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RFC on graph linking top marginal tax rates to job growth
Closing requested at WP:ANRFC. Consensus was against the inclusion of the graph due to concerns regarding whether the sources provided actually support the relationships suggested by the graph. A compromise with more support was suggested that had more support to include some prose from the sources with the stipulation that it does not contain language regarding a relationship between job growth and marginal tax rates. I'll let the editors on the page decide how best to include this prose. I, JethroBT23:36, 29 November 2013 (UTC)
The following discussion is closed. Please do not modify it. Subsequent comments should be made on the appropriate discussion page. No further edits should be made to this discussion.
An editor, EllenCT, would like to include the graph to the right, or the juxtaposition of the data in prose, in various articles to make the point that US job growth rates declined as the top marginal tax rates declined.
Several editors have concerns that the graph suggests correlation, and perhaps causation, between US top marginal tax rates and job growth history from 1940 to present without a reliable source stating that.
When asked for sources, EllenCT, has provided the following:
, , pages 362-70 in Peterson, W. and Estenson, P. (7th ed., 1992) Income, Employment and Economic Growth, Chapter 9, "Public Expenditures, Taxes, and Finance" and Berg and Ostry (2011)
No - The sources are primarily related to income inequality but none provide any specifics that draw a direct correlation as depicted by the graph. The graph, as is with the supplied sources, constitutes synthesis and therefore violates WP:OR.Mattnad (talk) 16:05, 19 October 2013 (UTC)
No - The sources do not support the material. The graph and the suggested prose are WP:SYN and WP:OR. The sources (which are primary) discuss opinions regarding positive economic effects of improving income equality. There are also sources that say that progressive taxes can decrease income inequality (when combined with proper progressive spending). From there, we make a giant leap to a 75% tax rate is better for economic growth than a 35% tax rate. There are no sources here that suggest this or that higher progressive tax rates improve economic growth, through income equality or otherwise. Morphh23:08, 19 October 2013 (UTC)
Yes - The editors claiming WP:SYNTH do not appear to understand what that means. It's not original research for Ellen to use a reliable source that draws these inferences. MilesMoney (talk) 23:13, 19 October 2013 (UTC)
Drawing "inferences" that are not explicitly stated in the sources is SYN. This is exactly what she's doing: "Do not combine material from multiple sources to reach or imply a conclusion not explicitly stated by any of the sources. If one reliable source says A, and another reliable source says B, do not join A and B together to imply a conclusion C that is not mentioned by either of the sources. This would be a synthesis of published material to advance a new position, which is original research. "A and B, therefore C" is acceptable only if a reliable source has published the same argument in relation to the topic of the article. If a single source says "A" in one context, and "B" in another, without connecting them, and does not provide an argument of "therefore C", then "therefore C" cannot be used in any article." Morphh23:32, 19 October 2013 (UTC)
Am I drawing inferences, or am I inserting facts which in your opinion suggest an inference which would be incorrect to insert without a directly supporting reference? That inference is supported by sources already in the article, even without causal chaining. And for causal chaining to be invalid, there would need to be a reason that the first part of the chain specifically precludes the end of it. No such reasons have been offered. EllenCT (talk) 06:33, 20 October 2013 (UTC)
You're inserting historical facts but correlation them together, which leaves the only point of it being to infer a direct relationship and degree of causality. I don't see anything in the article or the sources that infer a 75% tax rate produces greater economic growth than a 35% tax rate. There are many reasons the chain could be invalid, with the most obvious being that taxation has direct effects on economic growth. As a point of compromise, I think we'd be fine with including some prose in the article that tries to make your point without drawing those direct correlations, like "Income equality is an important component of economic growth, and when coupled with public spending, progressive taxes can have positive effects on reducing income inequality." Morphh13:49, 20 October 2013 (UTC)
That blog post isn't peer reviewed like the journal sources under discussion are. The graph is a more accurate representation of the reality of many countries over many time periods than the original graph at americanprogress.org. And if we don't include the text comparison of 1950 to today, readers won't realize that more progressiveness can do more job creation and economic growth with less total taxes, which is a hugely important take-away fact for readers to understand. EllenCT (talk) 16:32, 20 October 2013 (UTC)
A higher marginal tax rate for the rich does not imply more progressiveness. Which of the following two examples are more progressive? (Income levels where the bottom 90% pay 5% in taxes and where the top 10% pay 25% in taxes or where the bottom 90% pay 50% in taxes and the top 10% pay 60% in taxes.) There is a higher marginal tax rate in the second example, but the first example is more progressive. Also, by your language I suggest you don't use WP to promote a point of view. Arzel (talk) 16:47, 20 October 2013 (UTC)
Ellen, did you know the highest rate of job growth occurred before the income tax? a chart including those numbers it would look much different. Darkstar1st (talk) 18:28, 20 October 2013 (UTC)
yes relative to population, in fact we had negative unemployment, Increasing industrialization outpaced the supply of laborers able or willing to work in dangerous, low-paying, and dead-end jobs. However, the demand for low or unskilled jobs drove wages up and attracted waves of Irish, Italian, Polish, Russian, and Jewish immigrants who could earn more in America than in their homelands.Darkstar1st (talk) 12:58, 21 October 2013 (UTC)
No As others have stated the graph tries to imply a cause and effect relationship. Those in favor are too clever by half by trying to say that they are not making the correlation. Arzel (talk) 16:29, 20 October 2013 (UTC)
I agree the graph suggests a cause-and-effect relationship, which is supported by the sources as being the historical facts in many countries over many different time frames. I do want to suggest it, because it is supported by the highest quality peer reviewed sources. EllenCT (talk) 16:32, 20 October 2013 (UTC)
Taking your words for it "many countries" "different timeframes", is not the United States, and not with the specificity in the graph. After reading your sources supplied, they still don't cut the mustard. Mattnad (talk) 16:40, 20 October 2013 (UTC)
One thing I have learned about statistics over my many years is that you can pick a specific time frame and/or range of values to provide any point of view you would like. Furthermore as I stated just above, a high marginal tax rate is not directly correlated with progressiveness. Arzel (talk) 16:47, 20 October 2013 (UTC)
The graph is not appropriate as presented, Showing it as an X vs Y , using broad categories, is a misuse of statistics. The proper way to present the data is as a time series, with two lines representing marginal tax rate and employment growth, The reader can then draw their own conclusions (their conclusions might possibly be similar, but at least they will have the actual data). It could stil not be used to draw a conclusion--there are many other possible variables,, and it would be much better to show additional variables also besides job creation, which is not the only measure of economic growth. (Even so, it does not prove causation for any of them. (Empirical data without an underlying model does not prove causation of anything, in any domain.) And I agree with the comment that a graph for the US would belong in a section on the US, unless similar time series from multiple countries were shown.
And,while we are discussing graphs, the graph on income as a function of educational attainments is irrelevant to this article. The legend is particularly inappropriate--whether "Government spending on college tuition subsidies can pay for themselves many times over in additional tax revenue." is itself a conclusion, and, though certainly compatible with this data, is not proven by it. The graph is so irrelevant that I have boldly removed it. DGG ( talk ) 17:47, 20 October 2013 (UTC)
No, exclude. Remember that Misplaced Pages is supposed to be encyclopedic, information that gets provided should be relevant and as accurate as possible, and the juxtaposition proposed simply is not supported strongly enough by the citations to warrant the suggested causuality. Damotclese (talk) 16:54, 24 October 2013 (UTC)
Yes - re "Several editors have concerns that the graph suggests correlation" - The sources provided seem to suggest that there is a correlation. I'm a tad confused by the objections here. Do people feel that the sources aren't reliable, or that the sources don't support the idea that there is a correalation? NickCT (talk) 22:28, 24 October 2013 (UTC)
It is the second - the sources don't support a direct correlation. None of the sources provide this conclusion or are even about comparing progressive tax rates to economic growth. They're about income equality. What do you see in the sources that directly supports the conclusion that a 75% tax rate is better for economic growth than a 35% tax rate, or any scale with regard to how progressive rates effect economic growth? We're looking at the exact definition described in WP:SYN - there couldn't be a clearer example of the policy, though the material is technical. Morphh23:57, 24 October 2013 (UTC)
NickCT, the leap from the source material and the graph is more than tax rates in general, it's that it suggests the higher the top marginal tax rate, the higher the job growth in the United States from 1940 to the present. Did you see anything like that in the sources?Mattnad (talk) 02:43, 25 October 2013 (UTC)
Prose at least. Regardless of whether that particular graph of the data is included or not, prose making the general negative point should definitely be included. The negative point being that higher marginal tax rates does not historically preclude job growth. This is an important point to make since there is a very widespread, even dogmatic misconception in America that this is impossible. — Preceding unsigned comment added by 118.209.98.21 (talk • contribs)
We have to keep in mind the topic, which is a global article about a type of tax structure. By definition, a progressive tax is about effective rates, which are always lower than the marginal rate - it's about how the effective rate progresses. So describing the marginal rate while ignoring the effective rate seems counter to the entire point of the article. While your conclusion may be correct dependent on the tax and base compared (and all the other variables), the historical data used to make your point is not an empirical example. In the U.S. historical data, we're looking at lower effective rates in those high marginal periods (as a percentage of GDP), either via a decreased tax base, less tax streams or through evasion. It all depends on the tax structure and government spending, but all things being equal, raising tax rates usually doesn't produce increased economic growth. Morphh13:54, 25 October 2013 (UTC)
So here's the tally. 3 in favor, 7 against, and one IP Address, who has only made a single Misplaced Pages edit (I'm going to discount that one for reasons I'm sure I don't have to go into). While we do not have a consensus, the majority of editors who have commented object to a lack of connection between the source material and the graph or equivalent prose. One compromise, offered by Morph, and endorsed by MilesMoney, is as follows:
I think we'd be fine with including some prose in the article that tries to make your point without drawing those direct correlations, like "Income equality is an important component of economic growth, and when coupled with public spending, progressive taxes can have positive effects on reducing income inequality."
Think we can close this RFC, with the finding that the graph cannot be derived from the sources, and should therefore be excluded? Mattnad (talk) 21:44, 30 October 2013 (UTC)
Sounds good. Want to take a crack at it? EllenCT has got us started on source material, but if we can get secondary reliable sources, better from a WP:RS guideline perspective.Mattnad (talk) 18:25, 5 November 2013 (UTC)
The discussion above is closed. Please do not modify it. Subsequent comments should be made on the appropriate discussion page. No further edits should be made to this discussion.
Source excerpts per the closed RFC
Regarding the RFC closed against inclusion of the graph because it and the historical facts it represents "suggest a correlation" (that's a new one; for crying out loud, what is this, some kind of an anti-logic crusade? And by people who should obviously know better!) does anyone have any problem with including these excerpts:
"Taxes are a leakage from the income stream in the same sense of saving. Equilibrium requires that leakages in the form of net taxes plus saving must be offset by investment expenditures and government purchases of goods and services.... 'our fiscal policy targets have been recast in terms of "full" or "high" employment levels of output, specifically the level of GNP associated with a 4-percent rate of unemployment.'" —Peterson, Wallace C. (1992). "Chapter 9. Public Expenditures, Taxes, and Finance". Income, employment, and economic growth (7th ed.). New York: Norton. pp. 364–70. ISBN0-393-96139-7. {{cite book}}: |access-date= requires |url= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help) Quoting Walter Heller.
"inequality in land and income ownership is negatively correlated with subsequent economic growth.... there will be a strong demand for redistribution in societies where a large section of the population does not have access to the productive resources of the economy.... rational voters have to internalize this dynamic problem of social choice." —Alesina, Alberto (1994). "Distributive Politics and Economic Growth" (PDF). Quarterly Journal of Economics. 109 (2): 465–90. doi:10.2307/2118470. Retrieved 17 October 2013. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help); Unknown parameter |month= ignored (help)
"high unemployment rates...have a negative and significant effect when interacting with increases in inequality.... increasing inequality harms growth in countries with high levels of urbanization, as well as in countries with low levels of urbanization in which there is high and persistent unemployment.... High and persistent unemployment is likely associated to increasing inequalities. Furthermore, there are sensible reasons to expect that this process of high and persistent unemployment, in which inequality increases, has a negative effect on subsequent long-run economic growth.... In sum, unemployment may seriously harm growth not only because it is a waste of resources, but also because it has serious distributional effects: it generates redistributive pressures and subsequent distortions; it depreciates existing human capital and deters its accumulation; it drives people to poverty; it results in liquidity constraints that limit labour mobility; and finally it erodes individual self-esteem and promotes social dislocation, unrest and conflict. Hence, the experience of the 1980s, and the subsequent cycle of low long-run economic growth is a cautionary tale about the future risks for growth of high unemployment and increasing inequality in our current times. «The economic slowdown may entail a double-dip in employment... exacerbating inequalities and social discontent... and further delaying economic recovery» (ILO, 2011). Policies aiming at controlling the dramatic rise in unemployment associated to the current crisis, and in particular at reducing its inequality-associated effects, are not just pressing for the obvious current difficulties that they represent for society today, but also because of the handicap that they represent for future long-run growth." —Castells-Quintana, David (2012). "Unemployment and long-run economic growth: The role of income inequality and urbanisation" (PDF). Investigaciones Regionales. 12 (24): 153–173. Retrieved 17 October 2013. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
"A Yale professor who was among three Americans who won the Nobel prize for economics said Monday, 'The most important problem that we are facing now today, I think, is rising inequality in the United States and elsewhere in the world,' Shiller said." —Christoffersen, John (October 14, 2013). "Rising inequality 'most important problem,' says Nobel-winning economist". St. Louis Post-Dispatch. Retrieved 19 October 2013.
Are you asking whether we should include these excerpts, fully, as written above? If that's the case, I'd say that's a bit too much for an encyclopedic article. This is particularly true for the third excerpt. A better approach might be to find relevant portions of the existing article, and provide a takeaway sentence or two, or use them as an additional reference if needed.Mattnad (talk) 14:54, 11 December 2013 (UTC)
I think it's still a bit text heavy. Also, food for thought, some of the content around inequality of land ownership as well as impacts on employment are details that probably exceed the scope of a progressive tax article. These relate more to income and asset distribution policy. Progressive income taxes do not per se alleviate entrenched wealth disparities. Those tend to be address by other taxes (inheritance, gift) or by other government steps like nationalizing companies or acquiring land via eminent domain. And then we come back to a practical element of progressive taxation previously discussed - reducing income inequality depends greatly on how the taxes are spent. Rent seeking in the U.S. draws away tax dollars to entrenched interests like the military from poor people.Mattnad (talk) 16:03, 12 December 2013 (UTC)
The Castells-Quintana source supports all of material it's supposed to. There's nothing wrong with using a source on income inequality for statements about income inequality. MilesMoney (talk) 16:53, 1 January 2014 (UTC)
milesmoney, you are correct, but it does seem a bit off topic for an article on progressive taxes. Income inequality and its impacts should be covered in this much detail in the article dedicated to it. Progressive taxation is about government policy to fund its operations. The only viable point that should be made in this article is that progressive taxes are based on the fact that income equality exists. Another on topic point is that progressive taxation can help reduce income inequality, particularly where the top marginal tax rates are high. Mattnad (talk) 17:09, 1 January 2014 (UTC)
It would seem as though income inequality is the central distinction between progressive taxes and other kinds, so it should be given adequate space.
That's not what this paragraph does though - it even jumps to unemployment. It's not appropriate to include a paragraph with the purpose of trying to convey this synthesis theory (progressive taxes can improve inequality, equality can improve growth, thus progressive taxes improves growth and employment). If that's not the purpose, then the verbose economic inclusion serves no purpose on this article. This is intended to lead the reader to the conclusion that progressive taxes will improve economic growth via equality, without having sources that directly support that assertion (as we discussed above in the RFC), particular when empirical evidence to the contrary. Morphh21:36, 1 January 2014 (UTC)
Milesmoney, the content of the paragraph is quite appropriate for the Income inequality article in that it details the implications of income inequality. That's one step removed IMHO from the progressive tax article which should address the implications of progressive taxation policy, of which income inequality is a facet.Mattnad (talk) 21:57, 1 January 2014 (UTC)
How can the topic be "one step removed" when the section is about the economic effects of progressive taxes, and the subsection is about income inequality? Both of the sources discuss progressivity of taxation in the exact same way that the beginning of that section does. EllenCT (talk) 23:29, 1 January 2014 (UTC)
therein lies the problem. We should be minimizing that section, not expanding it. There is a main article on income inequality already. We do not need two. Just because there is a subsection, it is not an invitation to become expansive on the impacts or obscure theories on inequality. So in the article on automobiles, we do not have a detailed section on tire makers and the pros and cons of different rubber compounds. Mattnad (talk) 23:48, 1 January 2014 (UTC)
There are many articles on economic inequality, but there is no one article on income inequality in general, sorry. Obviously if we are describing its effects in the context of tax policy, actual evidence and causal pathways serve the reader. The idea that the information you've deleted is as far removed from the effects of income inequality as the pros and cons of rubber compounds is removed from the topic of automobiles is absurd and wrong. It saddens me to see such arguments used like that. EllenCT (talk) 00:08, 2 January 2014 (UTC)
Sorry to disappoint you, but your continued inserting an obscure academic paper on land ownership in agrarian economies is so far from the point of this article that my analogy is more than apt.Mattnad (talk) 00:14, 2 January 2014 (UTC)
Both of the papers are peer-reviewed, and neither of them are about agrarian economies. What are you talking about? EllenCT (talk) 00:18, 2 January 2014 (UTC)
As an FYI to all involved, EllenCT has been adding material and graphs (such as the one rejected in this RFC and others rejected elsewhere) to Tax policy and economic inequality in the United States article (which I didn't even know existed until searching for some additional material). Nice attempt to get around the consensus, move articles. Morphh15:14, 2 January 2014 (UTC)
That article has/had a lot of WP:COATRACK material and needs some serious NPOV work. Please take a look - I've made a bit of changes myself today on it, so feel free to review those - at this point, I felt it needed more of a chain saw approach than a scalpel. Morphh21:10, 2 January 2014 (UTC)
Bogus graph, original research
is cited as the source yet the graph does not appear in the paper. also, the graph cites the 2000 tax year, the paper was written in 1999. i will remove the graph without objection in 24-48 hours. Darkstar1st (talk) 18:35, 1 January 2014 (UTC)
the graph is consistent with tables 6 and 8 in the source paper. It's simply a graphical representation of the numeric data and the paper refers to the year 2000, likely a projection. It's dated, but more recent representations I've seen show a similar pattern. Mattnad (talk) 22:38, 1 January 2014 (UTC)
The following discussion is closed. Please do not modify it. Subsequent comments should be made on the appropriate discussion page. No further edits should be made to this discussion.
Instead of edit-warring over this excerpt, we clearly need an RFC.
Inequality in land and income ownership is negatively correlated with subsequent economic growth. A strong demand for redistribution will occur in societies where a large section of the population does not have access to the productive resources of the economy. Rational voters must internalize such issues. (Alesina, Alberto (1994). "Distributive Politics and Economic Growth" (PDF). Quarterly Journal of Economics. 109 (2): 465–90. doi:10.2307/2118470. Retrieved 17 October 2013. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help); Unknown parameter |month= ignored (help)) High unemployment rates have a significant negative effect when interacting with increases in inequality. Increasing inequality harms growth in countries with high levels of urbanization. High and persistent unemployment also has a negative effect on subsequent long-run economic growth. Unemployment may seriously harm growth because it is a waste of resources, because it generates redistributive pressures and distortions, because it depreciates existing human capital and deters its accumulation, because it drives people to poverty, because it results in liquidity constraints that limit labor mobility, and because it erodes individual self-esteem and promotes social dislocation, unrest and conflict. Policies to control unemployment and reduce its inequality-associated effects can strengthen long-run growth. (Castells-Quintana, David (2012). "Unemployment and long-run economic growth: The role of income inequality and urbanisation" (PDF). Investigaciones Regionales. 12 (24): 153–173. Retrieved 17 October 2013. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help))
Support inclusion of the passage as a separate paragraph, to explain why income equality is a positive economic effect. EllenCT (talk) 02:25, 2 January 2014 (UTC)
Omit the paragraph in its entirety, as it does not even approach the subject of taxation, progressive or otherwise. Obviously off-topic and superfluous. Roccodrift (talk) 02:29, 2 January 2014 (UTC)
Omit The source does not discuss the topic of this article. The source makes no mention of Progressive Taxation or the effect of Progressive Taxation on income equality. It appears to be an attempt to synthesize material. Arzel (talk) 03:18, 2 January 2014 (UTC)
Omit As stated above, the material expands on effects on reducing inequality with no direct link to progressive taxes being the reason. This belongs in the Income inequality article, not here. It leads the reader into a conclusion not directly supported by the material. Morphh13:40, 2 January 2014 (UTC)
Omit The proposed content is off topic. In addition, though this could be repaired and is not a reason for omission, it's written in a declarative style that is an inappropriate reflection of the sources and suggests an editorial POV. Jojalozzo04:49, 9 January 2014 (UTC)
Do Not Include Even though there seems to be something of an agreement that the section of text should not be included, I also want to note that the referenced citations are rather obscure and would not be considered to be academic or encyclopedic in scope so should be excluded on such grounds as well as the other reasons noted previously. Damotclese (talk) 17:52, 13 January 2014 (UTC)
New attempt
I made an attempt to add language to the existing section, using some of Ellen's sources above, that I thought was more in line with what was discussed in the RFC. I briefly described some of the negative effects that income inequality can create, then went into a sentence on how progressive taxation can reduce inequality. I then included information specific to taxes and points of view on the debate. Hopefully this will be palatable and gain a consensus. Morphh16:50, 2 January 2014 (UTC)
Your approach provides balance, but does it get to the nub of the issue that income inequality is a much broader topic best dealt with in another article? I feel this section growing is akin to Scope creep.Mattnad (talk) 17:18, 2 January 2014 (UTC)
I don't disagree - it was an attempt at compromise and I wouldn't object to trimming. My preference would be to remove the subsection and that of "educational choices" for a single section on "economic effects", where we include a couple sentences on progressive taxes reducing income inequality. Morphh17:54, 2 January 2014 (UTC)
The discussion above is closed. Please do not modify it. Subsequent comments should be made on the appropriate discussion page. No further edits should be made to this discussion.
Edit-warring
Comments about editor behavior – Discuss on user talk pages
The following discussion has been closed. Please do not modify it.
MilesMoney, left the following comment on my (NK's) talk page:
This revert constitutes edit-warring, particularly as you left no edit comment and did not participate in the subsequent talk page discussion. Please do not edit-war. MilesMoney (talk) 19:09, 1 January 2014 (UTC)
It is a damn lie. I have made one edit to the Progressive tax page. One edit for the whole time the article has been in existence. You just did not like the edit that I made. You saw my edit and then you went to my talk page and left the above lie. Please stop lying about those who simply disagree with you on edits. Please stop being an edit warrior. It will get you banned from all of Misplaced Pages eventually--not just topic banned as you are now. Please review all of Misplaced Pages's rules before it is too late. There is an article on Economic inequality, please push your position over there.If there is no article on "Income Inequality" then make that article and stop attempting to use the progressive tax article as a coathanger to add POV about income inequality.--NK (talk) 16:13, 2 January 2014 (UTC)
I appreciate you feelings (an instance of the pot calling the kettle black, and not technically edit warring on your part), but I agree with Morph that this is not really germane to the article talk page.Mattnad (talk) 17:13, 2 January 2014 (UTC)
Once again, I responded to MileMoney's reasoning for his edit and I gave my reasoning for my edit. Yes, it is absolutely relevant to this page. There are other places for the discussion on income inequality than in the Progressive Tax article.--NK (talk) 18:03, 2 January 2014 (UTC)
Compromise attempts
@Morphh: There are some substantial differences between and . In particular, the link to Gross fixed capital formation#Economic analysis was changed to Redistribution of income and wealth. Can both be included? Also, a single non-peer reviewed OECD report which represents a very small minority position and one which hardly even exists in the peer reviewed literature is described as "OECD empirical research". Shouldn't you apply your own standards of attribution for minority reports used to provide NPOV balance? EllenCT (talk) 05:24, 5 January 2014 (UTC)
I'm not sure where Gross fixed capital formation#Economic would fit, but if you find a good term to link it.. ok. Here are additional sources if needed which could support that conclusion. Morphh06:08, 5 January 2014 (UTC)
Stefan Folster & Magnus Henrekson, Growth effects of government expenditure and taxation in rich countries, 45 European Economic Review 1501-1520 (2001).
M. Bleaney, N. Gemmell & R. Kneller, Testing the endogenous growth model: public expenditure, taxation, and growth over the long run, 34 Canadian Journal of Economics 36-57 (2001).
R. Kneller, M. Bleaney & N. Gemmell, Fiscal Policy and Growth: Evidence from OECD Countries, 74 Journal of Public Economics 171-190 (1999).
Howard Chernick, Tax progressivity and state economic performance, 11 Economic Development Quarterly 249-267 (1997).
Stephen Miller & Frank Russek, Fiscal structures and economic growth: international evidence, 35 Economic Inquiry 603-613 (1997).
John Mullen & Martin Williams, Marginal tax rates and state economic growth, 24 Regional Science and Urban Economics 687-705 (1994).
Reinhard Koester & Roger Kormendi, Taxation, Aggregate Activity and Economic Growth: Cross-Country Evidence on Some Supply-Side Hypotheses, 27 Economic Inquiry 367-86 (1989).
Jay Helms, The effect of state and local taxes on economic growth: a time series-cross section approach, 67 Review of Economics and Statistics 574-582 (1985).
You are saying these all agree? Romer & Romer are on record saying the optimal marginal tax bracket is above 70%. EllenCT (talk) 06:26, 5 January 2014 (UTC)
Certainly Obama’s first Chair of his Council of Economic Advisers and her husband are not the best source for such a viewpoint, but what their 2010 research concluded was that for every 1% that taxes rise (as a percent of GDP), this causes GDP to fall about 2.2% to 3.6% over the next 10 quarters, mostly through negative effects on investment. She stated “In short, tax increases appear to have a very large, sustained, and highly significant negative impact on output.” During the recent election she came out with her NYT non-correlation argument, if that's what you're talking about. Not sure if new research was published or if she was just endorsing Piketty and Saez. As for above 70%, that sounds like an estimate for the hump in the Laffer curve, not a recommended tax rate for economic growth. Morphh13:36, 5 January 2014 (UTC)
Some address progressiveness, but many discussed particular taxes, of which we tend to place the incidence on higher income, and their economic growth effects, such as harm on investment. The point was, we had additional academic sources to pull from if need be. Morphh14:26, 17 January 2014 (UTC)
Perhaps I'm missing something here. The rfc above clearly indicates that most editors see expansion of this section as off-topic. EllenCT, it's not good wiki etiquette to call for an RFC, and then ignore it completely within a couple of days when it doesn't go your way. The insertion of the graph is a good example of pushing forward with your desired changes without even a token attempt at gathering consensus. Mattnad (talk) 13:24, 5 January 2014 (UTC)
I'm sorry you think that I'm going to stop trying to find a compromise solution to correctly describing the historical outcomes just because a lot of editors with political predispositions causing them to be offended by historical outcomes are in fact offended by them. I am not. I will continue to try to reach a compromise here and on the other articles where the information is pertinent. EllenCT (talk) 02:54, 6 January 2014 (UTC)
A compromise is bringing material here for discussion and coming to a common agreement. It is not simply adding additional off-topic information and then demanding a debate about this information. Arzel (talk) 04:00, 6 January 2014 (UTC)
I agree. It appears the section on income inequality is being used as a coatrack to introduce material not related or only tangentially related to the topic of progressive taxation. Insofar as the extraneous topic actually exists, perhaps a separate article would be appropriate, but packing all of that stuff into this article is scope creep and it needs to stop. Roccodrift (talk) 04:47, 6 January 2014 (UTC)
EllenCT, I suggest you seek compromises on talk pages when the material you'd like to insert is controversial - in this case because many editors think it's not within the article's scope.Mattnad (talk) 08:40, 6 January 2014 (UTC)
If the material I'd like to insert is controversial with people who disagree with the peer reviewed secondary literature, then proposals should go directly to article space. EllenCT (talk) 06:53, 18 January 2014 (UTC)
The controversy is not with a disagreement with "peer reviewed secondary literature." It's that the literature you've selected is not topical to the article. I will create another RFC.Mattnad (talk) 12:41, 18 January 2014 (UTC)
Is this material topical to the progressive tax article?
RESOLVED
The text should be removed as the vast majority of it is outside the scope of the article. If editors wish to return small aspects of the text to the article, they should:
Be careful to show why the added text is relevant to the subject of the article.
N.B. This is not an invitation to reintroduce the text bit by bit. The vast majority of it is outside the scope of the article. Yaris678 (talk) 12:20, 7 April 2014
The following discussion is closed. Please do not modify it. Subsequent comments should be made on the appropriate discussion page. No further edits should be made to this discussion.
Mean income of U.S. families by education of head, 1989-2010. Government investment in college tuition subsidies usually pay for themselves many times over in additional tax revenue.
Public subsidy of college tuition will increase the net present value of income tax receipts because college educated taxpayers earn much more than those without college education.
Nobel laureate and John Bates Clarke Award Winner Gary Becker, professor economics and sociology at the University of Chicago and a senior fellow of the Hoover Institute, argues that the root cause of income inequality is differing levels of educational attainment. Consequently, the "rise in returns on investments in human capital is beneficial and desirable" to society, according to Becker because it increases productivity and standards of living. Becker points to the widening gap in earnings between the college and graduate school educated and those who did not go to college. In 1980, the average income of a college graduate was 30% larger than the average income of a high school graduate. The average income of a worker with a graduate degree was 50% larger than the average income of a high school-educated worker. By 2007, the average college graduate earned 70% more than a non-college graduate and the income premium of a graduate degree was over 100%. Becker argues that while education is widening the income gap, it is simultaneously creating more opportunities for the poor and for marginalized ethnic and gender groups. According to him, the income growth with respect to education for women parallels the growth for men and the same is true between blacks and whites. Globalization, which has been spurred on by growing educational attainment, has also helped increase income and overall wealth inequality. Rapidly growing globalization during the 1980s due to the rise of emerging markets and increased demand for complex products increased the demand for high-skilled, highly educated workers because their marginal product of labor increased while the marginal product of labor for unskilled workers remained the same. This occurred because high-skilled workers were needed to operate new technology and to perform services that could not be done by low-skilled, low-educated laborers. Accordingly, the real wage of college graduates increased and declined for low-skill laborers which widened the wealth gap. Additionally, globalization combined with increased educational opportunities shifted the economy away from a manufacturing base to a finance and services-dominated market. Becker argues that this rise in income inequality is only a temporary and necessary transitory stage as the ever rising rates of return on investment in education will simply serve to raise living standards, productivity, and human capital across the board as more and more people become college and post-undergraduate level educated. He even argues that income inequality could reverse itself as more and more Americans get college degrees.
Off-topic – discusses, in an indirect way, what should be done with the tax money once raised. This article deals with the raising of tax funds and who gets to pay what. Sales taxes, VATs, tariffs, etc. have progressive aspects to them because wealthier people tend to buy more stuff. But it doesn't matter if people with more education have or earn more money. How they got that education has nothing to do with tax schemes. – S. Rich (talk) 17:13, 18 January 2014 (UTC)
@Srich32977: - Your statement is incorrect. The taxes you list are not progressive, they are regressive because wealthy people spend a smaller proportion of their income on goods taxed in those ways. If this view was essential to your "off-topic" view, please reconsider. SPECIFICOtalk15:19, 23 January 2014 (UTC)
– Not essential to the off-topic argument at all. I might have included luxury taxes or estate taxes, which are "progressive". Where and on what tax money is spent (for example, spending by Mark Ridley-Thomas#Controversy) has nothing to do with the progressiveness or regressiveness of the taxes or this article. – S. Rich (talk) 17:26, 23 January 2014 (UTC)
The progressiveness of the tax has as much to do with the income distribution of the tax base as the marginal rate of the schedules. EllenCT (talk) 22:37, 18 January 2014 (UTC)
Not really. You can have a progressive tax system that does relatively little for lower income households. The US for instance has one of the most progressive income tax systems according to the OECD, does less well on measures like poverty or the Gini Index. I think you might agree that the US does less to support lower income households than Canada. Canada has a less progressive tax system than the US but a better post tax gini index number, socialized medicine, affordable post-secondary education, some provinces have $7 a day government managed daycare etc. Mattnad (talk) 15:29, 25 January 2014 (UTC)
Include The Groundhog Day analogy is apt: once again we see libertarian Randroids unable to publish in the peer reviewed literature or produce accurate predictions or simulations which predict actual historical outcomes from prior data trying to push their unsupported political biases into Misplaced Pages, this time by whitewashing the relationship between the income distribution of the tax base and the progressiveness of the resulting taxation. That abuse of the accuracy policies needs to stop. EllenCT (talk) 22:31, 18 January 2014 (UTC)
Include but trim Invited here by wikibot. Some context can be included, as this is an alternate policy that shares the same goals. (For example, negative income tax is described in the article on minimum wage.) However, the section as displayed above is overweight. LK (talk) 06:01, 23 January 2014 (UTC)
LK, economic equality is an effect, which may or may not be a goal when creating the tax scheme. Such a tax may have many goals/effects and I don't agree with including sections or content just because they share the same goals. Once you make the jump that this article is not about progressive taxation, but about the goals of reducing inequality and that it covers any spending (subjects that other articles cover), then you could justify inserting just about any policy that seeks that goal (healthcare, housing, welfare, etc). If we have a sub-topic that is directly effected by a progressive tax rate, then include it, but we need to be careful about WP:COATRACK and WP:SCOPE. In your example of the negative income tax being described in minimum wage, that makes sense, because the negative income tax provides a minimum wage. Does education attainment provide a progressive tax rate? Does a progressive tax rate provide education attainment? We have to make the jump - education attainment can increase economic equality and so can progressive taxation. What else can increase economic equality - should we include content for each subject here? Those topics are best left for the articles on economic equality. What we should say here is that progressive taxation does reduce economic equality, but any jump to related goals makes little sense. As for your edit, I don't object to adding some balancing pov for existing content that does directly relate to the subject, but it may need to be reworded, because the content seems twisted and I'm not sure the source supports the current wording. I don't think the source states that lowering income equality increases education attainment, at least not without education spending (which may or may not be via progressive taxation). It says the reverse, that "the rise in inequality accompanied a rise in the payoff to education and other skills." So I think the context is reversed, though perhaps is cyclical with education spending. The source does not say that "progressive taxation may also increase educational attainment" - in fact, it says the opposite. Morphh14:53, 23 January 2014 (UTC)
For many, the solution to an increase in inequality is to make the tax structure more progressive—raise taxes on high-income households and reduce taxes on low-income households. While this may sound sensible, it is not. Would these same individuals advocate a tax on going to college and a subsidy for dropping out of high school in response to the increased importance of education? We think not. Yet shifting the tax structure has exactly this effect. A more sensible policy is to try to take greater advantage of the opportunities afforded by the higher returns to human capital and encourage more human capital investment. Attempts to raise taxes and impose other penalties on the higher earnings that come from greater skills could greatly reduce the productivity of the world’s leading economy by discouraging investments in its most productive and precious form of capital—human capital.
Re-write The text appears to imply several degrees of SYNTH and the relation of its content to "progressive taxation" is not stated by any single source. I see no problem with an "effects" section in this article if the effects can be well-sourced and directly related to the topic. The current section appears to confuse the effect of increased income for a single taxpayer with the aggregate effect of increased income for a large number of taxpayers, and seems to entail many assumptions or ceteris paribus conditions which are beyond the scope of this article. If a shorter version is included in the article, I think the views described therein should be attributed to the source and not stated in WP's voice as fact. SPECIFICOtalk21:33, 23 January 2014 (UTC)
There is an effects section in the article Progressive_tax#Economic_effects. The problem is that the RFC content is not an effect of progressive taxation, so I'm not sure how would you rewrite it. What would you suggest for a rewrite to make it on-topic to a progressive tax rate? Morphh01:45, 24 January 2014 (UTC)
If there is an RS which says it's an effect of progressive taxation -- for example if Gary Becker stated that view -- then we could cite and attribute that view to the source. SPECIFICOtalk02:00, 24 January 2014 (UTC)
Right - I agree with that. I think the only thing Gary said in regard to progressive taxation was that it would hurt educational attainment, which I quoted above. We do include a sentence in the section already on that topic. Morphh02:45, 24 January 2014 (UTC)
@Lawrencekhoo: I had trouble verifying "progressive taxation increases educational attainment of the poor" via the sources. Only one source mentions taxation and it supports the opposite argument. I think it needs to be reworded, but I think I understand where you're going. Assuming that a progressive rate lowers taxes on the poor, they will have more income to save/spend on education. Alternatively, if taxes on high earners is redistributed to the poor or to education spending, it could increase education attainment. In either case, we're dealing with after-tax spending, so we need to be careful. Morphh16:02, 25 January 2014 (UTC)
Do Not Include I was randomly selected by the 'bot for the RFC. I see that there appears to be something of a concensus that the text is not relevant and I agree, it should not be included. Also a lot of the text consists of claims which are not backed by falsifiable citations and references, claims that would discount the text's inclusion any way. Damotclese (talk) 19:25, 29 January 2014 (UTC)
Do Not Include Gary Becker seems to be advocating the very opposite of a progressive tax, based on his work as linked here and elsewhere on the same website (see Morphh's comment). There was a different article on that site, which supported Miz Ellen's views, but that isn't relevant. It wasn't written by Gary Becker, and besides, it seems like an excessive digression to include so much topical U.S. public policy-specific content in an article that is supposed to be about the concept of progressive taxation in general, without undue emphasis on country locale. I am sorry, as I don't recall the URLs now. I'll try to fetch them, as corroboration. --FeralOink (talk) 05:27, 3 February 2014 (UTC)
Exclude - Randomly invited comment. The text is tangential to this topic. It appears to be an agenda looking for a platform. POV pushing. Jojalozzo15:31, 10 February 2014 (UTC)
The discussion above is closed. Please do not modify it. Subsequent comments should be made on the appropriate discussion page. No further edits should be made to this discussion.
Economic growth graph
Ostry and Berg (2011) study the factors affecting the duration of economic growth in developed and developing countries, and find that income equality has a more beneficial impact than trade openness, sound political institutions, and foreign investment. Decreased progressiveness in capital gains taxes and other income taxes were the largest contributor to the increase in overall income inequality in the US from 1996 to 2006.
I question the inclusion of this graph, which several other editors have also removed. I have no issue with the source itself or the graph for presenting a pov, but does inclusion create one-sided NPOV issues and does it meet Misplaced Pages:Image_use_policy#Content, which states "They should be relevant and increase readers' understanding of the subject matter. In general, images should depict the concepts described in the text of the article." For one, the inclusion of U.S. specific content regarding capital gains is not anything that the graph depicts. We already have example content in the article with regard to U.S. tax policy and it creates duplication and issues for worldview writing. Second, as mentioned above, the graph presents a pov regarding equality driving economic growth, which one could source that economic inequality is a result of economic growth or, as described in the article, that progressive taxation could hurt growth. The graph doesn't depict progressive taxation effects though, what the image depicts is Ostry and Berg's analysis that income distribution is a major factor for economic growth. It sort of serves this WP:SYN gap to make the conclusion that progressive taxation increases economic growth, which is not supported by the sources.
Progressive taxation reduces inequality (A)
Graph depicts equality improves growth (B)
I'm concerned that the take away presented to the users based on it's inclusion is (C) that Progessive taxes improves economic growth, without actually saying or sourcing it. "A and B, therefore C" is acceptable only if a reliable source has published the same argument in relation to the topic of the article. If a single source says "A" in one context, and "B" in another, without connecting them, and does not provide an argument of "therefore C", then "therefore C" cannot be used in any article. The graph's inclusion is associated with this sentence in our content "High levels of income inequality can have negative effects on long term economic growth, employment, and class conflict." I think that sentence provides context for the section, but it's not what the section is about, so even if the graph was neutral, does it deserve to be included per WP:WEIGHT? Many questions and issues - please discuss. Morphh16:40, 24 January 2014 (UTC)
After specifically asking that the transfers be specified as progressive in order to benefit from progressivity, that you want to whitewash the actual benefit is not surprising. The graph should be included because it is supported by the sources cited and is therefore not a synthesis. Have you decided to abandon your replacement of "progressive" with "redistributive" or is this encyclopedia written by those who would lead readers to believe that there is no such thing as a regressive after-tax transfer, or a regressive pre-tax transfer brought about by policy? EllenCT (talk) 05:05, 25 January 2014 (UTC)
WP:SYN says that if sources A and B imply statement C, then you can't include C without a source directly supporting it unless it follows per WP:CK. It does not say that if A and B are related because they both deal with facts pertinent to the article, you can delete B because you personally don't like the mutual implication C. In this case, C is also supported by the peer reviewed literature in sections above and in the sources in the graph's caption, so WP:SYN doesn't even begin to apply. EllenCT (talk) 07:32, 25 January 2014 (UTC)
EllenCT: Personal attack, again. For the third time, I did not say that transfer payments were necessary in order increase equality. How many times do I have to say it before you stop repeating it? Please, acknowledge this, because repeating it in the future should be considered as intent to mislead other editors. I've noted a pattern of misrepresenting the words of others, not only Misplaced Pages editors, but that of your sources. Please be more careful in the future. As for WP:CK, you should reread it because it absolutely does not apply, in fact, it states the exact opposite right up front. If you have sources that directly conclude without interpretation that progressive taxation increases economic growth, then please provide it, because no such source has been put forward. Morphh14:06, 25 January 2014 (UTC)
As I said in the first post, I don't have an issue with the source supporting the graph for what the graph states. My concern is that inclusion may imply WP:SYN and that it presents a POV that is not balanced in an article where it's WEIGHT is minor. As for the term "redistributive", I believe the context of the section and sentence clearly indicate a transfer from high to low income. As I explained on my talk, "progressive spending" is not a common term and we should try to use language that the general public will understand. I did revert my edit of that term though until we can agree to something better. Morphh14:27, 25 January 2014 (UTC)
What sources support the idea that income inequality doesn't support growth? The Economic inequality#Inequality and economic growth article sections go into the history of the question in great detail, and while the idea that income inequality supports growth enjoyed non-fringe status due to Art Okun's regression mistakes, it's now thoroughly discredited while the Berg & Ostry work is cited widely and favorably in the WP:SECONDARY literature. Have you studied the secondary peer reviewed literature on the subject or not? EllenCT (talk) 07:12, 3 February 2014 (UTC)
I have to agree that this particular graph should probably not be included. However, there is a wide literature on the connection between income inequality and a wide variety of societal ills. This literature often points to tax progressivity as a mitigating factor. This article should include a section about how progressive taxation is often suggested as a way to mitigate the societal ills associated with higher income inequality. LK (talk) 07:47, 27 January 2014 (UTC)
Not included why specifically? It was a groundbreaking result to look at run lengths for variables that filter through in closer to decades than year-over-year results. Of course I agree that we should include a section about how progressive taxation mitigates social ills, but question whether the editors recently active here would ever allow such a dissonance with their personal political views. EllenCT (talk) 07:12, 3 February 2014 (UTC)
We already have a section on how progressive taxation reduces income inequality and I have no issue with including that progressive taxation is often suggested as a way to mitigate the societal ills associated with higher income inequality in that section, the lead, or mentioning it in the historical section. I could also see providing examples by naming / linking the primary societal ills it suggested to mitigate. What would concern me with an additional and separate section or paragraphs is that it would become a coatrack about economic inequality and the social programs and redistribution policies for reducing inequality with the peg being progressive taxation as a method to fund it. That would not be appropriate for this article and we've had sufficient RFC input for a consensus regarding this scope issue. Morphh15:01, 3 February 2014 (UTC)
EllenCT, per Morphh, the RFC has been open for quite some time, and the indications from a majority of editors is that it's off-topic when taken to the level of detail you want. It's not about politics but good writing. You may have noted that most challenges to your editing has to do with scope and sourcing, not your political views. Please provide others with the same courtesy. You will have more success if you keep your contributions on topic and ensure you have clear sources that state what you are inserting into articles. Mattnad (talk) 15:22, 3 February 2014 (UTC)
Income inequality
There has been some back and forth recently with regard to the first sentence in the income equality section. Thought we could discuss an improved version. The wordy and overly technical sentence states:
Some first thoughts come to mind without digging through the sources. We use the term "absolute income inequality" - is that a real term? It would seem to me that equality is always relative, but can be measured on absolute or relative income. I can understand that it's possible to decrease absolute income while increasing relative income (progressive taxation reduces inequality, but the effects may not always improve the poor's income and standard of living), but I'm having trouble understanding what absolute income equality means here. Perhaps someone can clarify and reword it - while I think the distinction of relative equality vs absolute income is worth noting, it's hard to understand. We then conjoin it with a requirement of low evasion and spending, which would seem unnecessary for reducing inequality via the tax structure. It would seem that progressive taxation by itself reduces inequality and that reduced evasion and progressive spending would improve equality effects. I question if the evasion statement is self evident - maybe we could footnote it? We also need to reduce the WP:TECHNICAL - I have a short discussion on my talk regarding the uncommon term "progressive spending", which sort of seems like a neologism and could be more easily understood as redistributive spending. We also have links to Gross fixed capital formation, which may not be something helpful for the average reader on a high level article. I also have concerns about the second sentence:
When income inequality is low, aggregate demand will be relatively high, because more people who want ordinary consumer goods and services will be able to afford them, while the labor force will not be as relatively monopolized by the wealthy.
It's stated as a fact when we should probably be phrasing this as an opinion and condition it (example: at what point does increases in equality negatively effect this trend as it would seem socialism wouldn't apply). I haven't had time to review the sources and verify the content. Morphh18:05, 27 January 2014 (UTC)
The wording "absolute income inequality" is from the source. I too am unsure about what absolute vs relative means in this case. As for that bit about tax evasion, it's from another source that points out that a more progressive tax system can increase evasion at the top end, hence reducing the actual progressiveness of taxation and hence reversing some of the income equalizing effect. As for the second sentence on Aggregate demand, I agree that it's problematic. I haven't touched it cause I haven't read the sources, but off-hand my impulse is to axe it. LK (talk) 12:54, 28 January 2014 (UTC)
Axe it why? It's easy to find sources in support of the statement. comes up at the top of a Google search for the two terms. is another looking at different data. Does anyone seriously contend that income equality decreases aggregate demand? For the other clause there's the classic and more recent work like and . I don't think either statement is terribly technical, but I agree "absolute" can go with no loss of its source's meaning. EllenCT (talk) 07:06, 3 February 2014 (UTC)
I guess I'm doing OR here, but speaking as an economist, I don't see a permanent increase in Aggregate Demand as a necessarily good thing. It's good now, since we're a middle of a depression, but once we're out it may actually be a bad thing since it depresses savings - unless Larry Summers is right and we are in danger of secular stagnation, in which case it would be a good thing. So, in short, I feel it's kinda an iffy thing to put as a justification for progressive taxation. LK (talk) 05:08, 7 February 2014 (UTC)
It doesn't say greater consumer demand is always good, but the best practices for amortization suggest to me that it is likely decades before inflation is a problem, even at 4% unemployment. Actually I have reason to believe that 4% unemployment reduces inflationary pressure relaitve to 6% because the private sector is more efficient, and I believe there is an analogy to how more progressive tax requires less total tax all else equal. Do you see it? There is support in the literature, but someone would probably call it synthesis unless I get two more overlapping citations. EllenCT (talk) 02:39, 10 February 2014 (UTC)
Section on Psychological effects
Sorry I don't have time to work on this, but much has been written on the psychological and social effects of inequality and progressive taxation, so that section should be expanded (perhaps section title should also be changed.) These papers can be mined for sources to expand the section on psychological and social effects:
And, of course, the book The Spirit Level, attributes all kinds of ills to income inequality, and suggests progressive taxation as one way to improve social outcomes. Review of the book here:
--LK (talk) 11:40, 28 January 2014 (UTC)
I expanded the article (the Lead and the Psychology section) to include some of these sources and ideas. Morphh09:40, February 7, 2014 (UTC)
@Lawrencekhoo: those are all excellent. Thank you! Regarding the questions about inflation in the previous section, and considering contractionary policy as a de facto tax on the poor (possibly meaning that employment is the ultimate private sector transfer payment for working class consumers), do you think it is possible to use to extend the basic ideas in to unemployment rate targeting in developed countries to advantage wealthy fixed-income earners earning less than inflation (both individuals and the management of stagnating firms)? The policy response that comes to mind is to make sure that government securities are competitive with (because they are invested in or hedged to be equivalent to) multisector bonds. EllenCT (talk) 03:03, 19 February 2014 (UTC)
My only comment Lawrencekhoo is that we should make sure that whatever ideas we bring in are a) mainstream, b) related to progressive taxes, and c) do not require synthesis. The papers introduced here by EllenCT focus on corruption and rent seeking issues which are at best obliquely related to a progressive tax topic (in as much as progressive taxes can mitigate unfair gains.) However, neither of them mention progressive tax policy in any way shape or form. Perhaps EllenCT can provide a quote? Mattnad (talk) 18:19, 19 February 2014 (UTC)
Don't tell me that you two think monetary policy doesn't amount to an effective tax. The effect of banks multiplying their money by loaning more than is on deposit is the same as a government devaluing their currency by printing more. In any case, please read . EllenCT (talk) 00:27, 20 February 2014 (UTC)
No, that's not it. I, for one, just never see responses that actually quote from refs. Not yet at least. One can always hope of course. Capitalismojo (talk) 00:46, 20 February 2014 (UTC)
"Psychological effects" ought to have similar outcomes across equivalent state actions. My question is about how reliable sources characterize the transfers of inflation targeting, including the extent to which lowering the inflation target may or may not be characterized as equivalent to a progressive tax on management and capital with transfers to labor and consumers, asked because I am looking for sources supporting the hypothesis that a lower unemployment rate can create less inflationary pressure because the private sector is more efficient than government. That was suggested by the abundant empirical evidence that more progressive tax requires less total tax, all else being equal. Would you prefer I copy the discussion to WT:ECON? Gladly. EllenCT (talk) 02:53, 20 February 2014 (UTC)
It sounds like you're describing an Inflation tax which some think of as regressive or proportional. If you reduced inflation, I don't think it would make it progressive, just less regressive per say. Likewise the same proportional effect would apply to deflation. As I understand it though, these monetary changes significantly effect the value of savings, much more than income. Such devaluation of wealth tends to be held by higher income earners and retirees, while higher relative debt is held by the young and lower income. So, the effects are likely more pronounced as intergenerational equity. In any case, inflation effects are outside normal definition of a tax, which is why it has its own ancillary article, so we'd need something to directly attribute. Morphh13:47, 20 February 2014 (UTC)
The definition of a tax which is a non-voluntary levy imposed by law on an individual or corporation in order to fund government function. There is no statutory rate, no law defined, no enforcement, no revenue increase to government in the form of payment. It's not even clear that the government would be the cause of the inflation, unless you're now siding with the Austrians and all inflation is caused by the monetary authority. Morphh01:04, 23 February 2014 (UTC)
Currency devaluation is a non-voluntary levy imposed by law on all individuals and corporations holding cash or cash-equivalent securities, in order to print money for the government. There may or may not be a statute setting the rate, but the rate is well defined and the devaluation is enforced the same way as non-devaluing issues of money or striking of coinage. It does not necessarily cause inflation, but it often does. EllenCT (talk) 08:17, 23 February 2014 (UTC)
So wouldn't this be more pertinent to an article on inflation (and am I making a baseless accusation per your note below)?Mattnad (talk) 17:38, 23 February 2014 (UTC)
I'm not the one who raised the idea that currency devaluation is not a tax. I reserve the right to address accuracy problems that occur in the course of discussions about other subjects. EllenCT (talk) 03:21, 24 February 2014 (UTC)
I understand the viewpoint and agree there is a burden, but such a broad interpretation of the definition would apply to any law that has an economic effect on personal income or standard of living. It's not a law that directs a levy to be administered and enforced by the executive to fund government. @Famspear:, what's your opinion? Does any court or law recognize this as a tax? A progressive tax has an increase in tax rate as the the taxable base increases, and it's difficult to say either one is defined as tax policy for currency devaluation. Morphh20:36, 23 February 2014 (UTC)
See p. 13 of if you're interested, but Mattnad is right. We should be talking about progressive taxes. Do you have any sources which suggest that more progressive taxes do not require less total tax all else being equal? EllenCT (talk) 03:21, 24 February 2014 (UTC)
I read p. 13, but that describes fiscal devaluation via tax reform. I'm not following your last question. All else being equal, we're just factoring revenue neutrality. I'm not understanding the context of the question / request. Morphh03:45, 24 February 2014 (UTC)
The conclusion that, up to a point, the majority of people would be happier if they paid less tax and shifted the burden to someone else doesn't seem like a profound insight. I feel like you're asking me to defend something, but I don't know what the dispute is about. My comment above was in regard to monetary devaluation being defined as a progressive tax - next thing I know I'm being asked to find sources for revenue neutrality and doubts for happiness. What exactly are you wanting to include in the article? Morphh14:54, 24 February 2014 (UTC)
How would you characterize the difference in outcomes between a very regressive, flat, and very progressive tax collecting the same amount of money? EllenCT (talk) 02:29, 25 February 2014 (UTC)
@EllenCT:, what might be more productive is less of a platonic dialectic (your asking a question to prompt the response you hope will make your argument clear), and more of your stating what you'd like to add to the article, with reliable sources supporting it.Mattnad (talk) 14:20, 25 February 2014 (UTC)
My question to User:Morphh was a direct answer to his question: I would like to include his characterization of the outcomes, but only if he agrees with the reliable sources. Therefore the question is not about platonic ideals, but about concrete improvements to the article, because I need to know the answer before I can confirm that it is what I want to include. What is your answer to the question: How would you characterize the difference in outcomes between a very regressive, flat, and very progressive tax collecting the same amount of money? EllenCT (talk) 08:05, 26 February 2014 (UTC)
Morphh asked "What exactly are you wanting to include in the article?". Your "question" in reply is not a "direct answer". I propose you write what you have in mind, with sources. That's a direct answer.Mattnad (talk) 11:07, 26 February 2014 (UTC)
Comments about avoiding WikiProject Economic talk page for discussion of improvement of this article
The following discussion has been closed. Please do not modify it.
WT:ECON is a page for discussion about the WikiProject Econ page. I've left a note about moving the discussion there, which is inappropriate. Please continue the discussion here or post an RfC directing editors to this page. Thank you. – S. Rich (talk) 05:37, 20 February 2014 (UTC)
What is the appropriate place to report tag-teams of editors who don't like certain articles making baseless accusations that editors working on improving those articles are out of scope? EllenCT (talk) 00:27, 23 February 2014 (UTC)
If everyone disagrees with you there is very little that you can do. The majority disagreed with me over negative content in the BP article. All you can do is leave the article, or WP in general. WP is a giant ouija board; nobody really knows who is driving it. Martin Hogbin (talk) 13:29, 23 February 2014 (UTC)
Everyone doesn't disagree at all, but some people have better things to do with their time than argue with those who think pamphleteers are more accurate than anonymous peer review. EllenCT (talk) 03:21, 24 February 2014 (UTC)
In your case I think pretty much every editor has disagreed with you. Charaterizing your failure to hear consensus as "tag-team" opposition is not a positive development. Capitalismojo (talk) 03:57, 24 February 2014 (UTC)
Outcome comparison of very regressive, flat, and very progressive tax
I would like to include a comparison of outcomes of very regressive, flat, and very progressive taxation. I know what the most reliable sources say. I would like to know what other editors think the second most reliable differing sources say. EllenCT (talk) 20:03, 27 February 2014 (UTC)
The outcomes or effects of tax incidence is a very broad topic that can impact many areas, both short and long term. The primary intent is already described in the lead paragraph. You're not making clear what you intend to include and I have no idea which sources you consider the most reliable that we're suppose to counter. This is not productive. If you're aware of additional sources that offer differing views, you should just include that balance when presenting the material. Then we can discuss any additional sources, weight or verifiability issues. Morphh21:57, 27 February 2014 (UTC)
The peer reviewed literature reviews are the most reliable in disciplines such as math and forecasting which have them, as WP:PSTS states. Which do you think are the top three most reliable sources on which economic models are most correctly predictive including the New Keynesian DSGE models, among those which study the effect of different tax incidence all other things equal? EllenCT (talk) 03:34, 8 March 2014 (UTC)
EllenCT, I'll give you points for starting the discussion here. Put something in writing, with sources and we can comment/participate if needed.Mattnad (talk) 01:21, 28 February 2014 (UTC)
Additional sources
How do other editors think that the sources at , , , , , , its source book, and should be summarized? I don't have time to summarize them at the moment, so please don't ask me how to say how I would summarize them first. I will be happy to summarize them later. EllenCT (talk) 05:48, 9 March 2014 (UTC)
As is clear from the comments on this page, I did not propose those sources. Moreover, my reply to the editor who proposed them makes it clear how I think they should be used. What is your opinion of their conclusions, and if you doubt them, what alternative sources with different points of view do you propose? EllenCT (talk) 01:42, 15 March 2014 (UTC)
Are you circling back to monetary devaluation being a progressive tax? That's not a summary that the sources draw if you read their synopsis or conclusions. The article contains several of the points made in these publication's conclusions. If there is something specific in a source that you think should be included, then please specify, be specific by quoting or presenting the intended prose, along with the attributing verifying text from the source. Let's avoid another synthesis dispute - "do not analyze, synthesize, interpret, or evaluate material" - it should be something that any educated person without specialized knowledge can verify. Morphh02:42, 15 March 2014 (UTC)
Monetary devaluation isn't necessarily progressive, it's an exactly flat property tax on those who hold cash, with the total incidence depending on the proportions who do. If you tell me something is a synthesis because A and B are reliably sourced, together A and B obviously imply C, and you don't like C, then I will debate you until you admit your mistake. But if you don't accuse me of synthesis, then I won't upset you when I act according to logic instead of your opinion. Fair enough? How would you summarize the sources? EllenCT (talk) 03:48, 16 March 2014 (UTC)
If there's an obvious implication of C, then you should have no difficulty finding a source that says that. Otherwise it's original research.Mattnad (talk) 11:30, 16 March 2014 (UTC)
Ellen, you just described the exact definition of synthesis (a core policy of Misplaced Pages), which specifically rejects that logic. Morphh14:39, 16 March 2014 (UTC)
No, stating C is against the policy. Telling people that they can't state A or that they can't state B because of the fact that A and B obviously imply C and you don't like C is attempted POV-pushing censorship. Do you intend to state how you would improve the article by summarizing the sources? EllenCT (talk) 07:21, 17 March 2014 (UTC)
This is not productive. If you want to add something to the article from these sources, spend the time to read them, write the content, and show the direct connection between what you write and what the source says. If this is important to you, then spend the time. Don't admonish other editors for not doing your homework. Mattnad (talk) 07:46, 17 March 2014 (UTC)
I agree Mattnad. Ellen, I've already included content and most of the sources in the article based on the synopsis and conclusions of the publications. If there are additional viewpoints from the material that you want to include that directly reference a progressive tax and are verifiable, then state it. As Mattnad stated above, if C is obvious, then you should have no difficulty finding a source. These are primary sources and must be used "only with care" to "make straightforward, descriptive statements of facts". Writing to imply C, even if not directly stated, is still against policy. See the first example of SYN "Both parts of the sentence may be reliably sourced, but here they have been combined to imply that the UN has failed to maintain world peace. If no reliable source has combined the material in this way, it is original research." So you could state A and state B, but if no reliable source has combined the material that way to imply C, then it's still original research. Your conclusion may be true, but wikipedia only publishes what is attributable, so let's avoid any debate and just stick to material that is directly verifiable and not imply any conclusions that are not already directly stated (preferably in secondary sources). Morphh14:06, 17 March 2014 (UTC)
Some editors claim that the sources in question do not show a causal relationship from greater progressivity of taxation to job and economic growth, but each of them clearly do. Why do some editors contradict the plain language of these WP:SECONDARY sources? EllenCT (talk) 05:31, 7 April 2014 (UTC)
Which secondary sources - the ones above are WP:PRIMARY sources. You've been here long enough to get your terms correct unless you're actively trying to mislead other editors - I even stated it in the last paragraph. So start with getting your terms correct. Secondly, which plain language - I've yet to see you quote something and the summaries and conclusions don't support that take away. Morphh11:09, 7 April 2014 (UTC)
What do you think the word "Review" in Boston College Law Review means? It is a literature review, which makes it WP:SECONDARY. It is also peer reviewed, which together makes it the most reliable of all classes of sources per WP:PSTS. All of the others are either reviews or have large literature review sections supporting their conclusions directly. You're the one clearly trying to mislead; or you simply have no basic understanding of the WP:RS policies whatsoever. Which is it? EllenCT (talk) 15:51, 7 April 2014 (UTC)
It's difficult to figure out what sources you're talking about because you toss out these blanket statements out of left field (first mention of job and economic growth for these sources). Most of the sources that you've put forward above and on the economics topic are primary - the boston law review covers happiness (so why would I think you referenced that?) and it depends on what your talking about (context) in the publication when determining if it's primary or secondary, but since you won't quote what you're talking about, we won't know. If I go on your history with these issues, then you're drawing syn from a primary source - that's your modus operandi. So, are you saying the Boston Law Review "Progressive Taxation And Happiness" was your reference which you think supports the assertion of "a causal relationship from greater progressivity of taxation to job and economic growth"? I can't find it - it seems to go with the premise that progressive taxation reduces growth, but their point being that economic growth doesn't equate with happiness, where equality does. So, quote the text, quote the text, quote the text - let me say it again - quote the text. No - I'm not accepting "each of them clearly do". If it is "plain language" - quote the text. Morphh00:52, 8 April 2014 (UTC)
Page 1392: "High unemployment also reduces the welfare of those who are employed .... increased spending (funded by higher taxes) on nonrivalrous social programs may be optimal." EllenCT (talk) 02:16, 11 April 2014 (UTC)
Putting aside the missing content between the start and end of that sentence (so who knows what lurked in there), I did not see a reference to progressive taxation. Sounds like another snipe hunt.Mattnad (talk) 02:41, 11 April 2014 (UTC)
"...who are employed, perhaps by increasing their fear of becoming jobless. The social costs of these indirect fears can be larger in the aggregate than the direct costs to the unemployed because they affect a much greater number of people. Government programs to reduce unemployment or to provide support for unemployed workers thus may increase social welfare. More generally, if much of private spending is wasteful because it is motivated largely by positional concerns, then increased spending (funded by higher taxes) on nonrivalous social programs, such as environmental clean-up and better police and fire services may be optimal." – S. Rich (talk) 02:55, 11 April 2014 (UTC)
Thanks S. Rich. In context, this source is unrelated to progressive taxation. Not at all relevant to this article.Mattnad (talk) 10:53, 11 April 2014 (UTC)
You have got to be kidding me. When an article about progressive taxation (the first two words of its title) talks about higher taxes, you honestly expect people to believe it could mean higher flat taxes? No. And you should be ashamed for even suggesting such an absurdity. But moving on, how about all of the other corroborating sources?EllenCT (talk) 02:09, 12 April 2014 (UTC)
Your quoted source doesn't mention the kind of taxes. Years ago Canada, for instance, instituted a VAT of 8% across the country (a flat tax) that was designed to fund public goods like healthcare and infrastructure. That tax, and its purpose, is consistent with your source. States and communities all over the US have increased sales and property tax rates pay for police, schools, and other public services. None of those are necessarily progressive taxes. Mattnad (talk) 03:24, 12 April 2014 (UTC)
Ellen, thanks for providing the quoted content. I understand both points here. As you point out, the title presents the larger topic of progressive taxes to happiness and I'd certainly agree that the taxation they describe would include progressive taxes. On the other side, as Mattnad stated, the content applies to any tax and is not inherently a function of the tax progressivity. These functions could be (and often are) funded via many tax types and the text doesn't deviate from that truth. The primary funding in the U.S. for such services include Federal Unemployment Tax Act, and often local sales and property taxes, which are all debatably proportional or regressive taxes. It could also include funding to federal things like the EPA or "shovel ready jobs" which are funded via a progressive income tax. Or it could apply to monetary inflation and quantitative easing. The point of the section is the spending or government action - the re-appropriation could have a positive effect on social welfare by reducing fear of unemployment. I don't think it supports your original contention, but it's a decent psychological argument for taxing to fund certain social programs. I guess the question is what makes this pertinent to progressive taxes vs other types. Would it make sense to write "Less fear of becoming jobless and increases to social welfare may be gained by government programs that reduce unemployment or provide support for unemployed workers, which can be funded by progressive taxes (or any other type)."? It seems to me this would be better left for an article like social spending or just generic taxation. I've mentioned before that we should be cautions when the content would expand the scope of this article into topics on spending. Morphh15:38, 12 April 2014 (UTC)
No, the quoted excerpt doesn't mention taxes at all, just spending. "In context, this source is unrelated to progressive taxation" is so completely absurd nobody should even dignify it with a reply. The titular subject of the article explains how that spending is paid for, at least for claims of optimality to hold in history, simulation, or logic. So, how do you feel about all the other directly corroborating sources? EllenCT (talk) 13:20, 13 April 2014 (UTC)
This article is not about spending. There are lots of great government services and functions that could be funded (progressively or otherwise), but this article is not the place to cover them. We already give a general statement with regard to progressive taxes being used as a way to mitigate the societal ills associated with higher income inequality and that it is used as a method to fund government social programs, which also increases happiness. This article is not the place to break down the effects of this or that spending policy. This is about revenue generation - which could be spent wastefully or optimally. If it's not talking about a direct effect of a progressive tax structure, then we're moving beyond the scope of the article. I think the other sources corroborate that progressive taxation has an effect on happiness, which we already cover in the article. Morphh15:39, 13 April 2014 (UTC)
The most reliable sources on horseshoes focus on protection of the hoof. Would you exclude those because they too discuss a mere adjunct to the topic? Nonsense! The sources say what they do because the subjects overlap, and arguing for their exclusion because your personal political point of view is offended by scholarship is POV-pushing devoid of any intellectual honesty. AND WHAT ABOUT ALL OF THE OTHER CORROBORATING SOURCES? EllenCT (talk) 11:54, 14 April 2014 (UTC)
EllenCT, you continue to push for topics that are outside of the scope of this article, notwithstanding our new and profound understanding of equine foot health. Even though the material you quoted relates to government spending and not progressive taxes, you seem fixated on this article. This is an article that should be focused simply tax systems that increase the burden as people or corporations increase their incomes/wealth. As Morphh pointed out, that's revenue. How they spend it is covered quite extensively in other articles.Mattnad (talk) 12:14, 14 April 2014 (UTC)
Professor Robert H. Frank states that tax cuts for the wealthy are largely spent on positional goods such as larger houses and more expensive cars, which could have been used to pay for things like improving public education and conducting medical research, and suggests progressive taxation as an instrument for attacking positional externalities.
I don't care to agree or disagree, but I think the sentence gives a decent summarization of the viewpoint. Morphh22:58, 14 April 2014 (UTC)
For Misplaced Pages editors, the question is not one of personal agreement or disagreement with any particular source. How the source is used in context is the important question. We must do so in a non-POV manner. There are many people who write agreeable stuff and disagreeable stuff, as well as stuff we agree with and stuff we disagree with. What do we do with the stuff, whether or not we agree with it? "In some areas there may be just one well-recognized point of view; in others, we describe multiple points of view, presenting each accurately and in context rather than as 'the truth' or 'the best view'." – S. Rich (talk) 23:28, 14 April 2014 (UTC)
United States has the most progressive income tax code?
I would like to query this statement from the end of the article, "United States has the most progressive income tax code ...", sourced to the book Growing Unequal?: Income Distribution and Poverty in OECD Countries. From what I have read, the US tax system, taken as a whole, is essentially flat. Could whoever wrote this please provide a page number and if possible a quote from the book? Thanks. LK (talk) 10:21, 16 April 2014 (UTC)
On my way out the door, so don't have time to review it, but here are a couple secondary sources. Morphh10:51, 16 April 2014 (UTC)
(Edit conflict) I don't have the OECD book, but it has elicited a lot of comment from reliable secondary sources that confirm and explain the findings. Samples from The Atlantic, Forbes, The Tax Foundation which includes the tax table from the OECD report. The US does not have the highest marginal tax rates (so the richest pay less than many countries), but it also has a far less regressive tax system (much lower income and payroll tax rates for less advantaged households, fewer flat, regressive taxes). The net is a more progressive system.Mattnad (talk) 11:03, 16 April 2014 (UTC)
I read another source that listed pgs. 103, 104. for Growing Unequal?: Income Distribution and Poverty in OECD Countries, but I haven't yet verified it. Morphh11:06, 16 April 2014 (UTC)
Those sources are neither peer reviewed nor WP:SECONDARY and do not appear to be fact checked. Two of them are blogs from clearly biased bloggers writing op-eds. The "overall U.S. tax system is only slightly progressive. Further, most of the progressivity of the overall tax system occurs in the lower half of the income spectrum. At upper-income levels, progressivity levels off and actually reverses...."EllenCT (talk) 06:13, 21 April 2014 (UTC)
<Insert>The Atlantic and Forbes are most certainly secondary sources. They are certainly not WP:PRIMARY sources. They are deemed RS and both have a mainstream journalism reputation for professional fact-checking. Neither are blogs, neither are "op-eds". Neither holds itself out as "peer-reviewed", but so what? Most of Misplaced Pages's refs are mainstream newspapers and journals not academic journals. Capitalismojo (talk) 14:56, 21 April 2014 (UTC)
Here is your "biased blogger": Clive Crook is a senior editor of The Atlantic and a columnist for Bloomberg View. He was the Washington columnist for the Financial Times, and before that worked at The Economist for more than 20 years, including 11 years as deputy editor. Crook writes about the intersection of politics and economics. Doesn't seem to be just a "biased blogger" to me. Capitalismojo (talk) 15:01, 21 April 2014 (UTC)
The question was about the US "income tax", not overall US taxation, your source isn't making an international comparison (sources show overall European taxation is outright regressive, not even "slightly" progressive; , ), and for its overall incidence your source relies entirely on Citizens for Tax Justice, which it describes as a "nonprofit public interest and advocacy organization" (see partisan lobbyist), and which has been shown to be unreliable as its internals are dramatically contradicted by more prominent sources like the CBO and Tax Policy Center. Your source even ends with an appeal for people to support a tax hike like the one Chuck Schumer proposed a few years ago, lol.
On the other hand, I did enjoy this line from your source, Ellen: "Corporate taxes are generally assumed to fall on owners of capital in proportion to their income from capital (dividends, capital gains, interest, and rents) (CBO, 2007)." Fascinating.VictorD7 (talk) 07:04, 21 April 2014 (UTC)
Absolutely false. According to your preferred CBO, capital gains tax in the United States are also income taxes, and they are most of the reason that income taxes are regressive at top brackets. "The major reason for the growing unevenness in the distribution of after-tax income was an increase ... in favor of higher income households.... over that period, the highest income quintile’s share of market income increased from 50 percent to 60 percent.... The share of market income for every other quintile declined." pp. ix-x; see also pp. 10-12, especially figures 6 and 7. EllenCT (talk) 08:32, 21 April 2014 (UTC)
EllenCT, you are again missing the forest for the trees. The CBO is quite clear that US taxes, including capital gains are progressive and despite some changes in ratios over the years, are still progressive. The OECD analysis is comparative between nations. It does not disagree with the CBO and is not only a reliable source, but has also been picked up by other reliable sources (re: Forbes, Tax Foundation, The Atlantic) making it notable in ways your selected "peer reviewed sources" typically are not.Mattnad (talk) 10:55, 21 April 2014 (UTC)
Absolutely nothing I posted was false, and, as Mattnad observed, nothing you said is pertinent to this discussion. VictorD7 (talk) 18:51, 21 April 2014 (UTC)
Yes. Those figures do not back up your assentation and have nothing to do with Capital Gains. However, even that graph can belie the nature of a person's tax and their share of wealth over the same time period. Assume person A makes 1,000,000 year 0 and pays a tax of 50% and has 50% of market income while person B makes 40,000 and pays a tax of 25% and has a 5% market. Then in year 5 person A makes 5,000,000 and pays a tax of 60% and has 60% market while person B makes 50,000 and pays a tax of 20% and has a 4% market you would have a system where the progressive nature was increased yet the rich became "richer". Just because the rich are "richer" does not mean that the tax system is less progressive. Arzel (talk) 02:24, 22 April 2014 (UTC)
What are the suggestions for improving the article? Looks like much of this thread is a discussion about the topic in general. Remember, WP:TPNO (guideline) and WP:NOTFORUM (policy) apply. – S. Rich (talk) 02:52, 22 April 2014 (UTC)
You think comments such as that help improve the article? It's like you're in the back of a courtroom during a evidentiary hearing standing up and saying, "Objection! Your honor, the fact that the witness did not notice that the graph furthest from equality in Figure 6 on page 11 is labeled 'Capital Gains' means that we can clearly have no further proceedings in this case of Article vs. Proposed Improvements," and then bangs a gavel on the wall. I wish this place had bailiffs who cared. EllenCT (talk) 06:04, 23 April 2014 (UTC)
The correlation between ownership in capital is correlated to a person's wealth. As the stock market goes up there is a disproportionate increase in capital assets for the very riCH. Correspondingly, when the markets go down they tend to lose the most as well. However, this does not really back up your claim. Most of this wealth is unrealized wealth. I know that your argument is that since the capital gains taxes are lower than the top marginal rates that this results in the tax system to be less progressive. However, with few exceptions, the very rich pay more in taxes as a proportion of their income than anyone else. That some are able to find ways to take advantage of certain aspects does not change the fact that for most salaried people our system is very progressive. My previous example was not meant to be a scenario related to this aspect of capital gains. You seem to be also making arguments that we are not progressive because even if you pay more in taxes as your income increases, those with higher incomes still make more because of their base income and have a larger share of the income/wealth. You don't like my argument fine, but you still have not provided reliable sources that back up the statements you want to make. Arzel (talk) 20:18, 26 April 2014 (UTC)
This debate on whether capital gains are taxed less, or more matters not. What we should depend upon is a reliable source that analyses the relative progressiveness of US taxes. We have the OECD study that has been further validated by other reliable sources. EllenCT, I readily accept that previous tax law changes advantaged those with capital gains (and dividends by the way). While the tax code was made less progressive, it did not make it regressive, particularly when compared to other nations per the OECD. I will add that whatever Bush II helped to enact, some of that has been rolled back under Obama and it's not contentious that 2013 tax law is more progressive than before.Mattnad (talk) 22:17, 26 April 2014 (UTC)
I looked at the OECD study and was meaning to comment here, but forgot. The OECD study only looks at Federal taxes, which are on the whole progressive. However, once state and local taxes are taken into account, the whole US tax system is largely flat. (See this Citizens for tax justice report.) Of course, because of different state laws, exemptions, different tax rates on income sources and other complications, the system may be progressive or regressive for individuals.
Also, once cash transfers are included (similar to the the earned income tax credit in the US), the the US looks much less progressive. For example, this Bookings article states " the current U.S. tax system is less progressive than the tax systems of other industrialized countries, and considerably less progressive today than it was just a few decades ago". Same finding from a recent IMF study . So, although true, I believe it's misleading to include the statement that the US Federal tax system is the most progressive among OECD nations. LK (talk) 03:38, 5 May 2014 (UTC)
LK, I believe it is a mistake to set "Redistributive impact of fiscal policy = Progressivity of Taxes". The edmundconway source measures the first (redistributive impact), not the latter (progressivity). You can see the difference for instance in this article by Edmund Porter in the New York Times where he says "Despite the progressivity of our taxes, according to a study of public finances across the industrial countries in the Organization for Economic Cooperation and Development, we also have one of the least effective governments at combating income inequality." This also matches the 2009 study by Prasad and Deng. From WP: "Prasad and Deng found that the progressivity of countries' tax codes is negatively correlated with the amount of redistribution they do." Many European countries have higher taxes and redistribute more income via transfers than do the US, but you must not equal this with having more progressive taxes. In fact, these transfers are to a large degree paid for by the regressive sales tax. Paul Krugman writes about this here, Why I’m Soft On Sales Taxes: "it does seem that countries with strong welfare states have less progressive tax systems than those with weak safety nets" Iselilja (talk) 14:57, 6 May 2014 (UTC)
They are different means to the same ends. If you have one, you don't need as much of the other, which is why the graph at the top of LK's source stacks them on top of each other. EllenCT (talk) 00:40, 7 May 2014 (UTC)
LK, CTJ is a partisan lobbying group with internal federal figures that are dramatically contradicted by the more reliable CBO and Tax Policy Center, both of which show taxation as more progressive, especially for the top 1%. We know CTJ's federal numbers are suspect, and it's possible their state/local ones are too, though the federal skew alone is enough to seriously throw off their results. I don't have time to dig up links right now but I and others have done so numerous times on this topic before and I'll happily do so again here if necessary. Furthermore, even CTJ describes overall US taxation as "slightly progressive", which, as the sources I and others linked to earlier show, still would make it significantly more progressive than the outright regressive taxation of other developed nations. VictorD7 (talk) 18:35, 12 May 2014 (UTC)
Per VictorD7, there's no dispute that some countries have more progressive spending than the US. This article is however about taxation. Regarding state and local taxes, the OECD didn't factor those in (to my knowledge), but for households in lower income ranges, their local taxes are 100% deductible from federal taxes. As you go up in income, the AMT kicks in which reduces and eliminates deductions which is progressive. So really, we'd need a reliable source that looks at total tax rates (including regional/local) by nation. If the OECD does not, do we have an alternative source that does? If not, then we're back using the sources we have. The OECD does do that and we can rely on it until we have an alternative.
One other point on the CTJ included payroll taxes in their calculation. Most of those are for SS and Medicaid which are technically insurance and not taxes. It then become a related debate on how to attribute those by income group, particularly since CBO analyis indicates that lower income households get back significantly more from SS and Medicaid than they pay in. Accordingly, there's a lot to not like about the CTJ analysis in this regard: 1) it doesn't compare the US to other countries, and 2) it does not account for payroll taxes the way it should be if we're actually looking at "taxes". Mattnad (talk) 18:51, 12 May 2014 (UTC)
Good points, though I'll add that the Northwestern study linked above considered all taxation, and it should be noted that sources like the CBO and TPC also count payroll taxes in their total federal figures, and yet still show far more progressivity than CTJ does in its federal numbers. The discrepancy remains unexplained. For months last year Ellen argued that it resulted from CTJ counting corporation taxation as regressive rather than progressive like the other sources, until it was proved through extensive quotation from her own source that CTJ in fact also counted corporate taxes as progressive. At the time she refused to acknowledge this, claiming that CTJ/ITEP wasn't a reliable source for its own views, and that she had a secret conversation with an anonymous former employee who contradicted the group's public accounts, though I'm not sure if she still maintains that position, or clings to the incredible notion that such a scenario, if true, would somehow do anything but discredit the source even further. VictorD7 (talk) 00:28, 13 May 2014 (UTC)
Federal vs entire system
I want to come back to my original point which is that the OECD study, which the blog posts and opeds are based on, is looking at only the Federal tax system. State and local taxes make the entire tax system less progressive. I've not seen anything to contradict this point, which I feel should be made in the article, if the point about federal taxes being progressive is made. BTW, payroll and medicare levies are federal taxes (they are used to pay for federal expenditures), and the OECD treats them as such. LK (talk) 06:32, 15 May 2014 (UTC)
Well, in other countries local taxes are also present but not accounted for in the OEDC analysis. For instance in Canada the provinces layer on their own income, payroll, and sales taxes but those are also not included in the OECD analysis (but I'll add that Canadian provincial taxes are not deductible from federal taxes the way state and local are in the US for lower income households). Do you have an alternative source that examines total taxes across nations? From what you've written, it seems as if the alternative views are considering only the United States.Mattnad (talk) 11:17, 15 May 2014 (UTC)
Lawrence, did you not read these on total taxation: , ? Other developed nations rely much more on regressive consumption taxes than the US does even counting the state and local levels, and such taxes are less progressively constructed than US sales taxes to boot, as are European income taxes. On the taxation front it's not even close. VictorD7 (talk) 00:18, 16 May 2014 (UTC)
There's a lot of points to answer here, so to address a few: a) AFAIK, most OECD countries (except Canada) don't have significant state and local taxes. b) The OECD report looks only at Federal taxes, whether, after including all other taxes the US is still the most progressive, AFAIK, no source answers that. c) Many sources consider the tax and transfer system as a whole, which makes sense, cash payments to poor families can be labelled a tax rebate (EITC), or an income subsidy, the economic effect is the same. To trumpet that the US has the most progressive tax system is misleading, as it includes the EITC, but leaves out cash transfers in other countries that don't structure it as part of their tax system. I suggest noting in the article that the US tax system is more progressive than most, as long as we also leave in the caveats about state taxes, and noting that including transfers, the US system is actually slightly below average in progressiveness. I think that best reflects the totality of sources on the issue. LK (talk) 08:02, 16 May 2014 (UTC)
http://taxfoundation.org/article/comments-who-pays-distributional-analysis-tax-systems-all-50-statesIt's probably better just to clarify that the OECD focuses on federal taxes. If we start to focus on the state tax component, it's not clear cut that the US is not progressive either. You've selected some sources for the state tax comment that have a strong POV, but there are others, including the chart I developed on the right from Tax Foundation analysis that shows that once Federal deductions for local taxes are included, combined State and Federal taxes are still quite progressive. Also, I would challenge only Canada has local taxes. I've lived in 5 other countries and all had other forms of local tax sales, income or property with varying credits for lower income residents.Mattnad (talk) 11:23, 16 May 2014 (UTC)
Institute on Taxation and Economic Policy estimate of the total effective tax rate for federal, state and local taxes (personal and corporate income, payroll, property, sales, excise, estate, etc.) by income level in 2011.
This article is not about income inequality and the CBO document you suggested does not address the topic here. Of course wealthier people have more after tax income than poorer people. As for your comments on the tax foundation chart being misleading - can you explain why?Mattnad (talk) 13:29, 19 May 2014 (UTC)
LK, you didn't answer my question about whether you'd read the sources I linked. Most other developed nations rely much more heavily on (regressive) consumption taxes than the US, regardless of whether it's at the local or national level. On top of that their income taxes are less progressive than US income taxes (per the OECD) and their consumption taxes are more regressive than US consumption taxes, so the US is even more progressive compared to other nations when "all other taxes" are considered. Of course, as Mattnad correctly observes, the line in question currently only refers to "the United States income tax". I think adding a segment on spending differences when the topic is strictly taxation would be frivolous, and I'll point out that some of those studies that lump taxes and benefits together notoriously exclude items like European sales taxes or certain types of benefits extended in the US. Regardless, such material more appropriately belongs in articles on redistributive spending, the welfare state, or maybe inequality. The progressivity of a tax code's structure is a creature in and of itself, and has various consequences beyond income redistribution (e.g. growth, efficiency, revenue volatility, etc.), so it would seem undue to select one tangential area for consequential focus.VictorD7 (talk) 00:10, 17 May 2014 (UTC)
Here is a paragraph from p. 105-6 of the OECD document
However, the progressivity of the tax system also depends on the level of inequality of taxable income, and the effective progressivity of a given tax schedule will be greater in a country with a more unequal distribution of taxable income. Table 4.5 adjusts for this effect by showing the concentration coefficient of household taxes divided by the Gini coefficient for market income (in the third column), as well as the share of taxes paid by the richest 10% of the population compared to the share of market income they receive (sixth column). Based on the concentration coefficient of household taxes, the United States has the most progressive tax system and collects the largest share of taxes from the richest 10% of the population. However, the richest decile in the United States has one of the highest shares of market income of any OECD country. After standardising for this underlying inequality, Ireland has the most progressive tax system as measured by the ratio of the concentration coefficients of household taxes and market income, while Australia and the United States collect the most tax from people in the top decile relative to the share of market income that they earn.
It seems to "household taxes" in the OECD document refers only to federal level taxation, but correct me if I'm wrong. Note that here, the conclusion of the author is that "Ireland has the most progressive tax system". --Ubikwit見学/迷惑15:28, 18 May 2014 (UTC)
No, at least not just Ireland. First, here's the earlier segment that sets the stage:
The second panel of Table 4.3 shows the distribution of household taxes (income taxes and employee social security contributions). Because taxes are deducted from household incomes, higher values of the concentration coefficient imply a more progressive distribution of household taxes. Taxation is most progressively distributed in the United States, probably reflecting the greater role played there by refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit. Overall, there is less variation in the progressivity of taxes across countries than in the case of transfers. After the United States, the distribution of taxation tends to be most progressive in the English-speaking countries – Ireland, Australia, the United Kingdom, New Zealand and Canada – together with Italy, followed by the Netherlands, the Czech Republic and Germany. Taxes tend to be least progressive in the Nordic countries, France and Switzerland. In most but not all countries taxes are more progressive for the retirement-age population than for the working-age population, reflecting the existence of various tax concessions for low-income retired people.
As this secondary source lays out, "According to the OECD, rich Americans bear a bigger share of the tax burden because they earn a bigger share of the income and because the US income tax system is more progressive." Look to your own final quoted segment: "while Australia and the United States collect the most tax from people in the top decile relative to the share of market income that they earn." Look at Table 4.5, which gives two "Alternative measures" of progressivity, side by side. On the right hand side, even with the inequality adjustment mentioned earlier, the US is the most progressive (more so than Australia). In the left side version Ireland is the most progressive, with the US second. It's legitimate to note that progressivity can be measured in different ways, sometimes yielding differing results, though I'll note that the article already mentions different measurement systems in a higher section (perhaps that point can be expanded with some more emphasis) and the segment in question here is already qualified to some degree (specifically mentioning the impact of tax credits). That said, I do commend you for digging up a pdf of the OECD source, and accompanying it with on topic commentary. Whether the current text should be left alone, slightly tweaked in some way to acknowledge that different measurements yield slightly different rankings, or possibly changed to reflect all taxes (per the Northwestern study; since the article is titled "Progressive tax", not "Progressive income tax") is what this section should be discussing, with any changes first agreed upon by consensus of course. VictorD7 (talk) 20:36, 18 May 2014 (UTC)
I'd hoped not to engage too much in this discussion, but regarding the relevant passages from the OECD study, the conclusion seems to be the clauses that your quotes sort of surround but are somehow avoid being highlighted in your post
However, the richest decile in the United States has one of the highest shares of market income of any OECD country. After standardising for this underlying inequality, Ireland has the most progressive tax system as measured by the ratio of the concentration coefficients of household taxes and market income
Also, I really don't have time to read the NW study, but perhaps you could reference something from that in relation to the "...changed to reflect all taxes (per the Northwestern study"?--Ubikwit見学/迷惑20:45, 18 May 2014 (UTC)
You just repeated yourself, ignoring the quotes I provided directly from the OECD study and from the secondary source about the US having the most progressive taxation (even after adjusting for inequality; look at the far right column of Table 4.5). Ireland ranks as most progressive according to one particular measure (with the US second), hence my commentary about different methods yielding slightly different results. I'll refrain from further specific commentary on the other study until (or if) you read it. VictorD7 (talk) 21:19, 18 May 2014 (UTC)
I don't have much time, so I'm just going to address one issue. VictorD7 asked me if I had read the sources and . The first is an oped that links to a blog that links to the second paper. Reading the paper in the second link, I note this: the authors analyze "three sets of taxes for which the LIS data are relatively complete for all 13 countries: income tax, property and wealth taxes and mandatory employee contributions (payroll taxes)". So, I'm guessing that income tax and payroll tax in the US is referring to taxes at the federal level. OTOH, I note that they find that taxes in the 12 other countries studied are downright regressive, so even if state taxes make the US essentially flat, that still make the US 'most progressive'. However, it would be a bit misleading calling something that's essentially zero the 'most positive', because all others are negative. Additionally, I note that in most of the sources cited in this discussion, they talk about the entire system of taxes and income transfers (e.g. in VictorD7's first link, the author notes "The less progressive the code, the more progressive the system" Also, , and ). Discussing the tax/transfer system as a whole, as I argued previously, makes much more sense (i.e. how does market income compare to take-home income?). LK (talk) 05:55, 19 May 2014 (UTC)
Just found an interesting discussion on Brad Delong's blog from 2012 . In the comments section, many economists weigh in on this issue and make many of the points that have been made on this page. To note the relevant, a) the US federal tax system is unusually progressive (compared with OECD), b) state and local taxes reduce that progressiveness and make the it essentially flat. c) When talking about taxes, economists typically mean taxes net of transfers (i.e. tax – transfers). d) When looking at tax after transfers, the US is less progressive than the majority of OECD nations. I'm happy to have all this in the article, but would object to including only US federal tax system is unusually progressive. LK (talk) 08:54, 19 May 2014 (UTC)
It's a bit a logic break to argue that some of your sources state the US is the least regressive, but we can't say it's more progressive because in aggregate we have a flat tax. Less regressive = more progressive.
I'm open to including a global tax comparison that examines all taxes (Federal equivalent and more local government entities) but I think we'd need a source. Here's where we are right now: a reliable, presumably non-partisan source (OECD) has done a study across many nations looking at federal taxes including payroll taxes. Why don't we just qualify it as such, particularly since even in the US, some state tax regimes are more progressive than others. NJ for instance has a very progressive state income tax structure and offers up to $10,000 in credits for local property taxes for lower income households which is further reinforced by Federal deductions. It's challenging to find a source that's broadly accepted that has done the homework on all state taxes (ITEP is not considered non-partisan by any means). Mattnad (talk) 13:29, 19 May 2014 (UTC)
@Mattnad:As per my reply to your query on my Talk page, I agree that it would be something of a rhetorical misrepresentation to claim that the US is more progressive in light of the relationship to absolute progressivity per se. If something does not meet the definition of progressive, it is not accurate to call it progressive because it is less regressive.--Ubikwit見学/迷惑15:22, 19 May 2014 (UTC)
I think I took a different logic class. To each their own. At any rate, the point that we need a comprehensive reliable source that examines total taxes across countries still stands if you want to bring in state taxes - otherwise we're just debating amongst ourselves.Mattnad (talk) 15:51, 19 May 2014 (UTC)
That's a little outside my cope of competence, so I'll defer to others. i will contribute to this insofar as it is possible as a generalist, so to speak.--Ubikwit見学/迷惑16:26, 19 May 2014 (UTC)
LK, you must not have read all of it. The studydoes include US state taxes. On page 438 (Oxford journal page numbering; the same page you quoted from!) it explicitly states "The USA figures do include state-level taxes." It also explains that it derives US sales taxes from BLS data. That's why I keep keep pointing out that your attempts to expand this beyond federal taxes only leads to results that make the US look more progressive vis a vis other nations. And no, taxes and spending are two distinct creatures, as our $17.5+ trillion debt shows. Redistribution isn't even historically supposed to be the purpose of US taxation, and certainly isn't the primary purpose, much less sole purpose, of any non communist nation's taxation. The Washington Post "blog" I linked to is by a liberal writer, and I mostly just linked to it for the quick and easy Kakwani visual displays he provides. His characterization of what's a "system" is less relevant (that's a nebulous description perhaps useful in a discussion on redistributive policy, but not taxation per se), but he and the study both emphasize the point of separating taxes from spending. Do they impact each other? Of course, but taxes impact many other areas too. It's not as if we go around Misplaced Pages to every mention of the US welfare state being less extensive than Europe's and add a "yes, but..." segment on the US having more progressive taxation, lest anyone read that and erroneously assume that the salient difference is that the US doesn't tax high earners as much (the much bigger differences are at the low and middle income levels). Also, the NW finds overall US taxation to be significantly progressive. The only source calling it near flat is the partisan lobbyist CTJ source, which is an unreliable outlier with an internal federal component that's dramatically contradicted by the CBO and Tax Policy Center, and even it calls overall taxation "progressive". No credible source has been presented that calls US taxation "flat" or "regressive". Regardless, your initial objection was to an international comparison, and since the (problematic) CTJ source makes no international comparison, it was a pointless distraction that never should have been raised in this discussion. I'm open to discussing potential article changes, but a selective mention of a tangential topic (spending) in that section would be frivolous and undue, and we certainly don't want to conflate a CTJ assessment of US only progressivity with the international comparison. Your Delong blog appears to be down right now. VictorD7 (talk) 19:38, 19 May 2014 (UTC)
Kakwani index
It would really help those of us who are ignorant in these matters if someone could expand Kakwani index, to give a simple useful definition. The maths from the German article would be useful too. All the best: RichFarmbrough, 01:48, 28 April 2014 (UTC).
Gini coefficient, and Hoover index are also related to inequality of income. I asked for improvements on Kakwani index because they are used by one of the studies cited in the article. All the best: RichFarmbrough, 15:24, 30 April 2014 (UTC).
Study covers years between 1950 and 2006. Berg, Andrew G.; Ostry, Jonathan D. (2011). "Equality and Efficiency". Finance and Development. 48 (3). International Monetary Fund. Retrieved September 10, 2012.
