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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. For example, in 1950, U.S. federal taxes were 14% of GDP, the top income tax bracket rate was effectively 88%, and jobs grew by 7.7%; in contrast during 2012, federal taxes were 19% of GDP, the top tax bracket rate was 35% (but effectively much less) while jobs only grew 1.4%.
I realize that it was added by a banned sockpuppet, but I agree with its sentiment and the facts it states, I think the sources it cites are sound, reliable, and important sources for the article, and I think it needs to be discussed. Income inequality prevents the private sector from operating as efficiently as it otherwise would, and progressive taxation is a legitimate fiscal policy to increase income equality. I think this passage has some important lessons, and I think I understand generally why it has become contentious, but before I state my assumptions, I would like to know why it has been repeatedly deleted and the subject of further complaints. EllenCT (talk) 03:48, 11 May 2013 (UTC)
A couple of points - progressive taxes and tax levels do not in themselves solve for income inequality or grow employment. It depends on how governments spend that tax revenue. And if we look at the United States, the OECD has cited it as the most progressive as far as taxes go (from a 2008 report, recent tax increases have pushed that even more) and yet there is still a lot of income inequality.
As for the the top income tax bracket comparison from 1950 to 2012, from a macro economic point of view, it's a bit of apples and oranges. The paragraph suggests causation without explaining how. The US economy and it's position in the world has changed a lot since 1950. Global competition, automation, computerization etc, have changed the job market. Even in a car factory, there are more robots doing the work that used to be done by people.
I worry that the second argument in particular is poor scholarship, even if people like to present the halcyon days of the 1950s as proof positive that high taxes = high employment. I won't even get into how in the 1950s minorities and women were excluded from the workforce and not even counted in unemployment figures. Another often unmentioned point is that everyone's taxes were higher then too. Mattnad (talk) 16:03, 11 May 2013 (UTC)
Sources earlier in the section state that progressive taxation does mitigate income inequality, without regard to concurrent fiscal spending. (That is because almost all government spending is either gross fixed capital formation, debt service, or transfer payments overwhelmingly to the less wealthy -- none of which negate the transfer from the more wealthy, and most of which reinforce it.) The US has a lot of income inequality under progressive taxation (but differing opinions on the incidence of corporate taxation might cause some to argue with that OECD characterization cited) because the income distribution is wildly more skewed toward the wealthy than anywhere else to begin with, and has been over the past half century, and has been becoming much more so over the same time period. I think the sources do support the argument made. While most people's nominal tax rates were higher before credits and deductions, the fact that the IRS took 14% instead of 19% of GDP indicates that most people taking tax credits and interest deductions were paying a lot less in taxes. That means the private sector was larger, and because it is more efficient, and per the sources, that is a legitimate comparison and a legitimate reason to believe it created more jobs and growth.
It seems like there is a libertarian / Austrian tendency to ignore the greater efficiency of the private sector when it is being supported by the greater income equality of progressive taxation. But is this a well founded, source-supported tendency or is it a knee-jerk reaction to higher taxes on the rich? We have sources supporting the argument being made. We have editors who want to delete those sources because they believe the opposite. But are there any reliable sources -- even Austrian Econ or libertarian source -- which actually make the opposing argument? If so, then we should include both sides per NPOV. If not, then the contentious material should be restored. I'm pretty sure it's a serious mistake to delete the argument and the sources supporting it in any case, unless there is some reason that the sources are unreliable or the facts are wrong or not supported by the sources. EllenCT (talk) 08:39, 12 May 2013 (UTC)
I'm less concerned about the first half of the paragraph, which is cited and follows the logic that income redistribution through taxes lowers inequality and increases spending (since people getting gov't assistance are more likely to spend.) However the later sentence comparing tax receipts, uncited, is suspect. It's not that the calculation of relative tax receipts is incorrect (I have no idea, but lets assume it's correct). It's that those difference in receipts are proposed as the reason for slower job growth between 1950 and 2012. It also ignores significant and persistent deficit spending by the federal government that also bumps up the share of the economy fueled by the Fed. Finally, the lower tax receipts is due in large part to the low taxes/high tax credits among middle and lower income households. See . It come back to the fact that the US tax system is more progressive and skews towards a smaller tax base, which is why there's federal lower revenue now than before. Ergo, the tax system is progressive AND we have lower tax revenue.Mattnad (talk) 10:09, 12 May 2013 (UTC)
I believe the figures in the final sentence are correct, but I agree they should be cited. As for that NYT story, it may say taxes are more progressive, but it doesn't say they've had any appreciable impact on income inequality. ("...every American is paying a lower burden currently than they did then. In fact, the total federal tax rate is still vastly lower for the very rich than it was at any point in the 1940s through 1970s. It has risen from historical lows, but is still closer to those lows than where it was in the postwar decades.") EllenCT (talk) 06:00, 13 May 2013 (UTC)
EllenCT, taxes are also vastly lower for everyone else, even more so than it was in the 1950s. But that's the point - the argument that progressive taxes reduce inequity is not always true. Inequity reduction requires progressive spending by governments. Most other 1st world countries have broader tax bases including much higher taxes for middle and lower income people, but then they redistribute it to things that matter like free healthcare, highly subsidized schooling etc. which really helps where it matters. At any rate, I'm fine restoring the first part of the paragraph, but still dubious of the second part.Mattnad (talk) 10:09, 13 May 2013 (UTC)
I think the last sentence is major correlation without causation. Aside from major points made by Mattnad regarding all the external economic factors, the marginal tax rate itself doesn't even really imply what the average tax rate was on the high end after all the loopholes of that time were taken into account, and I believe as stated above the actual tax level as a share of GDP was lower, which would have a greater effect on economic growth than the actual marginal rate. So the last sentence is WP:OR and not acceptable for the encyclopedia. As for the first part, I've looked at the sources (which might be considered WP:PRIMARY), but I don't see anything directly stating that. I worry the content is an "interpretation of primary source" and would constitue WP:OR and WP:SYN, which is being used in WikiVoice as a statement of fact without any attribution. The sources would seem to support that well-designed progressive taxes can decrease income inequality, which we already include in the article. However, these following statements try to get into something unnecessary in this article - a jump from tax policy to spending (redistribution), then to a simplistic and bias description of the economic effects of income equality under certain static conditions. I'll note that the content was also added to the Welfare state article by the sockpuppet Neo Poz,where it still exists. It was also copy / pasted to the comments of this Forbes article, where it was refuted by the Forbes article's author. Low income equality does not equal economic growth - there are lots of things that effect the economy and each change has dynamic effects. Plenty of poor countries with low income inequality and many rich countries with high income inequality. Certainly the common argument is that such a capitalist system that creates these inequalities drives economic growth, bringing more people out of poverty. Static pie vs grow the pie. I think the evidence supports that while the gap increases with the rich get richer, the poor are also getting richer, just not as fast. In any case, I don't think this material should be included. The argument that progressive taxes can reduce income inequality is included and fine, but the economic effects of reducing income inequality is best left for another article. Morphh14:40, 13 May 2013 (UTC)
I'll also note that EllenCT's last entry into Economic inequality is not supported by the sources. In fact, the intro of one of them seems to state the exact opposite "Over the past two decades, China has moved towards a market-oriented economy. Such a transformation initially entailed a marked rise in inequality, which was an inevitable consequence of the transformation of the economy that has delivered a higher and more sustained growth in incomes than observed in any other major economy". Certainly these things level out, inequality can be reduce which can contribute to increased growth, but this black / white statement of fact is misleading and not supported. Morphh15:19, 13 May 2013 (UTC)
Why isn't causation supported?
I believe that the causation implied in the recently re-deleted passage, "in 1950, U.S. federal taxes were 14% of GDP, the top income tax bracket rate was effectively 88%, and jobs grew by 7.7%; in contrast during 2012, federal taxes were 19% of GDP, the top tax bracket rate was 35% (but effectively much less) while jobs only grew 1.4%," is actually well-supported by the sources in the surrounding paragraph. What are the reasons that it doesn't seem to be? EllenCT (talk) 11:30, 22 September 2013 (UTC)
If we're doing original research, bringing together these facts to paint a picture, then we've gone too far. If someone reliable -- an economist writing in a peer-reviewed mag -- did the work and we're just repeating it, then we can definitely keep it. At most, we'd want to attribute it to them, but even that depends. MilesMoney (talk) 16:14, 22 September 2013 (UTC)
Hi EllenCT, I'd be happy to review reliable sources that support causation if you point me to them. But I'll not that just because something is written, does not make it credible (see the controversy around the MMR Vaccine and Lancet Study. Mattnad (talk) 20:17, 22 September 2013 (UTC)
We don't need causation. We just need a single source that brings all these facts together so that's their research, not ours. Do we have one? MilesMoney (talk) 00:29, 23 September 2013 (UTC)
Hi EllenCT, I read both From extortion to generosity, evolution in the Iterated Prisoner’s Dilemma and Inequality and Unsustainable Growth: Two Sides of the Same Coin? and neither refer to a comparison between 1950s tax rates and now, and tie it to current income inequality. Perhaps there is another source you had in mind? In previous discussions in this talk page, I proposed reasons for why it's an apples and oranges argument even without being an expert on the topic (which I will admit, I am not an expert). You're bumping up against a pretty firm rule of Misplaced Pages - we are editors - so no original research is allowed. We depend instead on reliable third party sources. I will add, the more technical the article, the higher the standard for the source. In the end, your comment that a conclusion can be "inferred from the facts" is proof-positive of original research.Mattnad (talk) 03:00, 23 September 2013 (UTC)
Actually, I don't believe that it is possible to draw a statistically significant inference from the factual statement in question. Which is why I need to ask: Which specific inference(s) do you believe are most likely to be drawn by readers? Are those inferences directly supported in turn by or ? EllenCT (talk) 23:27, 23 September 2013 (UTC)
I was able to access the second article. It makes points that progressive taxes can reduce inequality which is non-controversial and in the wikipedia article. No inference required for that.Mattnad (talk) 03:35, 24 September 2013 (UTC)
I've stated my objections above to the inclusion of this material and nothing has changed. It's not appropriate, unless as MilesMoney suggests, we are directly quoting and attributing that opinion to a specific person / organization. Morphh16:30, 24 September 2013 (UTC)
You are objecting to the inclusion of facts which are not in dispute, because you believe they imply something which is not necessarily true or because they are not themselves citing a source? If the former, then what exactly do you think those facts imply, and is that inference supported by or ? (To get to the first of those, try clicking through on the "PDF full text" link a second time.) If the latter, I will gladly include sources for the factual statements. EllenCT (talk) 01:35, 25 September 2013 (UTC)
To recap, the text that's being considered is as follows:
"...in 1950, U.S. federal taxes were 14% of GDP, the top income tax bracket rate was effectively 88%, and jobs grew by 7.7%; in contrast during 2012, federal taxes were 19% of GDP, the top tax bracket rate was 35% (but effectively much less) while jobs only grew 1.4%...."
First, without getting into whether this is prohibited original research, the proposed text is problematic. The highest marginal tax rate for individuals under the U.S. federal income tax law for 1950 was 91%. There is no such thing as a "top" bracket rate that is "effectively" lower than the nominal rate. Perhaps the author was trying to factor in the fact that the lowest levels of income in a given year aren't taxed at all -- I'm not sure. At any rate, the highest marginal tax rate for a given tax year is what it is: the highest nominal rate provided in the law. The effective rate of tax on a given level of income, in a progressive system, is of course generally lower than the highest marginal tax rate on that income (that is, the rate imposed on the "highest" dollar at the very top of the "stack" of income that's being taxed is generally higher than the rate computed by dividing the total dollar amount of tax by the total dollar amount of income).
Similarly, the statement that for 2012, the "top tax bracket was 35%" and yet was "effectively much less" is problematic. For 2012, the highest U.S. federal income tax marginal tax rate for individuals is 35%. Period. The effective rate of tax is a different concept.
However, I'm not sure what the author was actually trying to say with the use of the term "effective," so I'm not going to try to provide a corrected version of the text.
As to my two cents worth on whether the material is, in my view, prohibited original research, I will try to address that subject soon. I'm a tax practitioner myself, and I just finished with another tax season (yes, October 15th is a U.S. federal tax return filing deadline for many people), and I just wanna get to bed right now.... Yours, Famspear (talk) 04:26, 16 October 2013 (UTC)
I would like to know how you would correct the text. I think we should include text and graphics that make it clear that when total taxes were less but progressivity was greater, job creation was very much greater. That is certainly historical fact, the obvious implication is supported by the sources, and most of the editors who want to suppress it seem to be ideologues more interested in arguing that the facts should be suppressed than reading about the subject. EllenCT (talk) 11:42, 19 October 2013 (UTC)
Would it be possible to graph some select tax rates as functions of income to show the difference between the various methods graphically? It's very hard to envision the difference just by looking at the formulas. — Preceding unsigned comment added by 46.15.73.118 (talk) 05:04, 23 September 2013 (UTC)
That would be difficult given the complexity of the tax code. A household's location (state and local taxes), income composition (earned income, investment income) and deductions all impact progressiveness.Mattnad (talk) 14:56, 23 September 2013 (UTC)
No, the chart offered by EllenCT was not acceptable when it was introduced in 2012 by the SockPuppet Cupco, it wasn't acceptable when put in text form, and it's not acceptable now. It implies a correlation which is not supported in any mainstream or even fringe sense (WP:FRINGE). It is WP:SYN lacks support by secondary sources WP:SECONDARY. EllenCT, please stop trying to insert this material - it's becoming disruptive. Morphh00:21, 7 October 2013 (UTC)
The chart has the same provenance as the statement you are objecting to in the previous section. The correlation it implies is supported by and . EllenCT (talk) 00:33, 7 October 2013 (UTC)
Secondary sources - extraordinary claims require extraordinary sources. The chart that higher tax rates increases employment growth is an extraordinary claim. First, you have to make a lot of assumptions about government spending, which this article should not get into. The entire thing looks like WP:SYN and doesn't meet WP:WEIGHT on the subject of Progressive Taxation. Morphh00:44, 7 October 2013 (UTC)
Both of those sources include secondary literature reviews in agreement with the findings to which you object. EllenCT (talk) 01:21, 7 October 2013 (UTC)
The chart cites and , both of which have been subsequently deleted from the internet. It still passes WP:V. As for WEIGHT, it is precisely on topic. Why would you think that it isn't? EllenCT (talk) 00:45, 7 October 2013 (UTC)
The viewpoint implied is a tiny minority and the entire thing focuses not on taxation (or the method of taxation - Progressive or otherwise), but on spending. Morphh00:48, 7 October 2013 (UTC)
What supports the statement that the implied viewpoint is a tiny minority? It has been proven mathematically per and . EllenCT (talk) 01:08, 7 October 2013 (UTC)
Even the marginal tax rate itself is misleading because there were so many exemptions on those top rates that the real rate was much lower. So not only is the correlation between the two axes without causality, but the single axis is misleading. The entire chart is extremely bias and paints a picture which is wholly inaccurate and unsupportable. Morphh00:56, 7 October 2013 (UTC)
The vast majority of economic thought on this matter is that increasing income taxes will reduce economic growth, but we don't mention that in the article (showing graphs of all the empirical and researched data). Yet, we are to include a chart that suggests that higher tax rates actually increases economic growth? It doesn't imply facts I don't like - it doesn't imply facts (or more accurately, it correlates facts which have little causality presented using misleading terms). It's WP:UNDUE and does not present to the reader anything that is not extremely misleading. Morphh01:22, 7 October 2013 (UTC)
What do you expect the reader to take away from this chart? Even assuming we could strip away all the other economic forces during these time periods that effected the economic growth on the Y axis (which we can't), the chart does not accurately reflect the average tax burden after exemptions on the X axis. The entire thing misleads the reader on both the Y axis, the X axis, and the causality between X & Y. Morphh01:45, 7 October 2013 (UTC)
I'll also note that it's U.S. centric and we should try to keep this article global. So one more reason... Morphh01:51, 7 October 2013 (UTC)
Increasing the progressiveness of the tax incidence is not the same as increasing income taxes. That is why I want to include the statement about how U.S. federal taxes were 14% of GDP in 1950 compared to 19% of GDP last year. The reader deserves the facts. What are you trying to hide by removing the statement and the chart? If you object to the data, then find better sources. The inaccuracies you describe are small, and do not contravene the mathematical reality of the conclusion. The facts are the same world-wide. EllenCT (talk) 01:54, 7 October 2013 (UTC)
The average tax applies to progressivity as well. The 75% tax rate is not what they paid - if I recall, the rate on those high earners was averaged closer to 30-35% during that period after all the exemptions. I'm not trying to hide anything except misleading figures that have no causality. I don't object to the data - I object to the WP:SYN of the data. I'm not the only one - this discussion goes back over a year based on the same sentence and the same graph on different articles. This is not a new debate and the consensus has been not to include it. Morphh02:05, 7 October 2013 (UTC)
EllenCT, if we presume that high (and progressive) taxation leads to job growth, then what's the mechanism for this job growth? Government spending? Last time I checked, the government share of GDP has continued to grow steadily, recently peaking at 40% of GDP even has tax rates and revenues have fallen relative to 1950s. The government didn't stop spending and has done that by borrowing. So why then aren't people doing better financially? Mattnad (talk) 02:18, 7 October 2013 (UTC)
It would be inappropriate to quiz Ellen about these mechanisms because she didn't do the original research. Rather, she reproduced a graph from a reliable source. Your attempt to outthink that source is itself a form of original research that is, quite frankly, not allowed to us as editors. The scope of this discussion must be limited to the realm of editors, to questions of reliability, relevancy and policy. MilesMoney (talk) 03:49, 7 October 2013 (UTC)
Not really original research except to point out that correlation is not causation. I suppose EllenCT could have a point - if we use taxes to reduce the the income of rich people to that of the middle class and lower classes, then they would lead to income equality. But I don't think that's her point, or that of the research she cites.Mattnad (talk) 13:46, 7 October 2013 (UTC)
The graph shows the correlation. It makes no claims about causation. You're arguing against a point that's not being made, and you're doing it on the basis of your refusal to accept what the sources say. You're an editor here, not an independent researcher. MilesMoney (talk) 14:24, 7 October 2013 (UTC)
The point of a chart like this is to show a correlation. What is the point of showing a correlation without causality - Global Warming / Pirates. The information is purely misleading on multiple levels. I don't agree the graph is reproduced from a reliable source on tax policy (or a proper secondary) and I don't see that the statement / chart holds any mainstream acceptance as a correlation. To Mattnad's comment, even if it were EllenCT's point, that's extremely dependent on spending, which is not the point of this article. We need to focus on the structure of the tax code - its relative progressivity. Morphh14:52, 7 October 2013 (UTC)
I looked at the source for that chart. Ironically, it's used to make the point that LOWERING taxes for the rich doesn't necessarily lead to job growth. Michael Linden (the source) makes the point that that there's no causation between tax rates and job growth. That alone should be enough to disqualify it, as it's being used in this article.Mattnad (talk) 17:30, 7 October 2013 (UTC)
Sometimes economics is one of those fields where math like , , and come along and change the sign of a previously accepted conclusion. Blame Arthur Okun in the 1970s. EllenCT (talk) 20:15, 7 October 2013 (UTC)
Come on, Morphh; you know better than this. While the graph doesn't prove causality, it does show a correlation that a reliable source considers relevant. That's completely different from your warming/pirate graph, which arbitrarily takes two items whose correlation is uninteresting. Such behavior is entirely counterproductive. If you keep this up, I'm going to have to ask you to take your jokes elsewhere and let more serious minds discuss the article. MilesMoney (talk) 04:40, 8 October 2013 (UTC)
WP:NPA - What reliable source considers this correlation relevant? I haven't seen it in the ones offered by EllenCT. The only source I see that offers a correlation is from the Center for American Progress (a primary source), which appears to use it to make a non-correlation. The material, certainly in the way it is presented here that suggests causality, is not published anywhere that would lend weight to the correlation. The data used fluctuates greatly. In 1950 with 91% marginal rate, the growth was 7.7% - by 1953 with the same 91% rate, the growth was -0.9%. Even with a consistent tax rate during a short period of time it makes no sense. It's not in any way a scientific analysis, trend, or proper comparison, and has no place in this or any other article. Morphh13:30, 8 October 2013 (UTC)
A proper analysis of such figures would look at the short term and adjust for external growth factors - does the growth rate following a tax code change increase or decrease growth in the proceeding years. Here is a good article on the topic That Wishful Thinking About Tax Rates "Of course, many factors affect the economy, so a lack of correlation doesn’t prove that marginal-rate changes have little impact. That’s why economists have devoted thousands of pages in journals to testing the effects more scientifically." Morphh14:12, 8 October 2013 (UTC)
The final paragraph of that New York Times article you link to specifically indicates that high marginal rates will lessen the (now known to be very deleterious) effects of income inequality. EllenCT (talk) 13:11, 9 October 2013 (UTC)
EllenCT, that final paragraph merely states the obvious - raising taxes on the weathly will reduce income inquality and help reduce the deficit. It does that by making the rich less wealthy. It does not state that it would improve the condition of the non-rich and it does not support your desire to add that chart.Mattnad (talk) 14:12, 9 October 2013 (UTC)
(edit conflict) Right EllenCT, but that's not what this chart or that sentences says. You seem to be making an WP:ORWP:SYN leap that something that can improve income inequality necessarily leads to economic growth since certain studies show that higher levels of income inequality can reduce economic growth in the long term. For one, progressive taxation would need to be coupled with high progressive spending to provide the type of wealth distribution needed to effect income inequality, which is beyond the scope of this article. Also, it's not certain that the economic effects of one (since most studies show high marginal rates can hurt growth) don't balance out the other (gains from better income equality) or to what degree one is needed to achieve the other. None of the studies make the type of causality or correlation that you're trying to insert. Morphh14:28, 9 October 2013 (UTC)
Which specific studies show that higher levels of income inequality can reduce economic growth in the long term? EllenCT (talk) 03:31, 11 October 2013 (UTC)
You're right; it was a personal attack for you to denigrate that graph by falsely comparing it to global warming/pirates. And your subsequent original research added nothing of value to the discussion. I'm going to move on now. MilesMoney (talk) 18:22, 8 October 2013 (UTC)
This is becoming disruptive. There is no consensus for this contentious material. We need to take it to an RFC or further conflict resolution if you insist on continuing with including this information. Otherwise, we'll just edit war over it. Until a consensus is gained, leave the content out. Morphh15:19, 15 October 2013 (UTC)
In your opinion do , , or pages 362-70 in Peterson, W. and Estenson, P. (7th ed., 1992) Income, Employment and Economic Growth, Chapter 9, "Public Expenditures, Taxes, and Finance" (which describes progressivity in terms of transfers) support the inclusion of the statement and the graph? Does Berg and Ostry (2011)? If you don't think so, please help me understand why. EllenCT (talk) 23:05, 15 October 2013 (UTC)
Excuse me, but I'm going to have to caution Morphh and Arzel against making false claims of consensus. As I see it, there's just the four of us discussing it and we're evenly split in numbers. More to the point, two of us are willing to discuss it in terms of policy, while the other two are reverting each attempt at compromise and insisting that they have consensus. MilesMoney (talk) 01:31, 16 October 2013 (UTC)
Let me add my voice to the two other editors who do not see the cited materials supporting graph. This is classic WP:SYN. Since we are not able to come to consensus, I suggest this get taken to a neutral board.Mattnad (talk) 01:41, 16 October 2013 (UTC)
MilesMoney, this debate goes beyond this discussion. It's been discussed by many editors (and widely rejected) since the graph and sentence was added back in 2012 by Cupco. There has been no compromise offered and I'm not sure there can be - the material is just not supported and fails several policies. We're also discussing it at the Economics WikiProject. I'm probably going to open a formal RFC on it so we can put an end to this once and for all. Morphh02:52, 16 October 2013 (UTC)
"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)
Thanks EllenCT. These sources do not provide support for the graph in the least. The first argues the if the government is going to tax, it should spend so the impact is neutral. The second quote basically says that income inequality leads to less growth, but given they mention land ownership, aren't they referring to more agrarian economies? The third say that high and persistent unemployment, particularly in urbanized cultures, leads to income inequality and lower economic growth. Not one of them discusses top marginal tax rates, and applies it to the US. It's WP:OR. Mattnad (talk) 09:16, 17 October 2013 (UTC)
Davis-Moore Hypothesis and Structural-Functionalism
EllenCT: You removed the phrase "(mentioned in the Misplaced Pages article on Structural functionalism)" following "the Davis-Moore hypothesis." I have no serious objection to your having done that but may I ask your reasoning? I thought the phrase you removed added some context from another field of social science that many would find useful and/ or interesting. SteveT (talk)04:22, 25 September 2013 (UTC)
Thanks, Ellen, that makes sense (and, yes, I noticed that the link did not work and fixed it here!). I was unaware of the SELFREFERENCE style directive (I haven't contributed very frequently since I joined by in July 2012) -- thanks for that! I don't think the verbiage you propose is of sufficient value to justify an edit , so I won't bother but thank you very much for the suggestion! SteveT (talk)22:41, 25 September 2013 (UTC)
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.
If you are referring to the last paragraph in the lede; I don't think the main point about that sentence is the exact progressive rate in the US, but rather to point out that there are many ways to measure how progressive a tax system is. Your edit missed that point, imo. We may find another example than the US, if that proves controversial. This article should be international in scope, so if we are to compare how progressive taxes are in different countries, we should include several countries; not write solely from an American point of view. Regards, Iselilja (talk) 18:30, 19 October 2013 (UTC)
My view is that regardless of sources, a sentence like " Views differ on how progressive the United States tax code is relative to other economically advanced nations." is very US-centric and offers very little insight and information about Progressive tax. Why should we specifically mention such a non-information about the US in the lede? If you want to make a comparision, then mention something more meaningful. Which countries are thought to have the most progressive taxes, which have the least progressive and how progressive is the tax system in various leading countries: Germany, UK, Italy, Japan etc. Besides the sentence "For example, when refundable tax credits and other tax incentives are included across the entire income spectrum." is kind of nonsencical. If you think the current version is wrong or misleading, you can argue that it should be removed. But I frankly don't think the alternative you have offered, add much to the article. In addition, the lede is meant to be a summary of the body, which probably means that none of the two alternative versions should be in the lede, but rather in the body. Regards, Iselilja (talk) 19:04, 19 October 2013 (UTC)
Hi Iselilja, I'm totally open to changing the text to make it less U.S. centric. R U agreeing with me that my source is a reliable source?Lance Friedman (talk) 19:14, 19 October 2013 (UTC)
I'd like to add that the Atlantic article was also added earlier, and I reverted, uses an interpretation of progressive taxes that's incorrect. This graph demonstrates a progressive tax system but the author considers progressiveness by government revenue relative to an income percentile's share of income. Ironically, the graphs show wealthy pay more in taxes than the poor (both in rate and amount). Quite bizarre and frankly, should not be cited.Mattnad (talk) 19:44, 19 October 2013 (UTC)
Hi. I am not so used to working with ThinkTank sources, so I am not quite sure how they are considered as sources. You may know this better than me. I would think it is a reliable source, but not as good as a peer-reviewed source. Regards, Iselilja (talk) 19:47, 19 October 2013 (UTC)
This article should not be about the United States and should remain global in scope. I think any reference to the U.S. should only be as an example of how a progressive tax may look or to economic effects - to attribute the material. Material like this would be better placed in Progressivity in United States income tax, not in a global article that tries to define a Progressive tax. So I would suggest removing the content. Morphh22:34, 19 October 2013 (UTC)
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?
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)
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)
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)
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.
