Bush: Secret Progressive
Interesting to see Glenn Reynolds and Jonah Goldberg both falling for the bogus theory that the Bush tax cuts have made the tax code more progressive. This is obviously false. Does anyone seriously believe that Bush (accidentally?) and highly counterintuitively implemented a change to America's income distribution that runs highly contrary to the long-held goals of conservative tax policy? That this shift went unnoticed -- for years -- until it all of a sudden emerged out of the either from a variety of highly-partisan outlets? That's just silly. Unfortunately, Glenn and Jonah both have a weakness for the politics of resentment and are so eager to latch unto alleged instances of liberal hypocrisy that they're willing to believe the world operates in totally bizarre ways and pass this sort of theory on without checking any of the relevant information.
Let's think about this. Our tax code features brackets. You pay x% of your income up to A dollars, y% on income between A dollars and B dollars, z% on income between B dollars and C dollars, etc. If you cut the rate on the lowest bracket, then people making less than the first threshold will derive some benefit, and people making more than the first threshold will derive somewhat more additional post-tax income. If you cut the rate on the next-lowest bracket, people making less than the first cut-off get nothing. People making more than the first, but less than the second, get some. And people making more than the second get even more. Lather, rinse, repeat for further brackets.
Given that Bush's tax cuts involved, among other reductions, reductions in the top rate it couldn't possibly avoid disbursing more cash to high-income individuals than to low income ones.
The fact that high-income people still pay a very high share of overall income taxes reflects the fact that pre-tax income inequality is growing. The pre-Bush tax code curbed that inequality somewhat. The post-Bush tax code does less to curb that inequality. This is a non-progressive tax cut.
To have a progressive tax cut, you need to do two things. First, you need to cut a tax that poor people pay -- FICA, for example. That will cut taxes on the poor. But it will also cut taxes on the rich by somewhat more. So the second step would have to be finding a tax that rich people pay but poor people don't pay, and raise it. Bush hasn't raised any taxes on rich people. He hasn't made the tax code more progressive.
And after all, why would he? Conservatives have never maintained that the tax code should be more progressive. Conservatives have never maintained that the tax code should curb income inequality. Indeed, to the best of my knowledge, conservative don't think the government should curb inequality at all. Are we supposed to believe Bush enacted a progressive, inequality-curbing tax initiative just to stick it to liberals? To show us up, teach us a lesson?
To further confuse the issue, the Joint Economic Committee study that allegedly proves "Bush's tax cuts make the tax system more progressive" doesn't even purport to show that. Rather, it (misleadingly) claims that his tax cuts made the personal income tax more progressive. Bush's tax policies have also reduced the personal income tax's share of the overall tax burden in favor of the regressive FICA. He's also sharply reduced the estate tax, which was highly progressive, and various progressive taxes on capital income.
It's a little disappointing that the Republican Party thinks that misleading people is a good use of time for the people working at the JEC and the Council of Economic Advisors when they could be spending time developing policies or trying to make the population better informed.
Comments (25)
What?! I am shocked, SHOCKED to discover these two fair-minded paragons of even-handedness repeating blatantly if-not-outright-wrong-then-probably-wildly-misrepresented numbers from the Republican PR department.
Next you'll be telling me they claim the Social Security trust fund is going bankrupt, and also claim that we are winning the war in Iraq.
Who, I ask tearfully, who can we trust anymore?
Sorry, maybe I should address the question. As you pointed out, conflating "total taxes paid" with "percentage of income paid in taxes" is something right-wing statisticans have been doing a lot of in the last few years, for exactly the misleading purposes you outline. And I can't imagine anyone buying it who wasn't already a heavy drinker of supply-side Kool-Aid.
May 11, 2006 7:44 PM | Reply | Permalink
This is much like Matt's previous "2+2=5" column. Except even the home schoolers know the clear meaning of 2, 5, + and =, but not everyone really understands "progressive taxes."
So conservatives who confuse the meaning of "progressive" really are something close to visionary, in a way that confusers of arithmetic could never be.
Visionary Republicans are sort of like doggy boot manufacturers who orchestrated a 30-year campaign to redefine "leg" to encompass "leg + tail."
They sell more boots, and the fact that legs and tails are completely different things becomes just an inconvenient, liberal-barefoot-doggy talking point
--
-- All successful revolutions are the kicking in of a rotten door. (John Kenneth Galbraith) --
May 11, 2006 8:21 PM | Reply | Permalink
Having never purchased doggy boots, I'm uncertain what you're getting at. Do you have to buy them in packages of...five?
Please advise.
May 11, 2006 9:04 PM | Reply | Permalink
The title of the report is "Federal Income Tax System Is Highly Progressive After Recent Tax Cuts" [PDF]. That's "is highly progressive", not "became highly progressive" or "got more progressive". So the report isn't even claiming that Bush made the tax system more progressive -- just that Bush hasn't totally destroyed what progressivity there was when he came into office.
Reynolds and Goldberg are apparently illiterate.
DC Drinking Liberally
May 11, 2006 10:01 PM | Reply | Permalink
here's a tax proposal from a real war prez to put our great nation on a sound footing.
Follow the link for Murrow audio...
http://www.dailykos.com/storyonly/2006/4/11/20347/6147
What cost $25000 in 1942 would cost $313698.62 in 2005.
hahaha
Think that would put them all in a tizzy?
May 11, 2006 10:35 PM | Reply | Permalink
Perhaps a simplified model will expose what these guys are up to rhetorically. Say you have a nation of 10 people, and the poorer 8 of them pay a head tax of $10 apiece, and the wealthier 2 of them pay a head tax of $160 apiece (total revenue = 8 * 10 + 2 * 160 = $400). Lets further assume that gov't expenditures are also in the neighborhood of $400.
If you eliminate the $10 tax, and cut the rich guys' tax bill to $50 apiece, then, by warped Instapundit logic the system is "more progressive". Wealthy people now assume the whole tax burden, whereas previously they bore 80% of it.
But surely the right way to look at it is that the wealthy are $110 better off, the poorer are $10 better off, and there is now a $300 dollar deficit that threatens services that the latter group depends upon.
May 11, 2006 11:02 PM | Reply | Permalink
You're at your best in this post, when referencing actual facts. Trying to reason from first principles that Bush couldn't possibly have made the tax code more progressive because conservatives don't want it more progressive, OTOH, is silly.
Bush has done many, many things which conservatives didn't want, indeed, which they actively despise. It's one of the reasons his popularity has gotten so low: He's actively alienating his conservative base.
Why? To stick it to liberals? No, because he's not a conservative. He's not a liberal, either, of course... But no conservative would have the urge to refer to himself as a "compassionate conservative"; Doing that was roughly the equivalent of a Democrat billing themself as a "non-commie liberal", it was accepting as valid the opposition's libel about conservatism.
May 12, 2006 3:43 AM | Reply | Permalink
Fair enough for most of what you say, Mr. Bellmore, except
"...accepting as valid the opposition's libel about conservatism"
proposes a false equivalence.
There has never been a Democratic platform, Democratic leader, or major Democratic theorist who advocated communism. The party and the movement have been staunchly anti-communist since...well, since there was any communism to oppose.
But there have been serious conservative theorists--plenty of them--who maintained that the government should not be in the business of compassion, should not set out to ameliorate the conditions of people's lives, and indeed should have no role whatsoever other than as a military guardian of defense and an economic guardian of the market. And there are plenty that still maintain it.
Just think how appalled many conservatives were by Bush's post-Katrina speech--Peggy Noonan had a cow on the WSJ editorial page. Why? Because the WSJ brand of conservatism *still* thinks that conservatives have no business being "compassionate" with tax-payers' money. (Most of us just found it irritating because we knew he was lying, again, and would let NOLA rot, as he has).
Well, okay--I can understand that as a version of conservatism. It is a familiar libertarian-lite stance that sold well with Reagan's face on it (you know the joke about government being here to help, as though the very idea of a helpful government was risible to the Reaganite conservative mind).
So: "Democrats are commies." That's manifestly just an opposition libel, and a pretty silly one to anyone who understands the Cold War and how we won it.
"Conservatives do not think the government should do compassion." Opposition libel? No, just a pretty standard part of the ideology, from both Republican party leaders (pre-Bush) and conservative theorists.
May 12, 2006 4:49 AM | Reply | Permalink
Bush has done nothing comparable to completely eliminating the tax for the bottom 80% of the population, so I don't see how your example is relevant at all. He has not made taxes more progressive either on a percentage basis or in absolute terms, and the report they're citing doesn't claim he has.
They're just lying. No fake logic involved.
DC Drinking Liberally
May 12, 2006 5:37 AM | Reply | Permalink
Why don't you define what you mean by "progressive?"
Hint: it's not easy to do.
See this post by Greg Mankiw.
May 12, 2006 6:14 AM | Reply | Permalink
It's not as hard as Mankiw suggests. In fact, he probably got it wrong.
See Brad DeLong's evisceration of Mankiw at couple of days ago on his blog.
May 12, 2006 6:54 AM | Reply | Permalink
And see the evisceration of DeLong here and here.
DeLong, as per usual, never lets the facts get in the way of his insults. Typical of the unReality-Based Community - light on facts, heavy on insults. I see why Berkeley employs him.
May 12, 2006 7:37 AM | Reply | Permalink
Yeah, you can eliminate the taxes the poor pay entirely and that makes the system less progressive? That's got to be the dumbest idea I've ever heard. By definition, it is impossible for the tax system to be any more progressive than the poor paying 0% and the rich paying 100%.
May 12, 2006 7:40 AM | Reply | Permalink
"Yeah, you can eliminate the taxes the poor pay entirely and that makes the system less progressive? That's got to be the dumbest idea I've ever heard. By definition, it is impossible for the tax system to be any more progressive than the poor paying 0% and the rich paying 100%."
1)Except, of course, that "income taxes" != "taxes" and
2)There is no evidence that Bush has made the tax code more progressive in any case, even w/r to income taxes, and
3)All if this is completley irrelevant to Reynolds being a liar and hack. He didn't make a principled argument that Bush was right to make the tax code less progressive. He just lied about the effect of his policies.
May 12, 2006 7:57 AM | Reply | Permalink
Nice job, Al. Linking to wingnuts as if that meant something.
And if Berkeley is so clueless, than why did they hire John ("Torture is A-Ok, and the President is King as long as he declares war first") Yoo?
Wait a minute, I guess we agree. Had to happen eventually.
May 12, 2006 8:00 AM | Reply | Permalink
This is Driftglass's take on this idiotic tax sceheme, which has no more brains behind it that the GOP's attempt to buy us off with that equally idiotic $100 rebate check to fight gas prices... which just would've come out of our own tax dollars, anyway.
May 12, 2006 8:31 AM | Reply | Permalink
I have a rule. Stop reading any post that has the line "taxation is theft."
As for the more adult arguments in the sites you reference, I thought DeLong had a pretty good response:
"The argument that a tax cut for the rich is ultimately progressive because it runs up the deficit and creates a political backlash that ultimately leads to bigger tax increases for the rich than the tax cut--that is not one I've heard before. Yet it does have a certain plausibility, now that I think about it.
George W. Bush, redistributionist mole!"
May 12, 2006 8:32 AM | Reply | Permalink
So has anyone attempted to define "progressivity?" I don't think Delong addressed that point.
May 12, 2006 10:24 AM | Reply | Permalink
Yeah, you can eliminate the taxes the poor pay entirely and that makes the system less progressive?
I believe you misunderstood me. With my model, the system is indeed more progressive, but also a great deal for the well-off and a bad deal for those of modest means.
Progressivity is only a meaningful yardstick when all other things are kept equal: no cuts in services, and no increase in the deficit.
May 12, 2006 10:24 AM | Reply | Permalink
I think your view on FICA is mistaken - completely abolishing it would make the tax code more progressive, though it would create serious revenue stream problems. Under your argument cutting taxes across the board by an equal dollar amount (say whatever people at the poverty level pay) would not make the tax system more progressive, despite the poorest people paying nothing and the richest people paying essentially the same amount.
May 12, 2006 2:06 PM | Reply | Permalink
" The party and the movement have been staunchly anti-communist since...well, since there was any communism to oppose."
I ought to bill you for cleaning my computer after that spit take. Especially after your making a claim like that in the comment section of Mr. "How I celebrated May day" here.
But, yeah, conservatives don't think the government should do compassion. If the government were the only institution capable of doing compassion, that might actually have something to do with whether or not conservatives were compassionate...
May 12, 2006 3:25 PM | Reply | Permalink
I think W. Sutton came up with a pretty good defintion of "progressivity", or at least explained the rationale behind it:
"Because that's where the money is."
May 12, 2006 3:37 PM | Reply | Permalink
Bush is not a "conservative" haha
You're right and conservatives are NOT canservatives, either. Not since they became theocratic homophobic extremists which started about the same time they bedded down with their "true" savior bigtime around 1980.
But I understand they have to throw a lot of smoke to deceive their way into another election, that is all they do.
Here is some more on the Bush is not a conservative hooey.
What a pile of elephant droppings.
May 12, 2006 4:58 PM | Reply | Permalink
There's "conservatism" and there's what conservatives do as soon as they're in power. They are indeed different: the former is ideological and rhetorical window-dressing for the latter.
May 12, 2006 5:14 PM | Reply | Permalink
Perhaps a more accurate way to put it is that there's conservatism, and there's what politicians who sought the votes of conservatives do as soon as they're in power. Like most politicians of either party, Bush's only real ideology is power.
May 12, 2006 5:52 PM | Reply | Permalink