It’s Sunday, let’s pick on the New York Times. Rather than going after the Sunday Review section, which is much too easy a target (sample from today’s Review is Friedman doing his world-is-flat schtick: first paragraph of his column mentions some technology issue no one has thought about, EXCEPT, second paragraph, this particular profound thinker in a distant but dynamic part of the world where Friedman has journeyed to gain wisdom! Today is “the last mile” in telecom, and the place is “Jodhpur in the Thar Desert of western India”), I thought I would extract one particular article and be mean to it.The article of choice is Adam Davidson’s article in the Business section “It’s Not Just About the Millionaires,” which is of the school of Very Serious People. The VSP used to be exclusive to foreign policy, but have branched out, and usually consist of someone (Friedman is a charter member) explaining that the current path picked by the policy experts is the best one despite all the naysayers, as those naysayers Don’t Really Understand How The World Works (see “serious person” here for further discussion). Davidson Very Seriously explains why the government’s debt problem can’t be solved by taxing just corporations or rich people, but have to come by taxing the middle class. It finishes with the classic trope of a VSPerson that we have to give up our “fantasy” of raising taxes on businesses and rich people.
Davidson does some math to show that taxing the rich heavily won’t bring in that much money to help cure the debt. I’ll outsource that treatment of the rich to the Center for Economic and Policy Research, which, though entirely too kind to Davidson, does point out the essential issue with his analysis:
First, [Davidson's] piece too quickly dismisses the possibility of getting substantial additional tax revenue from the wealthy. It presents the income share for those earning more than $1 million as $700 billion, saying that if we increase the tax rate on this group by 10 percentage points (from roughly 30 percent to 40 percent), then this yields just $70 billion a year. However, if we lower our bar slightly and look to the top 1 percent of households, with adjusted gross incomes of more than $400,000, and update the data to 2012 (from 2009), then we get adjusted gross income for this group of more than $1.4 trillion. Increasing the tax take on this group by 10 percentage points nets us $140 billion a year.
In other words, Davidson essentially fudged his numbers to come out looking how he wanted to by choosing folks with $1 million-plus incomes and using 2009 figures. Looking at the top-1% for 2012 gives a much different picture.
His treatment of businesses is equally shaded. He pronounces his thesis early on:
Raising them, or even maintaining them, might satisfy the anti-corporate angst of protesters and populists, but it won’t come anywhere near paying off our debt
What is strange is that Davidson almost immediately abandons talking about the debt and begins talking about the top corporate tax rate, which is too high “most people who study the issue agree.” He then spends a paragraph talking about this, invoking Republican Presidential candidates, President Obama, and unnamed “leading progressive policy groups and academics.” He does essentially concede that the top rate is a red herring as “few large companies pay anything close to 35%” He explains how this happens (“huge teams of lawyers”) and that the real debate is about closing the loopholes.
Now comes the three-card Monte. “Any serious analyst who isn’t paid by one of the tax-benefiting industries would suggest eliminating most industry-specific loopholes.” Ah, good, one thinks, he’s now going to deal with how much revenue could be generated by improving the corporate tax code and show (honest argumentation after all) how this wouldn’t actually help. Right? “But the problem is that cutting them will not even come close to” Okay, here’s the thesis statement: not even come close to closing the deficit/reducing the government’s debt/etcHoweverHePhrasesItInAnArticleAboutDebt. “…come close to reviving our economy.”
Excellent! Now, let’s look at the debt and revenue fig…Wait, what? “But the problem is that cutting them will not even come close to reviving our economy.” But. Huh? I thought we were talking about debt and revenue issues? Where did “reviving the economy” come from?
And he’s off to the races. No discussion of debt, no discussion of what closing the loopholes would actually raise from corporations, no discussion of how it would affect the revenue picture. Instead, he wanders into cutting Social Security and Medicare, invokes the Rivlin-Domenici and Simpson-Bowles bipartisan commissions and generally wibbles on in a Very Serious Way, finally reaching the conclusion that taxing businesses “isn’t the answer.”
Combine that with the sleight-of-hand in treating the rich and you have an article that concludes that raising taxes on the middle class is the only way to go. Davidson’s article (like–to use an example close to the hearts of this blog–Amity Shlaes’ book) enters service as a reference piece, to be used as evidence. “Look,” Very Serious People will say “Even a liberal like NPR’s Adam Davidson demonstrates that we can’t tax corporations or the rich!” Never mind Occupy Wall Street; never mind the 99%. They don’t understand.
Only Very Serious People understand.