” means rotting meat. For a full explanation see Max-Neef’s keynote speech at the Zermatt Summit 2012 and Eisenstein’s videos (both @ Youtube) and “Awareness & Value: The theory of fundamental economics and natural values” (a subset of Holonomics: The formal-structural theory of energy and natural logic; forthcoming). The remedy is laid out and explained at The Greenbook blogsite > mm-greenbook.blogspot.com < but we may not have enough water or time left to implement it (in the USA, among other waste-based nations). For an exhausting overview of the problem in nauseating detail, see the videos "Moving Forward" & "Money – The Movie" (via Zeitgeist & Youtube) and "The Secret of Oz" after you wrap your mind around the real secret revealed in Awareness & Values — the notion of "value" is notional, arbitrary, and fundamentally relative, thus indefinite and fixed only in the moment of decision and/or agreement. In other words, for folks who fail to realize that, "money" will always be perverted for the Shell Game Model of Plutonomics. So, who is really either rich or poor? Who is more delusional, the bamboozled suckers or the ecocidal exploiters? Goodbye, Bon Voyage & Best of Fortune to All…