Monday, April 25, 2005

WSJ editors don't know the meaning of "Progressive"

The WSJ's misdirection of the day seems to be a study that shows that the income tax code is just as progressive today as it was in 1979.

The basic fallacy of My first reading of the reseach paper behind this op-ed suggests that the WSJ editors are referencing the share of tax revenue collected from different segments of the income distribution, but fail to account for the change of the income distribution. The share of income for those in the top tenth of one percent of the population roughly TRIPLED since 1979, but the fraction of federal taxes paid by the top tenth of a percent of earners went up much less than that.

Here's a link to the paper apparently referenced by the WSJ.

If the tax code in 1999 was as progressive as it was in 1979, the fraction of taxes paid by the top one-tenth of a percent of the population would have more than tripled in the 20 years from 1979 through 1999; instead, the top tenth of a percent tripled their income, but paid considerably less than three times the share of taxes.

That's a regressive shift. So, while the tax code remains "progressive", according to the authors of the quoted paper, it is considerably LESS progressive than it was in 1979.

So. Two possibilities: either the editors of the WSJ are unable to compare progressivity of two eras because they were confused by a relative tripling of incomes; or the editors of the WSJ are once again pulling a rabbit out of a non-existant hat.

Hop, hoppity hop?


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