The Agenda

Disagreeing with Matt Yglesias

I agree with Matt Yglesias on many issues relating to the economics of agglomeration and I find his thinking on education interesting and often persuasive. But I have a few pretty serious objections to his often scabrous take on what motivates conservatives, e.g., he recently pointed readers to David Frum’s analysis of Rep. Paul Ryan’s Medicare proposal, ending with the following rhetorical flourish:

Of course for Paul Ryan the regressive nature of the proposal is part of the appeal. Has Frum gone socialist or something? Did he miss the memo that the orthodox conservative view is that status quo American public policy is unfair to rich people? Its kind of an important part of the ideology.

But Frum corrected his post. After first writing

But why should the voucher be the same for all, regardless of need? How is someone who has gone through life earning less than $44,000 — and half of all Americans do earn less than $44,000 — supposed to accumulate the savings to pay for insurance against the medical costs of the 2050s?

a part of the column quoted by Matt, Frum later wrote

 

Under the Ryan plan, the voucher is NOT the same for all. People who earn less than $80,000 will receive a voucher equal to the full current value of Medicare (on average, $11,000), adjusted for inflation. People who earn between $80,000 and $200,000 will receive a voucher equal to 50% of the standard voucher. People who earn over $200,000 will receive a voucher equal to 30% of the standard voucher. Figures are doubled for couples.

What I should have written in lieu of the bolded sentence is this: “But all seniors regardless of need will face some gap which they must fill with their own saving.”

The policy problem remains even after my own personal error is corrected.

That may well be true, but it should go without saying that the observation loses some of its punch, not least because Rep. Ryan supports a much lower level of cost-sharing for low-income seniors than for high-income seniors. 

And today Matt takes on Greg Mankiw:

The answer is that the column labeled “Share of taxes of richest decile” is in fact the share of income taxes paid by the richest decile. The federal income tax in the United States does, in fact, have a progressive rate structure. Federal payroll taxes, state and local sales taxes, most excise taxes, and property taxes all have a regressive rate structure. So, yes, if you look exclusively at the most progressive element of the American tax code, it’s highly progressive. If you compound that exercise by mislabeling your chart, then you can mislead people. You might think it’s a little strange that Greg Mankiw, an economics professor, would mislead people by uncritically endorsing such a misleading chart but Mankiw believes that progressive taxation is immoral and should be opposed even if it enhances human welfare. Perhaps this same moral theory leads him to believe that misleading people about the subject is an act of justice. If so, then I’m not sure it’s really in the interests of Harvard (or the many universities that assign his textbook) to entrust him with the instruction of teenage economics students.

But the chart actually combines income and payroll taxes, as Scott Hodge makes clear in the post that accompanied the chart:

The first column shows that the top 10 percent of households in the U.S. pays 45.1 percent of all income taxes (both personal income and payroll taxes combined) in the country.  Italy is the only other country in which the top 10 percent of households pays more than 40 percent of the income tax burden (42.2%). Meanwhile, the average tax burden for the top decile of households in OECD countries is 31.6 percent.

As Matt notes, income and payroll taxes aren’t the entire picture; but we’d also have to factor in capital gains taxes, corporate income taxes, estate taxes, and other levies, as a commenter observes. 

I don’t think it’s a coincidence that these are both posts that make pretty big leaps regarding the gut instincts that motivate conservatives. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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