…was Andrew Sullivan’s head exploding:
- Tax code became more progressive after Bush tax cuts (Michael Stroup/PDF)
Stroup looks at changes in the tax burden between 1986 and 2004 — the latter being the year after the Bush tax cuts took effect — under a wide variety of metrics. It’s a short PDF, and you should go read it, but I’ll excerpt a few things:
Critics complain that the 2001 and 2003 Bush tax cuts gave the greatest tax relief to the wealthiest taxpayers. However, every major tax bill over the past 15 years — both Republican and Democrat — has increased the progressivity of the federal income tax system.
From 1986 to 2004, the total share of the income tax burden paid by the top 1 percent of income earners grew from 25.8 percent to 36.9 percent. During the same period, the total share of the tax burden paid by the bottom 50 percent fell from 6.5 percent to 3.3 percent.
Since the 2001 and 2003 Bush tax reforms, the share of total income received by the wealthy has increased; however, their share of the total tax burden has increased even more than their income share. In other words, Bush’s reforms have helped mitigate the income gap between rich and poor by increasing the progressivity of the income tax system.
I’m not willing to bite on this just yet — there are an awful lot of things going on in that short paper, and I don’t have the policy-wonk background to tell whether any of the statistics cited raise red flags for the analysis. Mostly I’m linking to it simply because it ought to stir up a lot of shit.
Hat tip to David Henderson, who notes that
Stroup, like almost everyone who writes about these issues, conflates income and wealth. He refers to poor people and rich people, but has no data on wealth: all his data are on income.
The common theme on EconLog over the past week or so has been that income and wealth are strongly correlated, but nowhere near synonymous. (I look forward to one or more of them writing about the decorrelations: My guess is that the vast majority consist of high-income people pissing away a lot of money, but it would be interesting to hear about low(er)-income people who’ve nevertheless managed to accumulate substantial wealth.)