Sunday, May 21, 2006

Greg Mankiw busts Robert Reich's liberal canard 
Former Clinton Labor secretary Robert Reich - a reliable redistributionist - argues that "we've turned a progressive tax system on its head."

Greg Mankiw turns Reich upside down and spanks him like a newborn baby.

Liberals hate it when we check the data.

It's not fair to use data or facts when arguing with a liberal. You have to use feelings only, or it's cheating.

Same basic facts, but I love how the Skeptical Optimist presents it in a user friendly chart.
I read thru the comments on Greg Mankiw's blog, and it's all blither and balderdash. none of these idiots have the foggiest intention of presenting reasoned arguement; they are trying to score political points for their point of view.

At base, this is a statistical arguement and all the statistics are biased by extreme outliers. Tax policy can not be based on the effects of a tenth of percent of the population with extreme high income.

The comments that accompany the chart at the Skeptical Optimist also show a lack of accuracy, and perhaps candor. A fair number of those paying zero tax are low income filers who never paid tax in the past, and therefore have not gotten a tax cut at all.
Well, that's not quite true, insofar as we're recognizing the possibility of a 'negative income tax.'

If someone has zero tax liability in 2004, and then nothing changes except he or she qualifies for a new or expanded tax credit (e.g., Lifetime Learning, retirement savings, child tax credit, etc.) then this individual's tax liability goes below zero. In that case, we have, in effect, a tax cut accruing to the benefit of someone who starts out with a baseline tax liability of zero.

This could easily occur if, say, Mrs. Nussbaum's husband dies, leaving a life insurance policy. The death benefit is tax free. Mrs. Nussbaum uses some of the money to go to school and puts the rest in a retirement account. She doesn't have to work. She therefore accrues no income tax liability (death benefits from life insurance policies are tax free), and qualifies for two tax credits - low-income retirement savings and lifetime learning.
Lack of Candor?

He simply states that 31% of Americans pay NO federal income tax.

Yeah, a tax cut is not possible at that point, but isn't that the point?
What is most disturbing is the assumption by most liberals that if people who produce get to keep more of their money it is somehow unfair to the "poor." Because my wife and I try to earn a living for our family, I would rather see more money out in public circulation rather than confiscated by the government, to be doled out to whatever group is in fashion, or whoever promised the biggest campaign contributions to a particular congressman. That people should be able to keep what they earn and use it to create more wealth for themselves and others flies in the face of liberal dogma, i.e.: "the government is here to take care of you, whether you want to be taken care of or not!"
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