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Re: “Letters

@ Wes O'Dell

Your letter is premised on a serious mistake on your part, which you would know had you examined my article or the easily accessible data with care.

Federal income tax revenues FELL after the Bush tax cuts. You wrote that they increased, which is provable nonsense.

In 2010 they were down significantly whether you use 2001 (a recession year when the first cuts took effect) or 2000 (the base year that candidate Bush said we should use to judge his performance).

In every year since 2001 the revenue was down except 2007 when it was equal to 2001. However, when you adjust for the larger population income tax revenue per capita was 5.5 percent lower in 2007 than in 2001. See my column "awful numbers" at tax.com.

From 2001 to 2010 (so from a recession to what is at least technically a growth year by the official NBER standards) individual income tax revenues, adjusted for inflation, declined 27%. Adjusted for a larger population, revenues are down 32% per capita.

You also misunderstand the meaning of "tax burden," the issue I addressed in citing Colorado tax burdens, and thus draw a false inference.

Burden, as any tax economist will tell you, is the share of income paid in a tax and we measure whether it follows the ancient (and thus conservative) moral principle of progressivity by whether the burden rises with gain or fall with gain. The amount of dollars paid, which you cite, has nothing to do with burden.

There is nothing manipulative about this data, as you suggest.

I take great care to make all of the numbers I use rounded and do extensive analysis before I publish to look at such things as rolling averages to make sure the data I use it not anomalous.

If you can show any error, including misleading use of data, email me at davidcay@me.com and I will correct -- if you have your empirical facts right.

Posted by DavidCayJohnston on 05/11/2011 at 9:48 AM

Re: “Letters

dropped three words:

The reasons the incomes of most of the poor are NOT TAXED IS explained in the Bible and Adam Smith's Wealth of Nations and John Locke's Two Treatises, among many other sources.

Posted by DavidCayJohnston on 04/21/2011 at 1:39 PM

Re: “Letters

Writer of the cover story here,

Mr. De Palma's letter above uses accurate data in a very incomplete and thus misleading way to come to a false conclusion.

First, as a good trial lawyer, Mr. De Palma sets up a straw man and ignores this line, near the top of my Myth #2 -- "Actually, they pay lots of taxes—just not lots of federal income taxes."

His letter deals solely with federal taxes, yet Mr. DePalma writes that "the poor pay nearly no net taxes."

So let's go to the CBO study he cites, which examined only FOUR of the many taxes we pay.

The poorest fifth of taxpayers, whose average income in 2005 was $15,900, or less than $306 a week pre-tax, paid 4.3 percent of their incomes to the federal government.

They had a negative income tax because of the Milton Friedman idea that became the Earned Income Tax Credit, which President Reagan warmly embraced and promoted, but that many of his followers today denounce. The reasons the incomes of most of the poor are explained in the Bible and Adam Smith's Wealth of Nations and John Locke's Two Treatises, among many other sources.

Still, the other three federal taxes took 4.3 percent of their incomes, which were so meager that this came to just under 1 percent of the revenue raised by these four taxes.

And that meager income was measured in a way that inflates it compared to the cash the poor had. That is because the CBO counted as income such things as medical care to the totally disabled, a key fact Mr. De Palma either missed or ignored because it undermined his case.

To be fair and rounded, and to test the standard I set forth in my article, we have to add state and local taxes, which Mr. De Palma ignored.

I used the high-end example of Alabama, nearly 11 percent at an income of $13,200 or less. So let's use Colorado, where in 2007 the poorest fifth paid on average 9 percent of their average $11,400 cash income in state and local taxes, compared to just 4.2 percent for the top 1%, whose income averaged just shy of $2 million.

Selectively looking at facts is a good trial strategy, which is why my third year law students dissect and analyze the ancient Greek trial transcript known as Lysias' "Against The Corn Dealers" to show how to sway a jury and get a conviction (and death penalty) against businessmen who just did what the government told them to do.

But I'm a journalist and so do my best in my writings to present the most rounded analysis possible (and maintain a vast trove of unpublished analysis to back up my work) because 44 years at this have taught me that some people will use incomplete arguments rather than consider whether the world is not as they imagine it to be.

It is human nature to adjust the facts to fit our view of how we imagine the world to be. Because my work often reveals jarring facts, I constantly critically question what I think and test it against the known facts, adjusting my view to fit the facts, not the other way around. That and testing your work by publishing so critics can show you your laws is the best way I know to find such error.

In this case Mr. DePalma has notmade his case on the facts.

So, to quote Mr. DePalma, those who "might want to become apprised with the actual tax situation" would do well to avoid the kind of selective use of facts in is letter.

Posted by DavidCayJohnston on 04/21/2011 at 10:40 AM

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