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October 25, 2002
Why Does the New York Times Publish This Dreck?
In today's New York Times, I read a letter to the editor from Senator Charles Grassley:
A Tax Cut for Whom?
October 25, 2002
A Tax Cut for Whom?
o the Editor:
Re "Springtime for Hitler," by Paul Krugman (column, Oct. 18): I stand by my call for unbiased tax data in policy debates.
Some observers claim that 40 percent of last year's tax cuts went to the top 1 percent of taxpayers. The Joint Committee on Taxation, Congress's official, unbiased source, says the top 1 percent will receive 27 percent of the income tax cuts in 2006, the latest projection available. Taxpayers with incomes of $200,000 and less will receive the majority of the tax-cut benefits, with 67 percent.
The real story is that despite those cuts, the top 1 percent of taxpayers will still pay 33 percent of federal income taxes. They will receive a lower share of the income tax cut, 27 percent, than their burden, 33 percent.
The joint committee says the taxpayers who will receive the greatest reduction in their tax burden have incomes between $10,000 and $40,000. Those with incomes between $10,000 and $20,000 will enjoy a reduction of 13.6 percent. Those with incomes of more than $200,000 will see their burden reduced by 6.1 percent. Intellectual honesty demands putting tax data in context.
CHUCK GRASSLEY
Washington, Oct. 24, 2002
The writer is the ranking Republican on the Senate Finance Committee.
Let me add--in italics and in brackets--what whichever member of Grassley's staff wrote it was really thinking as he did so:
Re "Springtime for Hitler," by Paul Krugman (column, Oct. 18): I stand by my call for unbiased tax data in policy debates. [Let's see if this snows anybody...]
Some observers claim that 40 percent of last year's tax cuts went to the top 1 percent of taxpayers. The Joint Committee on Taxation, Congress's official, unbiased source, says the top 1 percent will receive 27 percent of the income tax cuts [see how I snuck "income tax" into this sentence? All but the most alert one percent of readers will believe that I am claiming that the 40 percent number is flat-out wrong. *Snort*!] in 2006, the latest projection available. Taxpayers with incomes of $200,000 and less will receive the majority of the tax-cut benefits, with 67 percent [Now I've dropped "income" from this sentence. Let's see if the New York Times will call me on it, or if they'll let my omission of "income" from "income tax cuts" slide through.].
The real story is that despite those cuts, the top 1 percent of taxpayers will still pay 33 percent of federal income taxes. They will receive a lower share of the income tax cut, 27 percent, than their burden, 33 percent. [Of course, they will receive a higher share of the *total* tax cut than their share of the *total* tax burden. But once again not one reader in 100 will catch the omission.]
The joint committee says the taxpayers who will receive the greatest reduction in their tax burden have incomes between $10,000 and $40,000 [Oooh! Aren't I clever! I mean, of course, "percentage reduction in their income tax burden." But once again almost everyone will read the sentence to mean "dollar reduction in their total tax burden". *Snort*!. Those with incomes between $10,000 and $20,000 will enjoy a reduction of 13.6 percent. Those with incomes of more than $200,000 will see their burden reduced by 6.1 percent I wonder if the New York Times will let me get away with this--if their editors have any guts at all, they will require that I add "income tax" to "burden". There's no chance that they'll demand either that I give percentages of the total tax burden, or that I give dollar figures--the Times's editors are far too scared of us to do that]. Intellectual honesty demands putting tax data in context. [*Snort!* Look at how I have told no outright lies in this letter--except for those in its first and last sentences--and yet managed to convey a completely false impression of the distribution of the tax cut!]
Surely the New York Times has no business publishing such dreck? Surely some editing of letters to reduce the mendacity quotient is called for? And if you are going to publish such letters unedited, at least provide a one-paragraph cheat sheet below them so that normal readers have a chance of figuring out just how mendacious Senator Grassley and his staff are...
Posted by DeLong at October 25, 2002 02:30 PM
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If you're not going to write the Times to tell them this, at least send them your url.
see also
http://www.wws.princeton.edu/~pkrugman/grassley.html
Yes, definately get in touch with the Times about this.
There's an awful lot of disingenuousness in the political argument over "who gets how much" of the tax cut -- on both sides, so I wouldn't get carried away with righteousness if I was on either side.
Let's make clear what's happened: An income tax cut was *actually effectuated* that is basically at an even rate across-the-board and actually somewhat weighted towards the lowest income levels. That's what Grassley is talking about.
But the Republicans also wanted to make hay with some their anti-estate tax constituents -- so they included in last year's law the repeal of the estate tax (for all of one year!) all of a sudden in *2010* -- that is, when everyone now in a leadership position in D.C. will be gone and not have to deal with it, four Congresses in the future!
Is this repeal binding on the future? Of course, not. (In fact, it is *self*-repealing in 2011!) Is it likely to take actually take place? Of course not -- not with the fiscal situation that will be approaching then!
People forget -- Congress has done this many times in the past (including with the estate tax) slashing or repeal taxes or making some other big fiscal reform starting, say, *ten years from now* -- it never becomes reality.
But it was a very cheap way for the Republicans to make hay with the bogus claim that they "repealed the estate tax". And OK, if they want to claim credit by saying they did that, then it's fair political game for the Democrats to bash them for doing it by counting the "estate tax repeal" in the total effect of the tax cut -- and, as the estate tax repeal is heavily weighted to the rich, claiming that the total tax cut is thus weighted to the rich.
But in reality that's every bit as bogus the Republican's claim, because the estate tax repeal *isn't real*. It's just a great thing for both sides to posture about and get all excited about. It motivates the base -- it's good for both parties, that's why they're both happy with the argument. (If I sound cynical, I've been watching the Congressional tax writers and their political calculations for 20 years -- and if you want to talk about people who would put Bismark's sausage makers off their feed ...)
So the Republicans have been very disingenuous about all this. But so have the Democrat anti-tax cutters -- equally so. Because they never, ever say:
"This tax cut is outrageously weighted towards the rich *after 2010*, but actually is reasonably balanced until then, and whether it will stay 'as is' until 2010 is of course highly problematic, what with all the Congresses and elections and unknowns between now and then." I mean, that's not the sort of position that would motivate the base, eh?
So reality is that when Republicans claim they've "repealed the estate tax" they are conning people. And when Democrats include the effect of that "repeal" in the last tax law's "distribution effects" they are simply playing the other side of the same political coin.
So if one wants to get upset that a Republican like Grassley wants to talk only about the distribution effects of the *actually effective* tax cuts, on the grounds that it doesn't fully represent the whole enacted tax law, fine and good.
But then when one complains about the heavy distributional weighting to the rich in the law, one should hold oneself to the same high standards of accurate disclosure, and make clear one is complaining about the distributional effects after 2010, not any time around now -- and that those effects are "iffy", presumed, and very subject to change.
Absent that, like I said, I wouldn't be too self-righteous about it.
BTW, the NY Times doesn't avoid publishing letters to the editor just because they are stupid.
A little while back they printed one saying the stock market contributes nothing to the economy because when an investor buys a share nothing goes to the company, so it doesn't help the company. So if the whole stock market market was regulated or taxed away, said this letter, it wouldn't make any difference, yadda, yadda. And they've published letters much worse than that.
Jim:
You reminded me of my favorite letter to the editor of all time (I believe in the SF Chronicle in the 80s), one that said that the government ought to sell bonds to raise money to pay off the national debt, "just like they did to finance the war". I hope the editors printed it just to give readers a chuckle, but that may be giving them too much credit.
Jim Glass points out that the estate tax cut is currently set to expire shortly after it takes affect. But a key "selling point" for Republican candidates right now is that they want to take control of the Senate and "make the tax cuts permanent." Therefore, when discussing the tax cuts, it is important to think about what they will do when they are made permanent. A key reason for Grassley to lie now is so as to build the support for a permanent extension.
I've always wondered, in the political discussion over tax cuts, why it's never mentioned that, if one lowers the rate on the lowest tax bracket, everyone who pays taxes gets a cut.
Why, if an unwanted tax cut (in the Dems eyes) was imminent, not propose a tax cut of equal size that was adjusted so that only very slight cuts (if any) would occur at the top rate, and the vast majority of the tax cut would apply to low and middle income families? If the Repubs started saying that the percentage cut for high income families was low, start pulling out dollar figures and ask why, say, if an average earner gets a tax cut of $x, is a tax cut of $y not good enough for somebody in the top 1%, and that the Repubs are proposing $x2 and $y2, instead. If such a cut were passed (which was unlikely), I suppose that it could make tax increases more politically costly in the future, but I don't think that tax increases are ever terribly popular, anyhow. If it failed, though, the Dems could bring it out for the midterm elections, and instead of being unable to really bash the cut, which could be unpopular, they could say "look, we had an alternative that we think could have really done some good, but our opponents chose this instead."
Additionally, why is it never discussed by either party (that I've seen) that estate tax serves a broader goal than just raising revenue for the gov't? Is the notion of resisting multi-generation accumulation of wealth and the idea of not letting some rest on the laurels of their fathers and grandfathers that unpopular? I've heard the term "death tax" scores of times, but I've rarely seen any give anything but lipservice to the notion that it serves a greater social good or that it is a tax that very few pay.
Is the notion of resisting multi-generation accumulation of wealth and the idea of not letting some rest on the laurels of their fathers and grandfathers that unpopular?<<
I've always wondered this. It seems as if the only counter to this is the empty "class warfare" scream.
Who's going to argue with the sentiment that we shouldn't create an aristocracy of the overprivileged? It's a fundamentally American sentiment that people with the ability to do so work for what they get.
Surely the New York Times has no business publishing such dreck?
Brad, not a day goes by that I don't mutter that to myself.
And the funny thing is that "people" like Andrew Sullivan attack the New York Times for being hopelessly left wing and hostile to the Republicans.
>>A little while back they printed one saying the stock market contributes nothing to the economy because when an investor buys a share nothing goes to the company, so it doesn't help the company. So if the whole stock market market was regulated or taxed away, said this letter, it wouldn't make any difference, yadda, yadda<<
Actually not idiotic; just an entertaining way of dramatising the fact (uncomfortable for a certain kind of economist) that the stock market is, in all but entirely freakish years, a use of funds for the corporate sector, not a source. Which supports Joan Robinson's point that the stock market has little to do with capital raising and is in the main "a convenience for rentiers".