Today we are presented with three pieces in the WaPo Opinion pages that each in their own manner highlight the tremendous stupidity and confusion that either IS government or IS the analysis of government.
Taken in order of what I consider to be the least to most complex, we have…
First is Charles Lane discussing the modern day consequences of the Democratically dominated 60s; namely the Great Society. What Charles gets completely incorrect is that, at the time, nobody believed there would be long term negative consequences to giving a lot of stuff away to a lot of people. He says:
Transformative and beneficial though they were, and still are, the Great Society programs minted 50 years ago have mutated into sources of new and intractable problems, the most important of which is their unanticipated, enormous cost
And yet, only a few paragraphs later, he gives us this:
Even in those optimistic early years, though, skeptics worried about unrealistic goals and unintended consequences. In 1970, Daniel Patrick Moynihan wrote that the true “test of a program . . . is not input but output. It is interesting, and at times important, to know how much money is spent on schools in a particular neighborhood or city. But the crucial question is how much do the children learn.”
To claim that nobody anticipated the costs…completely disingenuous.
Lane’s piece, however, is a trifle compared to an observation George Will makes in his piece, about Keystone.
While Will’s entire piece is worth reading, here is what I believe to be the most accessible gem of stupidity, levied by Will against BO:
Obama revealed his economic sophistication years ago when he said that ATMs and airport ticket kiosks cost jobs. He does not understand that, outside of government, which is all that he knows or respects, all jobs are “temporary.”
John Tamny, editor of RealClearMarkets and an editor of Forbes, notes that Borders had 10,700 employees and 399 bookstores until it had none of either, thanks in part to Amazon, whose 150,000 employees have probably participated in enough creative destruction to know that permanence is a chimera. Blockbuster — remember that? Remember late fees? — had 60,000 employees and more than 9,000 stores until rivals such as Netflix appeared.
Yes. And, I would further note that BO walks both sides of the line on this because there are many occasions – a specific one of which was when BO exhorted the virtues of DOE’s lending program and Solyndra – when BO claims the jobs are permanent. Apparently, for BO, the jobs are permanent when he supports the program and temporary when he’s against it. Utter hogwash.
Finally, the most confused of all, is EJ Dionne. In this piece, he’s trying to make a point about how rich people don’t pay more than poor people in taxes, particularly local taxes. What EJ – and everybody who make this argument, of which there are many people who do – fails to understand is the difference between the percentage of whatever that is taxed and the revenue generated by (or, equally, the money confiscated because of) the tax.
Here is an example of EJ’s confusion:
On its face, the property tax would seem progressive, because big houses are taxed more. But the study finds that on average, “poor homeowners and renters pay more of their incomes in property taxes than do any other income group — and the wealthiest taxpayers pay the least.”
In fact, no, property taxes don’t ever seem progressive* because THEY’RE NOT! Property taxes, at least, every one that I’ve encountered, levy exactly the same percentage tax against property values. More expensive properties pay a large real dollar value in tax because the property is worth more, not because the tax percentage changes. Furthermore, OF COURSE poor homeowners pay more of their incomes in property taxes than do any other income group; they have less money, in general, so (almost) any tax is necessarily going to be a larger percentage of their income.
Here it is folks, math 101…
Property tax is 10%
Person A earns $100,000 per year and owns a $200,000 home.
Person B earns $50,000 per year and owns a $120,000 home.
Person A will pay $20,000 in property taxes which will represent 20% of their income.
Person B will pay $12,000 in property taxes which will represent 24% of their income.
The tax is the same, as a percentage, for both people. Person A pays more total dollars than Person B, yet Person B pays a larger percentage of their total income than person A.
He makes the same mistake when talking about supposedly regressive taxes like sales taxes:
When you think about it, such figures should not come as a surprise. Most state and local governments rely on regressive taxes — particularly sales and excise levies. Poor and middle-class people pay more simply because they have to spend the bulk of their incomes just to cover their costs.
The percentage is the SAME!** And poor and middle-class people typically DO NOT pay more in total dollars. These groups typically only pay more when one considers what they pay as a percentage of their total income.
Person A makes $100,000 and spends $10,000 per year on groceries.
Person B makes $50,000 and spends $8,000 per year on groceries.
Because people eat about the same amount, though person A is likely to buy more expensive items simply because they can (or because they’re not aware that they’re doing so…because they can afford not to be).
Suppose there is a tax on groceries (which there often isn’t, but the example works perfectly well if you change the tax to something else, like say a sales tax on electronics, which there often is if there is a sales tax at all) of 10%.
Person A is paying $1,000 per year in sales tax on groceries.
Person B is paying $800 per year in sales tax on groceries.
Person A is paying 1% of total income in this grocery sales tax.
Person B is paying 1.6% of total income in this grocery sales tax.
The tax is at the same percentage rate. Person A is paying more in total dollars; yet Person B is paying more in total dollars as a percentage of total income.
EJ thinks he’s figured out something profound when he says:
The institute found that in 2015 the poorest fifth of Americans will pay, on average, 10.9 percent of their incomes in state and local taxes and the middle fifth will pay 9.4 percent. But the top 1 percent will pay states and localities only 5.4 percent of their incomes in taxes.
But…IT’S JUST (very simple) MATH! It’s completely obvious! It shouldn’t be in an opinion piece in a major national newspaper!
* – Progressive and regressive are words which, as applied to taxes, mean something very specific and widely agreed upon (because it’s just a definition). They mean something about how the percentage of the tax levied changes as the taxable base changes. These words are all about percentages, not absolute dollars. A progressive tax is a tax where the percentage of the taxable base increase as the taxable base increases; a regressive tax is a tax where the percentage of the tax decreases as the taxable base decreases.
** – So EJ is completely and utterly incorrect in his utterance. See *, above.