Comments on: The WSJ’s dubious fiscal reporting A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: DanHess Thu, 05 May 2011 18:45:51 +0000 MattJ — good points.

I tend to still think taxes have gotten more progressive, sort of, although you have to look deeper than just the top earners.

For one thing, about 50% of filers (roughly the bottom half in income) owe no income tax. That is without precedent in modern history. f-of-US-households-apf-1105567323.html?x =0&.v=1

Another thing is that a look only at the topmost earners doesn’t present a full picture. In fact the topmost earners have probably gotten a better deal from recent tax changes than top tier professionals just below them. For example a salaried surgeon or pro athlete probably has a higher tax rate than their boss the hospital or team owners whose income is in the form of share appreciation and dividends.

By looking at the top 1%, we are mostly capturing business owners. The got a great deal from the Bush tax cuts. Top salaried people, less benefit. The bottom half? Clearly things look pretty progressive to them.

By: MattJ Thu, 05 May 2011 13:21:34 +0000 DanHess, it is almost certainly not true that ‘taxes in the US have definitely become more progressive over the last 20 years’, and the article does not argue that. It makes the point that FEDERAL taxes have become more progressive over that times span. Because the article does not focus on state and local taxes, it makes no claim on overall US taxation progressivity.

For those interested, Brian Roach wrote a paper 8 years ago analyzing overall US progressivity ( -tax_incidence.pdf)

His conclusion at the time (2003):

“Recent changes to the federal income tax should not be analyzed in isolation but rather as
part of the entire U.S. tax system. The progressiveness or regressiveness of any
particular tax is not nearly as important as the incidence of the entire tax system. Using
the tax progressivity index, this paper shows that the U.S. tax system is composed of both
progressive and regressive taxes. Overall, right now the U.S. tax system is slightly
progressive. The progressiveness of the U.S. tax system in 2000 was at a similar level to
that during the 1970s, although progressiveness has not remained constant and has been
impacted by legislation. The recent Bush tax cuts have made the federal income tax, and
thus the entire U.S. tax system, less progressive, particularly if the sunset provisions in
the tax cuts are extended or made permanent. There is a possibility that even this small
degree of progressiveness could be eliminated from the U.S. tax system in the future.
Making state or federal social insurance taxes more regressive, or making the federal
income tax less progressive, could be sufficient to make the entire U.S. tax system

I wold love to see a similarly detailed analysis of overall US taxation with more recent data, but it seems to me to be hard to find.

Having said that, to me Felix has never seemed more like a Democratic shill than in this post. This article presents a series of facts; facts that will matter when it comes time to talk about increasing federal revenue. Felix writes “the big picture, when it comes to taxes, is that we’re not paying enough of them.” The data presented in this article argues that when it comes time to change tax laws so as to increase federal revenue, we will need to do so in ways that increases revenue from all segments of the income distribution, not just the top 10% or 20%.

By: DanHess Wed, 04 May 2011 23:27:50 +0000 Felix, we know how much you hate the WSJ for being a paper that dares not be left wing.

The basic point of the article is simple and factually true. Taxes in the US have definitely become more progressive over the last 20 years. I would bet any amount of money that most Americans think the reverse is true.

In fact, I would argue that state income taxes (which McKinnon doesn’t include) are usually more progressive still, because they don’t have the payroll tax components.

But your point that the tax pie has shrunk is a good one. Taxes and spending are way out of line. Your solution of course is to hike taxes of course because the spending part is fine, fine!

By: y2kurtus Wed, 04 May 2011 11:11:35 +0000 Felix allow me to “cast sly doubt” on the assertion that the middle class pays it’s fair share due to payroll taxes.

Under the current social security system (which won’t change much) an average worker will collect slighltly more in benifits than they paid in taxes.

Under the current medicare system (which will morph into a bare bones bandaids and asperin plan) an average worker will collect MANY TIMES what they paid in.

Do you see the difference there between the income tax and payroll taxes? One transfers wealth earned by workers to the goverment to pay for services. The other transfers wealth earned by workers to other workers and due to demographic shifts it’s paying out more than it’s taking in.

For those who want to hold on to the quaint idea that the lower and middle class really is pulling their own weight via the payroll tax… I’ve got a deal for you… double my income tax withholdings today and then next April when I file my return give me a credit which allows me a refund of 105% of what I paid in.

Did you tax me? How much? Because that is exaclty how the payroll tax works… it’s just just a longer time shift.

By: trexbean Wed, 04 May 2011 06:25:58 +0000 Excellent fact check on the WSJ’s reporting in the era of Murdoch. Thank you, Mr. Salmon.

By: FuManchu Wed, 04 May 2011 06:19:42 +0000 Felix, you are way behind the curve on this one.

This is the same information linked to by Mankiw which set off a shitstorm of people trying to refute it. E.g., Yglesias sounding like a bonehead here: 3/unequal-incomes-and-the-unequal-tax-bu rden/ .

“Taxes” included payroll taxes, but was limited to federal taxes. All the chart really shows is that the rich in the US pay much more of the overall taxes, and the poor pay less, compared to any other country looked at. That’s it. Although it depends on your exact definition of “progressive taxation”, the US already has the most progressive taxation in many ways.

“What push?,” Felix? Really? Did you miss where Pres. Obama said that rich people “like me [Obama]” will have to pay more? When you focus to effort to raise taxes (or cut tax breaks) while only mentioning the extremely rich,
that’s a push.

Frankly, if “we’re not paying enough of them [taxes],” it would be unprecedented to get more from the extremely rich. The countries which are able to get more than 30% of GDP in tax revenues heavily tax the middle class and poor. Their rich pay much less of the tax base than in the US. Their poor pay a much much higher percentage of the tax base than their counterparts in the US.

By: GRRR Wed, 04 May 2011 01:57:18 +0000 I am suspicious why the WSJ would use CBO, and not go straight to the original sources?

By: djiddish98 Tue, 03 May 2011 23:07:43 +0000 All these articles use the term “taxes” pretty liberally. They typically refer only to federal income taxes, and ignore state (sales),local (property).

You could also go all Grover Norquist on it and count local / state fees & rates as well, which are all regressive.