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Today's Wsj Chicanery

In the Wall Street Journal editorial page today, Andrew Biggs and Kent Smetters offer up the latest in that page's endless series of columns arguing that the rich pay too much in taxes. Biggs and Smetters make the extremely familiar point that it's not fair to judge a tax plan on the basis of what proportion would benefit the rich without comparing it to what proportion of the tax burden the rich already pay:

But can we conclude that the rich would pay too little taxes under the McCain plan? Not really, because most media reports do not reveal the resulting share of the tax burden borne by the highest earners.

As it happens, the top fifth of earners currently pay 67% of all federal taxes -- including not just income taxes, but payroll taxes, corporate taxes and death taxes. The top 1% of earners pay 26% of all federal taxes.

Actually, there's nothing particularly unfair about judging a tax plan by what percentage goes to the rich, because the point is to compare it with other uses of the same money. McCain's tax plan would give 40% of its benefit to the richest 1%. Can't voters question whether they should support a policy that mostly benefits the rich, rather than an alternative use of the money with more broadly-shared benefits?

Now, I agree that a more precise analysis would compare what percentage the rich would get with what percentage they already pay. But knowing what proportion of the tax burden the rich already pay tells you nothing unless you know what proportion of the income they earn. 26% of the tax burden might be a lot of the richest 1% were earning, say, five percent of the national income. In fact, they're earning about 22% of the national income. Kind of a relevant fact, right? At no point do Biggs and Smetters see fit to include it, which shows yet again just how rock-bottom the intellectual standards are for publication on the Journal editorial page.

And, if you think forcing the richest slice, who earn 22% of the income, to pay 26% of the federal tax burden is too progressive, keep in mind that state and local taxes are generally regressive. Indeed, counteracting the regressivity of state and local taxes is one reason why the federal tax code is progressive. As of 2004, the last year for which I could find data, the richest 1% paid just 20.8% of all taxes (local, state and federal) while earning 19.1% of the income. This is the punitive, redistributive system the Journal rails against daily.

--Jonathan Chait