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April 27, 2005

Duncan Black Tries to Teach Economics to the Wall Street Journal

Like teaching a pig to sing opera, it doesn't work. You waste your time, and it annoys the pig:

Remedial economics for the WSJ editorial board ... [Media Matters for America]: The Wall Street Journal editorial argued that 'the overall tax burden grew more progressive' in the last 25 years because upper income taxpayers pay a larger share of total taxes than they did in 1979... between 1979 and 1999, the share of total taxes paid by the richest 0.1 percent of taxpayers rose from 5.06 percent to 11.05 percent, and the share paid by the top 1 to 5 percent of earners rose from 14.69 percent to 17.75 percent. But over the same 20-year period, the share of total U.S. income that these two groups earned increased much faster than their share of the tax burden, as economists Thomas Piketty and Emmanuel Saez explained in an updated version of their paper 'Income Inequality in the United States, 1913-1998' (which now includes data up to the year 2000). In 1979, the top 0.1 percent of taxpayers earned 2.01 percent of total U.S. income; in 1999, they earned 6.63 percent. This group's share of total income more than tripled, while its share of federal taxes paid only increased by a little more than double.... The relative share of total taxes paid by various income groups -- which the Journal cites -- is [not] a... measure of... progressivity.... [A] tax system is 'more progressive' if taxpayers pay a progressively larger share of their incomes in taxes as these incomes go up... [as is explained in] the online supplement (PowerPoint exhibit for chapter 12, slide 35) to the third edition of his introductory economics textbook, Principles of Economics (Thomson South-Western, 2004), [by] N. Gregory Mankiw, who served as the chairman of President Bush's Council of Economic Advisers until late February 2005...

Well, maybe annoying the pig is worthwhile.

One of my most interesting moments in Washington was being seated at a luncheon table behind Charlie Stenholm and Judd Gregg, who began to spin more and more interesting and improbable theories about just why Dow-Jones let the Journal editorial page exist in its current form...

Posted by DeLong at April 27, 2005 07:39 PM