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I continue to miss what all the fuss is about on the ProPublica piece, both in the sense that (as this article points out) it’s not, in broad strokes, surprisin
by md_ 5y ago
I continue to miss what all the fuss is about on the ProPublica piece, both in the sense that (as this article points out) it’s not, in broad strokes, surprising, and in the sense that it’s very far from journalistic malfeasance.
This author argues that ProPublica “misunderstand” the difference between taxing unrealized gains and taxing income. I’ve seen this same argument on HN comments, as though knowing what a 1040-B is somehow makes one a tax policy expert.
Of course, there are countries that tax wealth directly, so “taxes paid as a percentage of wealth” is certainly a valid metric! And if the public are concerned about tax policy disparities between the ultra rich and the rest, it’s the only metric to look at[1]; as everyone knows, the ultra rich tend to earn their wealth primarily as capital gains, so a metric like “effective tax rate on earned income” would simply not be very informative across social classes.
I’m really surprised that this argument has taken off; it feel almost like some sort of astroturfing campaign. There’s no reason we shouldn’t talk about effective tax rates on wealth, even though this isn’t how the US tax code works; indeed, that’s really the point of the article.
1. As someone else noted, looking at returns on capital vs labor after taxes and transfers over time is a better approach to understanding trend, but as a snapshot view, I think this is quite reasonable and easier for readers to grasp.
- jeremy_arnold 5y agoOP here. Three things: 1. Most countries that have tried wealth taxes have either abandoned them or have had to constantly readjust them due to logistical difficulties and capital flight. They're elegant in theory, but very difficult practically. 2. The problem with ProPublica's coverage is that it was a tax policy argument masquerading as a news story. If they wanted to advocate for whatever policy position, that's fine! But to paint specific individuals as underpaying in taxes is deeply disingenuous. It poisons the civic well and gives casual readers the sense that something nefarious is happening. 3. Violating right-to-privacy laws to illustrate a policy proposal is bad! Really bad!
- md_ 5y ago1. Two points: a) The capital flight argument is silly. The US has a global tax on tax residents already, alongside an onerous reporting scheme. b) So what? Again, I don’t understand your argument, which seems to be “this is just how it works—taxes on unrealized gains are rare.” Indeed they are rare, but isn’t that the entire point of the ProPublica piece? 2) No, it’s illustrating the consequences of current tax policy. I read (or misread?) your argument as “effective tax rates on total wealth is the wrong metric” (and you go on to suggest that looking at such a metric puts one as an ignorant). Why is this the wrong metric? Economists like Piketty and Milanovic—going back to Kuznets—have looked at returns on capital vs labor. Effective tax rates on capital are one such component. Why is it disingenuous to look at such a metric? 3) Really? I dunno. https://www.oyez.org/cases/1970/1873 https://www.oyez.org/cases/1970/1873?