Jonathan Chait’s Own Hypocrisy
John on February 19, 2010 at 5:58 pm
Over at TNR, Chait has a post pointing out that while many Americans claim to be for deficit reduction, when asked about specific policies only a small minority are for cutting spending. The one exception to this rule, according to Chait, is raising taxes on the “rich.” He uses this Gallup chart to make his point:
Nothing wrong with the chart per se. People apparently support higher taxes on the rich. It’s the context of Chait’s outrage that’s so amazingly hypocritical.
You see, Chait, like just about everyone else on the left, threw a hissy fit [Correction: Wrong TNR author. Chait's hissy fit is here.] over Sarah Palin’s use of “death panels” in her critique of ObamaCare. It was an insult to our (meaning Chait’s like-minded readers) intelligence.
But when it comes to this post about Republican hubris, Chait is happy to throw out the Gallup poll without bothering to point out how badly (and intentionally) misinformed the respondents are. Who actually pays taxes?
Look at the chart for a moment (click for full size). You’ll see that the top 10% of earners are paying around 70% of all income taxes. Americans who think they aren’t paying their fair share are badly misinformed.
Wonder why Jonathan Chait doesn’t feel the need to educate America about this? Could this be an example of hypocrisy?
Update: Jonathan responded to my criticism this morning, which I appreciate. My response to what he said is here.
Category: Blogs & New Media, Politics |
I believe that all of our elections should be held on April 15th.
February 19, 2010 @ 7:37 pmEven accepting all of your premises as true, I don’t see the hypocrisy here. Perhaps hypocrisy is the wrong word.
February 22, 2010 @ 8:07 amI know that the top 10% pay 70% of all income taxes.
I also know the richest 10% receive nearly 50% of all US income. I know this level of inequality has not been seen since the 1920′s.
Considering these two facts, I also think the rich are not paying their fair share.
So who is uninformed? Where exactly is the hypocrisy? What was there for Chait to ‘correct’?
On the other hand death panels are not in the health care reform bill.
I don’t think the facts are on your side on this one, buddy. A lot of people just don’t think 10% of the people deserve 50% of the money, and progressive taxation is one of the most economically efficient ways to address this disparity.
February 22, 2010 @ 1:06 pmSomeone is about to learn a valuable lesson in not trying to throw down with Jonathan Chait….
February 22, 2010 @ 1:43 pmWe call those people socialists (or Communists). Those of us that believe in a free markets understand that the distribution of wealth is left to market forces to decide, not government. A lot of those top1% earners are actually small businesses, the kind that provide most of the jobs in this country.
As for learning a valuable lesson, we’ll see. I think he never made a convincing rebuttal of my hypocrisy charge. My response to Chait is here.
February 22, 2010 @ 3:09 pmHey John,
I guess Adam Smith (yes, that Adam Smith) is a commie.
Check out this quote from The Wealth of Nations:
“The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.”
Ouch. I hope that as a big free market advocate you know who Adam Smith is.
When the richest 10% make 50% of the money and pay 70% of the taxes (actually they pay less, that statistic is only for income taxes, other taxes are generally less progressive) reasonable people call that a moderately progressive tax structure.
Another commie who strongly favored progressive taxation: Teddy Roosevelt. Also check out Eisenhower, Dwight David, the commie general who invaded Normandy and later led the communist Republican Party.
Your right wing boilerplate neither addresses the issue at hand (whether favoring progressive taxation indicates ignorance of facts) but is itself either ignorant (see above) or glib.
February 22, 2010 @ 8:51 pmTomTom,
What I said is that government should not be in a position do dictate what percentage of income goes to any particular segments of earners. That’s something much closer to Communism or perhaps fascism.
There’s a big difference between progressive taxes (too progressive in the case of federal income tax) and government deciding by fiat that the top 10% can’t earn more than x% as you seem wont to do. I don’t think you’ll find Adam Smith signing up for that one.
I’m sure your straw man argument was much more satisfying for you, sorry I couldn’t play along.
February 22, 2010 @ 9:18 pmProgressive taxation has many advantages. Among them it helps reduce income inequality.
I neither said nor believe that “the top 10% can’t earn more than x%”
Bringing up socialism and communism is making a straw man argument because I am neither. Progressive taxation and concern over income inequality are mainstream American ideas, enacted into law generations ago and in place since.
Right wingers don’t like it and they disagree, and that is great. What is not so great is name calling and reductive arguments.
I note that no one has addressed the substance of the original argument.
February 23, 2010 @ 7:36 amTomTom,
If you say so. The statement I reacted to was:
Deciding what the top 10% “deserve” and then redistributing appropriately (according to you) goes beyond arguing for progressive taxation. Again, you won’t see Adam Smith signing up for that one.
Go back and read it again:
Notice I didn’t specify you; therefore there was no name calling involved, at least not on my part.
Socialist countries like Sweden often use multipliers to set maximum income distribution, i.e. the top earner can make no more than 7X the lowest paid janitor. So given your statement about what the top 10% “deserve” it was a reasonable thing to bring up, not a “reductive argument.”
My original argument was that Chait was a hypocrite, i.e. he claims to care about public misinformation, but in fact only cares when his ox is the one being gored. I think I made that case pretty definitively since Chait’s response was that a) the public probably is misinformed about tax rates but b) he isn’t obligated to correct public opinion in every case.
February 23, 2010 @ 8:07 am“A lot of people just don’t think 10% of the people deserve 50% of the money”
I was referring to the author’s citation of popular opinion in a Rasmussen poll. Do you think I am wrong? Do you think only a few people “don’t think 10% of the people deserve 50% of the money”. Maybe you need to hang with a new crowd. Those people are not socialists or communists (who believe the state should own and manage the means of production) just because the division of income strikes them as unjust. As an experiment I asked several guys in our shop, Republicans all, if they thought 10% of people deserve 50% of the money and should pay 70% of the taxes. One thought that was “about right”. Another said there was no way the richest 10% made that much money, my figure must be bad. The third made a comment about f*****g lawyers. I did not get a sense that he thought it was a just arrangement, although I dod not pursue. These people are not socialists or communists.
I fail to see the point about public misinformation. I think a well informed public has no problem with the richest 10% carrying 70% of the income tax burden. After all, since the richest 10% make 1/2 the money we are talking modestly progressive taxation, and progressive taxation polls well.
Finally, the 70% is itself misleading. It picks out the most progressive (income) tax and ignores regressive payroll and sales taxes.
The only reason the 70% figure raises eyebrows is because few people know just how big a slice of the pie rich people get. Higher information pushes opinion toward higher taxes on the rich, so how can a poll that shows people favor higher taxes on the rich be a sign of misinformation?
I think you have exactly backward. If a poll showed most people oppose higher taxes on the rich it would be a sign of misinformation.
February 23, 2010 @ 10:44 amPersonally I reject the entire premise of the argument equating the share of national income with the justness of the relative tax burden. What anyone earns based on their talent, initiative, hard work, or even good fortune should have very little to do with the proportion of their income which is confiscated by the government relative to other citizens. Even with a flat tax, by definition high income earners will pay significantly more taxes in gross dollar terms. Considering that the federal government exists to provide for the common good, and low income earners disproportionately benefit through entitlement programs and public infrastructure, I think this would be “progressive” enough by any fair definition of the word.
But liberal ideology has now corrupted multiple generations of individuals with the idea that they are entitled to material benefit above and beyond what they are able to provide for themselves. Based on their own initiative and hard work, rather than expropriating income and benefits from the most productive in society.
This is flat-out moral corruption.
February 23, 2010 @ 11:06 amMorgen:
A very honest question for you. Can you explain to me how you (presumably) hold these two positions:
1.) A flat tax is a fairer system of taxation.
2.) Democrats are wrong for seeking to cut Medicare (i.e., ration care, death panels, etc.)
As far as I can tell, anything short of a progressive system of taxation would result in destroying the U.S. treasury. At the same time, Republicans refute to budge on Medicare.
What’s the solution?
February 23, 2010 @ 11:27 amMG, I may put some more thought into this and get back to you with some additional detail. But can you clarify for me what has led you to believe that I think “Democrats are wrong for seeking to cut Medicare”?
Because this is not how I would frame my beliefs on this issue. With regards to the health reform debate, my primary beef with Democrats is that they have been disingenuous about the scope and impact of the Medicare cuts they have proposed, which were politically necessary for them to avoid even more substantial tax increases to fund their bill.
If we are going to “root out waste and inefficiency” in Medicare then any savings to be gained by doing so should be used to shore up the Medicare program itself, not to fund the expansion of government-subsidized health care. Especially for middle-class wage earners.
Medicare is a political football. Democrats engaged in even worse demagoguery on this issue when Republicans proposed much more meaningful reforms back in 2003-2004.
Without going into too much detail, I think it comes down to individual responsibility. The federal government cannot provide full retirement income and health security to all Americans without dramatically altering the political and economic system which has made this country great.
The only other long-term solution is to cap tax payer liabilities for social security and medicare payments by transitioning to something more like a defined contribution rather than a defined benefit plan. (Think tax credits, vouchers, etc.)
I am not yet intimately familiar with all of the details of Congressman Paul Ryan’s “roadmap“, but I believe he is on the right track.
February 23, 2010 @ 11:49 amMorgen:
It was my impression that Republicans were casting themselves as the defenders of Medicare now. But I may be wrong.
By your logic, though, it seems like you’d be okay with Medicare being gutted entirely, and all that money being kept by the rich people who earned it, fair and square.
We both know that such a position isn’t feasible politically (good thing you’re not a candidate!). And although I would probably disagree, I respect your honesty.
February 23, 2010 @ 12:01 pmMy preferred approach would not be for Medicare to be gutted completely. But given that the Medicare and Social Security programs combined now represent unfunded liabilities in excess of $100 trillion (!), obviously something must be done.
The sane and responsible approach is a reform plan which keeps the current compact with seniors and those ~55 and older, but for everyone else transitions to a system which shifts more of the financial responsibility to the individual. By increasing the eligibility age for these benefits, and by capping the benefit amounts based on a reasonable actuarial calculation of the money being paid into the system.
This may (gasp) even require some limited additional taxation during this transition period, given the level of fiscal irresponsibility which led us to this point to begin with.
You are right that Republicans are now the ones casting themselves as the saviors of Medicare, but I think its pretty obvious that this is a political ploy. I don’t much like it either. If our leaders – Democrats and Republicans – do not get serious about addressing government spending, especially with these entitlement programs, the tea party movement is going to overwhelm all of them.
February 23, 2010 @ 12:16 pmRe:15
That seems reasonable to me. But can that be squared with a flat tax?
I was always under the impression that a flat tax would decimate the U.S. Treasury. In other words, progressive taxation isn’t so much a ploy to attack the rich, as it is a necessary reality.
Some of the more serious Republicans I know have acknowledged as much, and that’s why you rarely hear serious calls for a flat tax.
February 23, 2010 @ 12:26 pmWell, in theory any target government revenue level would be possible with a flat tax, right? The higher the flat tax, the higher the revenue.
And the proposals I have seen have exempted very low income earners from the tax entirely, so this could still be structured in a progressive way.
It would be worth it from my standpoint even if my net taxation level was the same just to be rid of all the complexity with itemized deductions, AMT, etc. (and I am at the top marginal tax rates)
February 23, 2010 @ 12:39 pmTomTom,
Yes, I think you are wrong. The people being polled don’t know what the top 10% make or what they are taxed. They are acting on feelings.
Your poll of guys in “the shop” isn’t exactly scientific. Also it would be important to point out that of that top 10%, most of that money is going to the top 1%. Why? Because those are small businesses. Ask your Republican friends if they support higher small business taxes and see what you get.
In any case, there’s a difference between people reacting to new information and people, like you, looking to change the way income is distributed via government. I doubt your Republican friends would sign on for government control/taxation necessary to make that happen.
February 23, 2010 @ 1:23 pm“Personally I reject the entire premise of the argument equating the share of national income with the justness of the relative tax burden”
Me too. I like the idea of the People, through their elected representatives, “equating the share of national income with the justness of the relative tax burden.”
That is exactly why tax schedules change over time.
And all this blather about hard work and initiative, get real.
I am a small business owner (25 people) who built my company from the ground. We make a testing system that is selling all over the world and is beating the competition, a German subsidiary of an American multi-national.
We are being sued by this $16B corporation over claims that do not pass the laugh test. Their case is so weak it is obvious their goal is to run us into the ground with legal fees. We are out $2M in fees to lawyers who make $500 an hour.
From where I stand rich people make the rules and then a lot of them abuse those rules to game the system.
In a democracy if the rich get too greedy and rig the system too egregiously they can get their wings clipped. Boo Hoo. If you don’t like it perhaps China or Russia would be more to your liking. Rich people in thos countries don’t take any guff from the masses.
Democracy doesn’t exist to cater to glibertarians who fetishize a theoretical framework that does not reflect the world.
February 23, 2010 @ 1:24 pmI find it interesting that you show disdain for this concept and then go on to elaborate how you built your own company through…hard work and initiative presumably.
You are a victim of your own ideology as far as I am concerned, since you obviously support a system of taxation which disproportionately penalizes success and productivity.
Does it not bother you when the President lumps in those who make $200K or more a year with the “rich”? Because the type of people you refer to who rig the system for their own greedy aims are not small business owners.
Someone who starts and runs their own business at great personal risk, and who through hard work and good fortune ultimately manages to make a decent living earning $200K or more should not face the prospect of having 50-60% of their earnings – or more – confiscated by the government.
This is not a glib fantasy, it is common sense. Something you seem to be lacking.
February 23, 2010 @ 2:23 pmThe year I first made over $200K I absolutely felt rich. It does not bother me at all when Obama calls me what I am.
I know that the reason I can make so much is because we live in a democracy where periodic over-reaching by the rich and connected triggers blowback. The pressure to keep the corruption in line (or else!) is necessary to keeping the system functional.
Progressive taxation is one of the ways that the middle restrains the top. Don’t believe it? Look around. You can positively correlate effective progressivity of taxation and low corruption. You can also positively correlate lower income inequality with lower corruption.
USA/Canada – not very corrupt
Japan/Korea – not very corrupt
Western Europe – not very corrupt
Russia/China Very corrupt corrupt
Brazil/India/Mexico (democracies but high income inequality) quite corrupt
The 3rd world – very corrupt, very unequal
There are exceptions and variations but the trends are strong.
America saw its greatest growth in both GDP and standard of living during a period of low inequality from the ’30′s to the ’80′s. As inequality has risen middle class incomes have stagnated and corruption at the top has increased. CEOP pay has skyrocketed, but can we really say American corporations are better run? Financial sector salaries have boomed at the same time recklessness increased.
All humans are checked by the potential for pushback if they go too far. Progressive taxation is discipline applied on the top by the middle, and it is not coincidence it is more common in successful advanced economies.
February 23, 2010 @ 3:04 pmWell, your position is based on reasoned analysis even if I don’t agree with it. Ultimately I think we disagree on what the ideal level of progressive taxation should be – not on the concept and benefits of progressive taxation itself.
And I also think that the type of wealth and concentration of power you seem most concerned with is best addressed through estate – not income – taxation. Which we would probably disagree over as well.
Since on one hand you consider yourself to be “rich”, and on the other you feel strongly that the current tax system is not progressive enough, I have to ask:
You do realize that the IRS will accept additional unsolicited contributions on your behalf?
Set the example for all of us other successful small business owners who are lucky to get by with what the government allows us to keep under the current system.
February 23, 2010 @ 3:19 pmThis is just silly. There are so many differences between the West and the third world. To seize on income inequality as the source of the corruption is beyond stupid. How about the fact that most 3rd world corruptocracies are run by Communists promising more equality (Hugo Chavez and Castro come to mind, but Russia and China have strong Communist history as well), while most Western nations have free market systems and a history of democracy. Not surprisingly, the result in the corrupt nations is a grey market where every transaction requires bribes because that’s the only way people can survive, i.e. off the books.
I think you’re the one operating in the fantastical world of make believe.
February 23, 2010 @ 3:24 pmJohn,
Skip the 3rd world. One can always nitpick when different examples are used to illustrate a trend. If your ideology forbids you to see a pattern I expect you will not see a pattern.
Morgen,
Thanks for the kind words. Yes, I know the IRS will take donations, but I’m not that generous!
Seriously, I think that competing interests and groups keep each other in line in a democracy, and that is why I see tax rates as fair game in our politics. If I send a check to the IRS it does not apply pressure to anyone, or politically represent my interests.
What is my interest? In the short run they are lower taxes as I am in a high bracket, but in the long run I need a clean system more than I need lower taxes. Hence I am very sympathetic to politics that rein excesses among the rich and powerful. I was able to succeed because the system in the US is fairly clean, thank God. A powerful corporation has tried very hard to rub me out, and more money has been transferred against my wishes to lawyers than I have paid in taxes. I see very clearly how the law is structured to make these games possible, and Republican blindness to this type of abuse does not draw me to the right.
Democrats are kind of whiny and often annoyingly PC, but I look at the result of financial deregulation under Bush, Reagan, and Clinton, and Democrats get it while Republicans spout their religion.
February 23, 2010 @ 4:39 pmTom, I think you may be mistaking Democrats’ motivation for financial regulatory reform as pro-consumer, or an attempt to level the playing field for smaller financial institutions. While I think that some Democrats (e.g. Geithner) are sincerely attempting to reduce the level of risk inherent in the system, I think many liberal Democrats see this as a means to further their desired social policies which are decidedly big government and anti-business.
And in spite of his rhetoric, the President has been as cozy with Wall Street as any of the preceding Presidents you named.
And trial lawyers, of course, are a key constituency for Democrats of all stripes.
I do not blame you for not trusting Republicans to provide meaningful solutions based on their past track record. But I think there is a real opportunity to re-define the Republican agenda through the conservative populist revolt currently underway. While elected Republicans will probably continue to disappoint us in the near term, ultimately I think your own interests may end up being more in line with our side of the aisle.
February 23, 2010 @ 5:05 pmMorgen,
A hitch I have with Republican rhetoric is that they tend to resist the limitations of the invisible hand (free-rider problems, dilemma of the commons, etc.).
Sustained good economic performance tends to be demonstrated by mixed economies which encourage markets where they works but also fully accepts that regulation is required to address market failure, which really does occur.
What I hear from Republicans is an almost religious faith in markets and an equally religious resistance to the idea that government can be effective (extra, strangely, when it comes to defense). I am a real middle of the road guy who takes success where I find it. Free markets produce the best cars, but in health care we spend twice the money for worse outcomes than other developed countries. The health care failure makes me skeptical that health care functions as a market.
As an economic matter this is no surprise. Markets depend on good information and transparent pricing. Just try to shop for price when you need care! Yet I hear all this talk about how market forces should prevail in medical care.
Lately respectable Republicans (I’m talking to you Peggy Noonan) like to talk about how of course we should get rid of denying policies to people with pre-existing conditions, but a coverage mandate and subsidizing lower income people is a bad idea.
This just seems like willful resistance to analysis. Insurance is a device for spreading risk. Insurance companies scrupulously assess risk before signing a new policy. Tamper with that and you better consider the implications.
If you do not let insurance discriminate based on risk sick people will sign up and costs will skyrocket. Healthy will drop their policies because the cost is rising and they can always sign up if they get sick at no relative penalty. (This is not just theory, this is what happened in NJ) Hence the need for a mandate which keeps the risk spread out. Mandated health insurance has to be affordable or the poor will be unable to pay, hence the need for subsidies. And there you have the backbone of Democratic HCR.
Republicans seem to live in a world where policy is all ice cream (no discrimination on pre-existing conditions) and no spinach (mandates, subsidies). It is irresponsible.
You may say that you are for none of it, that insurance companies need to assess risk. You are right, but then what do we do? I do not see why we should pay twice as much for lesser outcomes, which is where we are now. For me doing nothing is not an option.
Yet the free market religion makes socialization of medical care anathema, no matter how well it works in so many countries.
It strikes me as faith-based politics. Too ideological and insufficiently pragmatic.
Please don’t talk about tort reform. Great idea, I’m for it, it’ll give us a few percent, but that is all. Problem not solved.
February 23, 2010 @ 5:52 pmWoah. Our healthcare is not a failure. Our healthcare system is great. It’s the insurance and the prices that are the problem. The free market has enabled the US to become a leader in the world’s healthcare industry. Our people are well cared for, pretty much everywhere in the US. Something is screwing up the prices in the system.
As a recent medical insurance biller/account rec. tech, I can tell you that Medicare reimbursement screws up the system to some degree. How much, I’m not sure. Doctors have to charge sometimes 40% more than they should because Medicare screws them and lowballs everything. Then providers start billing based on what Medicare reimburses. Then there is the Medicare fraud. OMG, you wouldn’t believe some of the stuff that goes on.
This is clearly government fiat affecting prices. Again- to what degree?
I would not call Roosevelt a commie, but he was definitely progressive. He started a new era of progressive reforms in the government that has gotten a little out of hand in some ways. Many of the “conservatives” since TR have not been very conservative. Bunch of pinkos, if you’ll allow me to join in the fun.
The federal government is just too big; way out of alignment with what the founders envisioned. We shouldn’t have to tax people so damn much to support this leviathan. It was supposed to be a nation of states rights, but now the feds constitute the majority of my government accountability baby-sitting time. And I live a _____________ long way from D.C.
And don’t beat up the Libertarians, they’re a vital social counterbalance against forces that would corrupt this nation to it’s core, as you like to say.
February 23, 2010 @ 10:11 pmCorrection: then providers start billing based on what other providers had to bill to get a fair reimbursement from MC.
February 23, 2010 @ 10:13 pm