The rich, the poor, and taxes: what’s a fair share?

The New Neo Posted on by

Our friend Paul Krugman tackles the idea that the right is misrepresenting the facts when it says the rich pay a lot more in taxes than the poor:

The claim that only rich people pay taxes is a zombie lie ”” something that keeps coming back no matter how many times it’s killed by evidence…

Yes, high-income people pay the bulk of the federal income tax. But that’s not the only tax! And while the income tax is quite progressive, the payroll tax ”” the other major federal tax ”” isn’t; and state and local taxes are strongly regressive.

Krugman then offers a chart based on research by a group called the Citizens for Tax Justice (here’s a link to the more complete version of their charts and research).

I find this worth talking about because, despite the straw man argument with which Krugman begins his comment (“the claim that only rich people pay taxes”) and his later typical accusation that the right is purposely lying, he raises an interesting topic: how much should the rich contribute? How much do they actually contribute? And what is a fair share for rich and poor and everyone in between?

Of course, a book—or several—could be devoted to these questions. But let’s just deal with a post right now.

To start with, I noticed—by the title of the group offering the chart Krugman cited, “Citizens for Tax Justice”—it can hardly be considered an objective source (here’s the Board of Directors of its research arm, the Institute on Taxation and Economic Policy). But no matter; I don’t have competing figures from a truly objective source (are there any?), so let’s just work with what we do have (their figures, by the way, are based on a method explained here).

Krugman is absolutely correct that income tax is only part of the picture, and is progressive in the sense that income tax rates (not just amounts collected) rise with income. Capital gains taxes and estate taxes (and to a certain extent interest and dividends taxes) are similarly progressive, and are also borne disproportionately by the wealthy because the wealthy tend to be the ones with those assets. Then there is the payroll tax, which is arguably regressive (see this for the arguments pro and con), but is also at least theoretically not a regular tax but is instead supposed to go towards later entitlements such as social security and Medicare. Those are the major federal taxes involved.

State taxes fall mainly into the categories of property and sales taxes, and are not progressive. However, once again, if the rich own more property and buy more goods, they will pay more tax in terms of total amount, although not in terms of percentage of income or tax rate. Some states also have income tax and/or taxes on interest and dividends, which vary in their progressiveness from state to state.

I’ve often said that economics and finance are not my field of expertise, so I may be making some errors here in the details, but that’s my understanding (have fun correcting me in the comments section if you so desire). The point is that the situation is nothing if not complex, but the bottom line is that even Krugman’s charts, furnished by the left-leaning Citizens for Tax Justice, indicate that the tax code does result in the rich paying not only a great deal more money in taxes in the sense of total amount, but more in terms of percentage of income as well. Therefore the entire system is progressive.

Who are these rich? The charts don’t tell us, except in terms of quintiles of the population. If you look at the graphs, you will notice that the three lowest quintiles pay not only a smaller amount of taxes in general (not just income taxes), as one might expect, but a smaller percentage of income as well. In the fourth quintile that begins to change, and in the fifth quintile the percentage of income paid is considerably larger.

Krugman writes, “The overall system is barely progressive at all.” His point is obscure; the system is progressive overall, not just the income tax part of it. What’s more, he does not address the point the right makes, which is (a) that the rich contribute a huge percentage of tax revenues compared to their actual numbers, and (b) that the lower quintiles do include many people who pay no regular income tax (as opposed to payroll tax) and therefore have an incentive to raise income taxes for the rich only. Another point is that the left and many of these people would like there to be more outright income redistribution as a result.

One can either agree or disagree with that goal. One can also believe taxes should or should not be progressive. But right now our overall tax structure (not just the income tax) is already progressive, as even Krugman concedes. One of the differences between left and right is that the left thinks it should be even more so and the right does not. Here is a summary of the arguments pro and con; judge for yourself.

Perhaps the most interesting detail, however, is one omitted by Krugman’s charts, and that is what those top quintiles represent in terms of actual income. I’ve been unable to find a relevant chart for the year 2010, the one that corresponds to the chart Krugman used. But if you look at this chart for 2004, you will see that the fourth quintile starts at an income of $55,000 per household, the fifth quintile begins at $88,000, and the top 5% starts at $157,000. The figures may have gone up somewhat in the intervening years, but my guess is that they haven’t jumped substantially.

I don’t know about your definition of rich, but mine does not involve households earning $55,000 or $88,000. So we don’t seem to really be talking about rich people at all. We’re talking about basic, middle-class, working people—particularly married couples, who tend to be disproportionately represented in those top quintiles.

So forget the super-rich, those who have great tax accountants and shelters anyway, and can move abroad if they wish—how much more can the middle-class be tapped to support the federal government and entitlements? Isn’t that really the question here? Are these groups not already paying their fair share, and then some?

If you’ve been wondering why the standards of writing have declined in recent years…

The New Neo Posted on by

…wonder no more. Some time ago, the teaching of writing liberated itself from the surly bonds of clarity, rules, and white oppression (is that redundant?) and escaped to touch the face of diversity and self-expression.

Now, huge numbers of writing teachers are dedicated to those latter two principles, as the agenda at a large conference recently sponsored by the Conference on College Composition and Communication (hey, at least they haven’t jettisoned alliteration) demonstrates:

…[P]anels focused on everything but the written word as traditionally understood. Offerings stressed civic engagement, multi-media, sustainability and “eco-composition,” multilingualism, student self-assessment, student extra-curricular experiences, student “engagement,” cross-disciplinarity, hip-hop, Native American traditions and languages, digital storytelling, “queer rhetorics,” “feminist rhetorics,” “visual rhetorics”””and all the usual ethnic grievance communities: Chicano, African-American, indigenous, etc.

Politics is not just covertly present in almost every aspect of the conference and its workshops, it is overtly present as well. And the politics is, as one might expect, that of the left.

Mary Grabar, author of the piece on the conference, and an English instructor in Atlanta, writes:

My own work duties as an instructor of composition forced me to miss a paper on “Tea Party Rage” on Thursday afternoon. But after sleeping off the headache induced by all the drumming, I was at the Atlanta Marriott to attend the Friday 8:00 a.m. session “’Unrelated Kin’: Building Kin Relationships with Critical Race Theory and Out-Loud Public Literacies in Rhetoric-Composition Studies.” Here again a presumed “critical thinking” was applied against the teacher’s political enemy to engage students in protest “action.” Panelist Jody Ludlow advocated using “critical race theory” to expose what she claims is the promotion of “white privilege under the false veil of fairness,” in the language of Nebraska’s Initiative 424 against affirmative action. But through the example of Ludlow and approximately 95 percent of conference participants, it became clear that one must condemn one’s own “white privilege” to be allowed a place at the CCCC table.

The entire article makes for depressing reading. It’s not that this sort of thing was previously unknown; anyone who follows education (and anyone who has read Allan Bloom’s over-twenty-year-old work The Closing of the American Mind) is well aware that these trends have been going on for decades. But the extent of the claptrap, the details of the indoctrination, and the dominance of this sort of approach are still sobering and shocking to read.

A personal note about teaching on the elementary (rather than college) level: I received a very old-fashioned education, even for its time (50s and 60s), in the public schools of New York City. My teachers were uniformly old, and they taught writing and grammar as it was taught at the turn of the century (the twentieth, that is).

We diagrammed sentences till the cows came home. The teachers were tough and it was boring. Rules were rules. Self-esteem was something to be laboriously earned through performance. And diversity merely furnished the ingredients for the soupy melting pot out of which an American identity would be forged.

But by the time I had grown up and was a parent myself, there were rumblings of a kinder, gentler education. At the time it took the form of what was called invented spelling.

The idea was that children would do better at writing if their natural urge to express themselves was not bogged down by such extraneous baggage as rules, at least at the beginning. Later on, precision would come. But in the beginning it was all about freedom and feeling good about oneself and the writing process.

I never bought it. Somehow, generations earlier had managed to learn how to write properly without being unduly stifled. Why encourage bad habits? It seemed logical to suppose that, if children continually practice poor spelling and grammar, it will become more entrenched, and research bears up the fact that traditional spelling instruction is better.

Spelling is just the tip of the iceberg, though. Far more important is the neglect of the classics, the demonization of the old dead white men (and a few women) who wrote so many of them, and the elevation of diversity for diversity’s sake. Those trends seem to be going stronger than ever, and have borne political fruit.

Obama and history: it depends on what the meaning of “always” is

The New Neo Posted on by

A lot of attention was paid recently to Obama’s display of pique at interviewer Brad Watson, who had the temerity to ask the president a couple of slightly challenging questions on Monday.

But far more interesting to me was another statement Obama made during that same interview, when in response to the reporter’s query as to why Obama is so unpopular in Texas, the president answered, “Well, look, Texas has always been a pretty Republican state, you know, for historic reasons.”

A more ignorant comment is hard to imagine. Texas always Republican state? Au contraire. It was only around Reagan’s time that Republicans started winning in Texas. Till then it was reliably Democratic in its presidential choices, with just a few exceptions.

You might think Obama is historically ignorant and unaware of these facts, and if true that would be bad enough. And perhaps that really is the whole explanation for his extraordinary comment.

But I’m not convinced it’s the case. One of Obama’s fields of expertise is the history of the civil rights movement, and he must know that the South was solidly Democratic for a long time.

But if he does know the truth, why would he lie about such a thing? Does he think his answers are irrelevant, and that he just needs to give a response, any response? Is it just a way to deflect a question he’s not interested in actually trying to answer?

Or—and I’ve come to think this may be the most likely explanation—perhaps it depends on what the meaning of “always” is. As a notorious narcissist, Obama’s frame of reference would be himself. Texas became Republican in the 80s, but Obama’s political career didn’t begin until the late 90s, so perhaps as far as he’s concerned the only relevant history starts with his own entry into political life.

Birthers of a different kind

The New Neo Posted on by

Andrew Sullivan used to be the leader of the pack of those obsessed with the question of whether Sarah Palin actually gave birth to her son Trig, and under what circumstances. But now there appear to be other contenders. I refer not only to the author of the linked piece, but to many of the commenters there.

And they call Obama-birthers strange.

[NOTE: In the comments section you can also find this excellent example of the general thought process of many liberal women who just hate, hate, hate Sarah Palin:

I was furious as a woman and a mother when she outed her pregnant daughter to the world and when she bragged about endangering her baby by not getting herself to an ER. Her winking, flirtatious performance at the vice presidential debate reminds me of the type of woman who sleeps her way to the top in business. Other women have remarked to me that it reminded them of the woman who steals your husband all the while pretending to be your best friend. These are the negative female stereotypes that those of us who have careers fought so hard to overcome. And she dishes it right back to us, claming that she is breaking a glass ceiling for women everywhere. In actuality, she is pressing hard on top of that glass, smothering the women underneath it, and sneering and winking at the Republican, patriarchal and sexist machine cheering behind her as she looks for approval. If I had been interviewing her for a job I would have tossed her resume into the trash can if she answered my interview questions like she answered Ifill and Couric. And if she had winked at me during an interview, I would have shown her the door faster than it could have hit her in her shiny designer skirt. Her entire continued act is insulting to all of our intelligence, and demeaning to every woman that has had to make it in educational settings and in the workplace on the strength of her abilities, not on her looks and not on her sexuality. So yes, women have worked long and hard not to be silent when we see a woman like this promoted simply because of her uterus.]

So, if scientists couldn’t even foresee…

The New Neo Posted on by

…the effects of the oil spill on the Gulf, how are they going to figure out what’s going on with climate change?

[ADDENDUM: Actually, there were a few lonely voices saying fairly early on that the spill would naturally repair itself. One of them, interestingly enough, was that of none other than Rush Limbaugh (not a scientist, nor does he play one on radio). Another was British geologist Michael Welland, who even managed to specifically mention the oil-eating bacteria in a post that bears full reading, entitled “Alcanivorax borkumensis – oil-eating bacteria, where are you?”

Welland is careful to differentiate himself from the hated Limbaugh, lest he be tarred with the same brush. He writes in a disclaimer [emphasis mine]:

Given that there are hundreds of natural oil seeps in the northern Gulf, spewing out an estimated 70,000 tonnes (roughly equivalent to 20 million US gallons) of oil every year, why do we not see a more oil-polluted Gulf in normal circumstances? One big reason is the natural activity of bacteria like Alcanivorax borkumensis. No, I’m not supporting Rush Limbaugh and his demented and twisted interpretation of facts, but one fact is that natural processes can help in the kind of catastrophe we are facing. But those natural processes don’t have the critical mass to deal with events on this scale – they need help.

Apparently, although Welland was one of the few who was correct about the oil-eating bacteria, he was wrong about that last point—it turns out they didn’t need help.]

Who was Obama’s mother?

The New Neo Posted on by

The NY Times features an article by Janny Scott, who’s written a book about Obama’s mother Stanley Ann Dunham. The article focuses on her sojourn with her son in Indonesia, occurring when Obama was 6 to 10 years old, and it paints a very curious although incomplete picture.

Many of the facts were previously known, but there were several details of this rather long article that struck me as odd and/or of possible psychological significance. It seems the very young Obama had to learn more equanimity and emotional stoicism than most kids of his age, because in Indonesia he was somewhat of a social pariah, incessantly taunted for his race. That stoicism would come in handy when he was sent to Hawaii by himself at the age of 10 in order to further his education, knowing he wouldn’t be seeing much of his beloved mother again.

To me, this is one of the most telling quotes from Obama, from a recent interview with Scott:

“I think that [the return to Hawaii] was harder on a 10-year-old boy than he’d care to admit at the time,” Obama said, sitting in a chair in the Oval Of­fice and speaking about his mother with a mix of affection and critical distance. “When we were separated again during high school, at that point I was old enough to say, ”˜This is my choice, my decision.’ But being a parent now and looking back at that, I could see ”” you know what? ”” that would be hard on a kid.”

Note in particular the pronouns Obama uses. When he speaks of the pain of the separation, he—who usually has no trouble using the word “I” in almost any context—cannot even bring himself to use the first person to describe this event. He distances himself in the first sentence (“harder on a 10-year-old boy than he’d care to admit at the time”); comes back to the first person to describe the later high school years, when he was older and less emotionally vulnerable; and then returns to the third person again to look back and say “that would be hard on a kid.”

A kid. A 10-year-old boy. Not this particular 10-year-old boy, Barack Obama, the one who was also told by his mother that he was brilliant and could be president some day. The mother who also taught him a great many other things, including “to disdain the blend of ignorance and arrogance that too often character­ized Americans abroad.”

Dunham’s biggest lesson for her son may have been stoicism and putting a good face on things despite his pain and anger. Here is a reminiscence of that time from an acquaintance of the family in Indonesia, Elizabeth Bryant:

After lunch, the group took a walk, with Barry running ahead. A flock of Indonesian children began lobbing rocks in his direction. They ducked behind a wall and shouted racial epithets. He seemed unfazed, dancing around as though playing dodge ball “with unseen players,” Bryant said. Ann did not react. Assuming she must not have understood the words, Bryant offered to intervene. “No, he’s O.K.,” Ann said. “He’s used to it.”

“We were floored that she’d bring a half-black child to Indonesia, knowing the disrespect they have for blacks,” Bryant said. At the same time, she admired Ann for teaching her boy to be fearless.

Those who perceive Obama as an outwardly calm but inwardly angry man with a chip on his shoulder about race would do well to ponder these formative years and the lessons they taught. If he appears emotionally cold, it helped him to survive at an age when some very volatile emotions must have been roiling within him.

Obama’s mother was certainly neither a conventional person nor a conventional mother. But the truth about her remains elusive, despite tantalizing psychological glimpses. Towards the beginning of the Times article, Scott describes some supposed misconceptions about her:

…[I]in the fevered imaginings of supermarket tabloids and the Internet, she is the atheist, the Marx­ist, the flower child, the mother who abandoned her son or duped the newspapers of Hawaii into printing a birth announcement for her Kenyan-born baby, on the off chance that he might want to be president someday.

Scott goes on to say that Obama’s mother “did not fit any of those [descriptions], as I learned over the course of two and a half years of research, travel and nearly 200 interviews.” But, despite this disclaimer, the 6000-plus-word article never even addresses whether Dunham was an atheist or a Marxist. And other information the article contains most definitely substantiates the idea that she abandoned her son—and even the fact that she thought he could be president one day.

Slow news days

The New Neo Posted on by

Have you noticed the news has been relatively slow lately?

What is conventionally thought of as “news,” that is. There’ve been no significant rumblings of revolution in still another Middle East country and calls to war. No oil spills. No earthquakes or tsunamis. No legislators caught with their pants down (literally).

But sometimes the news that ends up making a difference slips in under the radar of most people. We just don’t know what it will be. For example, will the current story that Standard & Poors has said that the US could lose its AAA rating end up being exceedingly significant? James Saft at India’s Economic Times certainly thinks it may:

Firstly, if the U.S. loses its AAA rating it could prove to be the turning point in a loss of confidence that starts a debilitating move out of not only Treasuries but dollar assets. After all, the U.S. won’t default on debts which it can erase with the flick of the switch on the printing press, but it may well inflate its way to making dollar holdings very bad investments.

Secondly, the lack of alternatives means that a move out of Treasuries, if it ever came, would be hugely distorting for the rest of the world’s debt ecosystem. There simply aren’t enough “safe” alternatives.

But others think the story’s so ridiculous it’s to be laughed at. Here’s James Fallows at the Atlantic, among others:

What I’d really like to know is who S&P likes in the Hornets-Lakers series, or this season of American Idol. Their views would carry just as much weight.

Har de har har har. Fallows also describes James K. Galbraith’s response as a “derisive guffaw.”

This derision is based at least in part on their very correct observation that S&P hasn’t exactly covered itself with glory in its predictions and ratings in recent years. Then again, as Haft points out, S&P’s problem was not jumping the gun, it was the opposite:

One argument advanced for why we shouldn’t care about the threatened downgrade is S&P’s (and other ratings agencies’) track record of being spectacularly wrong, first in various emerging market sovereign crises and then during the housing bubble.

I’d argue the opposite; ratings agencies have a reputation of being timid and late, and are also beholden to government-granted status as Nationally Recognized Statistical Ratings Organizations for much of their business. That one of them steps up and threatens the U.S.’s rating is a sign that cannot be ignored.

A worrisome and highly related issue that been on many minds for quite some time is the deficit. But it’s only a biggish story when something new happens: Paul Ryan’s plan comes out, Obama makes a speech, Congress tackles the budget. But we can always speculate on how big it will become in the future, and what we might need to do about it:

..[T]he best back-of-envelope estimate is that meeting this unfunded portion of our Social Security and Medicare commitments would require roughly an immediate 80 percent increase in federal income taxes, sustained forever.

That is one end of a spectrum. The other is to cut out $100 trillion of present value of anticipated entitlement spending.

I was at a dinner last year with about 15 well-known Washington think-tankers, academics, journalists, bloggers and budget experts, entirely focused on the question of where on this spectrum we will end up. What was striking to me was that as we went around the table, the majority of these people asserted confidently what would be politically feasible or infeasible positions. Many of these equally confident-sounding assertions were contradictory and, not shockingly, tended to line up roughly with each speaker’s political inclinations.

It would be simple for me as an economic conservative to dismiss the idea of a tax increase equal to an 80 percent increase in income taxes as politically unrealistic, but I’m not so sure about that. In the event of a crisis, I could easily imagine “emergency” income taxes on the “most fortunate among us” plus some increases in middle-class tax rates, plus the introduction of a VAT, amounting to something like that.

If you had asked me at a New Year’s Eve party in 2006 what I thought the odds were of the U.S. government taking a controlling interest in the largest bank, the largest car company, and the largest insurance company in America, I would probably have laughed at you. Yet within 36 months, this is exactly what had happened.

My friends who are more liberal than I probably should not make the analogous mistake of imagining that benefit reductions that seem absurd politically right now might come to seem less absurd, and surprisingly quickly.

If you think about it, any real solution to the federal deficit problem is currently politically impossible; yet we know mathematically that, barring a productivity miracle, the situation cannot persist indefinitely. Therefore, we know that some change that currently seems politically impossible is all-but-certain to happen sooner or later.

Prognostications have a funny way of not panning out. Yes, a few people always manage to have been right, or nearly right, about a future event. But are they consistently and reliably right? Those would be the people to listen to. But who are they?

Moiseyev Partisans

The New Neo Posted on by

I recall a performance of the Moiseyev Dance Company’s “Partisans” as the single most exciting theatrical experience of my life. It occurred back when I was a little kid and the company was on its very first visit here.

A couple of years ago when I searched YouTube for a video of the dance, which is the venerable Moiseyev’s signature piece, it was—alas!—nowhere to be found. So imagine my thrill recently when I discovered it had subsequently appeared.

However, as I watched, I would have thrown something at the screen had it not been my own computer I’d be damaging. A mere shadow of what it should be, too much of the time it’s either shot from too far away or too close. The fabulous ending, where each couple in turn goes from casual trot to full speed ahead in an instant (you’ll see what I mean if you watch), is ruined by focusing on closeups of the wrong couples at the wrong time, missing the moment of transition for most of them.

And yet, and yet…enough remains of the magic for me to post this video for those of you who’ve never seen it. Yes, it’s very hokey and corny and gimmicky. Yes, it’s about the USSR’s WWII partisans, celebrating the glory of the brave Russians and all that jazz. But what a fabulous illusion it presented (especially as a child)—an illusion far more magical in the theater than in this video. It seemed impossible that dancers could glide across the stage and look as though they were on conveyor belts or roller skates, and yet be creating the effect with nothing but their bodies and their own two feet.

Oh, and as a child, it was altogether thrilling when one of the dancers was suddenly revealed—as her hat fell off, seemingly accidentally, at a well-timed moment, as in this video—to be a woman! I seem to recall in the olden days the dancer had long flowing red hair, which was far more effective. But no matter.

Take a look: