After being called out very elegantly and eloquently by Clive Crook in The Atlantic about the fact that the U.S. tax system is in fact more progressive than other countries, Jonathan Chait responds one last time. His problem with my original argument, he writes, nicely this time, is that it is wrong to use the share of tax paid by the top earners to show the progressivity of a tax system.
The measure of progressivity used by the OECD isn’t easy to illustrate in a meaningful way (the U.S.’s is 1.35 vs. France’s 1.1) which is why I used the share of taxes paid (especially since my source for the data is the same table that shows the measure of progressivity and that I linked to that data in my column and responses).
Now, does it mean that every country where top earners pay a larger share of taxes collected than other countries automatically has a more progressive tax system? No, it doesn’t and nor did I in For instance, it is true that a higher share of taxes paid can be the result of top earners taking a biggest share of income in that country. However, having the highest share of tax paid isn’t always, as Chait claims, simply the result of having the biggest share of income either. As it turns out, in the United States, taxpayers at the top bear the highest share of the tax burden both because they earn the biggest share of income, but also because the U.S.-income-tax system is more progressive.
In this third round, Chait also explains that his only beef with me is my use of the share of tax paid by top earners. However, in his first response he did bring up the issue of tax rates, as he defines progressivity as “the degree to which a tax system increases tax rates on higher-income earners.” Since he brought this issue up, in both of my subsequent responses, I tried to explain the interesting paradox that the U.S. can have both lower rates and higher progressivity than EU countries. Smaller tax deductions, higher rates hitting lower levels of income, and heavy reliance on regressive taxes in other countries are some of the factors that explain this paradox. Chait claims I am changing the topic when I was merely addressing an issue he raised and establishing the reasons for the progressivity of the U.S. tax code.
Now, to conclude, yes, it is true that a higher share of taxes paid alone doesn’t prove higher progressivity — and hence it is a very imperfect measure. But will Chait acknowledge the progressivity of the U.S. tax system?
No, he won't. You can't expect liberals to acknowledge logic because they don't use it themselves. They only know what "feels" right. And it certainly feels right that "the rich" are getting away with murder while Dickensian children starve in America's streets.
You cannot debate a liberal because they do not live in the real world, they live in the made-up one inside their heads.
Reply to this commentLinkReport AbuseI don't understand all this, but you know if Krugman's on the case you've touched a nerve. Well done!
Reply to this commentLinkReport AbuseJonathan Chait shows the classic argumentative style of the Left, which is to eat their cake and have it too. In order for Chait to advance his argument, he must first accept that the American tax system does tax the rich at proressively higher rates, but to keep the argument going he has to denounce the very system that he is in support of. One wonders why these people even wasted their time going to school.
Reply to this commentLinkReport AbuseYou were not using using the share of taxes paid by the top 1%just to demonstrate the progressivity of the tax system, you were using it specifically to argue that their taxes shouldn't be raised because their burden is already so high.
You were trying to create the impression that the rich in this country are especially burdened when that is just not true.
Reply to this commentLinkReport AbuseI have a serious question.
You state, "European Union governments understand that in order to feed their welfare states, governments must collect taxes from all citizens, including those at the bottom of the income ladder. So the U.S. tax system is more progressive and collects less tax revenue as a share of GDP."
It is strange that you are looking to Europe as a model for US tax policy. You have already acknowledged that in Europe they collect more tax revenue as a share of GDP not just because their systems are more regressive, but because the actual marginal rates are higher. Indeed, the higher rates kick in at even lower incomes.
So why do you argue that higher rates on top earners here could not possibly lead to more revenue?
Considering Europe has higher marginal rates and more revenue, it is really strange to say, "we should follow Europe, which shows that higher marginal rates couldn't possibly work in raising more revenue."
Are you really arguing that higher marginal rates on top earners would not increase revenue at all? Hasn't the CBO said the opposite? (enough with this canard that raising taxes on the top won't solve the whole deficit problem. who cares?)
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