Chart of the day

 

There have been at least 3,293 gun deaths in the United States since the Newtown massacre.

Chart of the day

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Mankiw and the moochers

Greg Mankiw found the latest numbers from the Congressional Budget Office both “illuminating” and “surprising” because they showed that “the effective tax rate is negative for the middle quintile.” The implication was that the middle-class had joined the ranks of those getting more than they contribute, that is, the tax-and-transfer moochers.

Actually, all the CBO numbers demonstrate is that the federal tax and transfer system is mildly progressive. As readers can see in the chart above (which is based on numbers from the same table—supplemental table 7— whence Mankiw obtained his numbers), while the average incomes after taxes and transfers for the first three quintiles is higher than their market incomes, the incomes after taxes and transfers for the top two quintiles are slightly lower.*

And Nancy Folbre does a good job dismantling, step by step, Team Republican’s moocher argument. Here’s her conclusion:

Stepping back from these particulars, the larger point is that most government transfers take the form of social insurance against risks related to health, unemployment and poverty. As with private insurance, people shouldn’t expect the premiums they pay to equal the benefits they receive. What they should expect — and appreciate — is reduced risk of an economic shock that could turn their lives upside down.

It follows that people who receive more in government benefits than they paid in taxes are not moochers. Those who break or bend eligibility rules for private gain are — along with those who evade their taxes or shelter their income in offshore bank accounts set up for the express purpose of minimizing their tax liability.

*Plus there’s the additional issue, which Mankiw notes in an update, that “the CBO’s transfer data includes state and local transfers, but the tax data includes only federal taxes. If state and local taxes were included, or if state and local transfers were excluded, the middle quintile might well turn positive, though the CBO does not provide the data to establish that conclusion definitively.”

Chart of the day

Percent of Income Earned by Top 0.1 Percent of Taxpayers

source (missing years reflect lack of current data)

Lies, damned lies, and the right-wing use of income statistics

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The right-wing wants desperately to show—against all the evidence—that the rich are being taxed to death and that income inequality has dramatically decreased.

WTF?!

So, up steps William McBride to do their bidding. He uses Congressional Budget Office data to attempt to show (a) the federal tax burden has continued to shift toward individuals at the top of the income distribution, who now carry the lion’s share of the tax burden, and (b) income inequality has lessened and is now no better than it was in the mid-1990s.

The first problem, and a not-insignificant one, is that the data McBride is using stop in 2009. And, it’s true, inequality went down during the Great Recession (because of declines in capital gains for those at the very top), but now it’s starting to return to its former obscene levels (as corporate profits and capital gains have rebounded).

Second, McBride fails to mention income shares in his discussion of taxes. So, yes, while the federal tax burden of the highest quintile (20 percent of households) was 67.9 percent in 2009 (up from 55.3 percent in 1979), their share of before-tax income was 50.8 percent (up from 44.9 percent in 1979).

The third problem is, McBride focuses on federal income taxes but forgets about all other federal taxes, such as social insurance taxes, corporate income taxes, and excise taxes. So, the figure he cites—the top quintile pays 94.1 percent of all federal income taxes—falls to 67.9 percent when all federal taxes are included.

As for his claim of record progressivity of the federal tax code, he really is cherry-picking. The tax progressivity of all federal taxes based on the equalization of the distribution of income (calculated as the difference between the Gini indexes for income before and after federal taxes) was in 2009 exactly what it was in 1979.

So, as a real measure of what has happened to inequality in the United States, I decided to consult the latest data (from the World Top Incomes Database) and I came up with the chart above. Notice anything about the trend? While the average income of the bottom 90 percent of the population remained relatively constant from 1979 to 2010 (actually falling from $32.9 thousand to $29.4 thousand, in 2010 dollars) , the average income of the top 1 percent soared (from $340.6 thousand to $857.5 thousand).

So, beyond the lies, damned lies, and the right-wing use of statistics to attempt to show inequality has decreased in the United States, there’s one incontrovertible fact: the rich are getting rich and everyone else is falling further and further behind.

Austerity in Europe—beyond the numbers

Here’s John Hooper’s dispatch from Rome:

Behind the woeful statistics lies terrible human suffering, as events in Italy have shown.
Since the beginning of March, four people have committed suicide and two others have set fire to themselves — all, by their own accounts, edged to the point of desperation by a recession that comes on top of more than a decade in which the Italian economy has seen almost no growth.

The latest victim was a 27 year-old Moroccan-born construction worker who set alight his petrol-soaked body in the centre of Verona. He told the Carabinieri who put out the flames he had not been paid for four months, was already eating at a soup kitchen and faced being evicted from his home.

The day before, the owner of a small building firm near Bologna who is in dispute with the tax authorities also set himself on fire, but with more serious consequences. The 58 year-old man, who has not been named, suffered burns to 100 per cent of his body after he ignited his car in front of the tax tribunal where his case was being heard.

On Tuesday, a house painter threw himself to his death in the southern city of Trani. On March 20, two men — an employee who had lost his job and an employer who was unable to collect his debts — both hanged themselves. Eleven days earlier, a 60 year-old shopkeeper from the port city of Taranto also hanged himself after being refused a bank loan.

Accelerate this!

I used to understand physics. Now, I don’t. Not at all.

I don’t understand dark energy and dark matter. And I don’t understand the latest “observation” of the Higgs boson in the data from the U.S. Tevatron accelerator before it was shut down. They’re beyond my 20-year-old (even then, partial and incomplete) understanding of physics.

I do, however, get the statistics:

• Particle physics has an accepted definition for a “discovery”: a five-sigma level of certainty
• The number of standard deviations, or sigmas, is a measure of how unlikely it is that an experimental result is simply down to chance rather than a real effect
• Similarly, tossing a coin and getting a number of heads in a row may just be chance, rather than a sign of a “loaded” coin
• The “three sigma” level represents about the same likelihood as tossing more than eight heads in a row
• Five sigma, on the other hand, would correspond to tossing more than 20 in a row
• With independent confirmation by other experiments, five-sigma findings become accepted discoveries

And I’m quite sympathetic to the the spontaneous philosophy of the physicists:

Most professional physicists would say that finding the Higgs in precisely the form that theory predicts would actually be a disappointment. Large-scale projects such as the LHC [Large Hadron Collider] are built with the aim of expanding knowledge, and confirming the existence of the Higgs right where we expect it – while it would be a triumph for our understanding of physics – would be far less exciting than not finding it. If future studies definitively confirm that the Higgs does not exist, much if not all of the Standard Model would have to be rewritten. That in turn would launch new lines of enquiry that would almost certainly revolutionise our understanding of the Universe, in much the same way as something missing in physics a century ago led to the development of the revolutionary ideas of quantum mechanics.

But I still have no idea what a bump in the data between 115 and 135 gigaelectronvolts looks like or what it would mean to rewrite the Standard Model.

United States of official AND supplemental poverty

Last week, the “experts” were arguing that the official U.S. poverty measure was biased. Now we know that it was: downward.

Yep, while the experts assured us the problem of poverty was not as bad as we thought, because the official statistics overestimated the problem, the new Census Bureau estimates—based on the “supplementary poverty measure”—actually raise the number of poor people in the United States.

The rate of poverty in 2010 now stands at 16 percent (instead of the official 15.2 percent) and the number of poor people has risen to 49.1 million (from the 46.6 million under the official rate).

So much for the oft-repeated assertion that the official rate portrayed too bleak a picture of poverty in the United States.

Occupy design

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Occupy George

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In the United States, the average CEO earns 185 times more than the average worker (which actually underestimates the difference, which is more on the order of 350).