Tuesday, April 21, 2015

Deceptive half truths from Pew Research Center

The Pew Research Center is supposed to be an organization you can trust. They are routinely cited on NPR. They are a non-profit. They claim to be non-partisan. As cynical as I am, I never had reason to distrust them...until now.

Drew DeSilver, a senior writer at Pew, writes a story titled, "High-income Americans pay most income taxes, but enough to be 'fair'?". Given the title, readers might expect the author to actually answer that question, but DeSilver doesn't even try.

He starts out with a nice chart showing the composition of government revenue since 1934. It's interesting, but with regard to income tax revenue as a percentage of government revenue, not much has changed post WWII. However, please note that this does not mean that income tax rates haven't changed over that time period--more on that later.

After a bit about corporate taxation, which is tangential to the question posed in the title, he presents his second chart, "Who Pays Income Taxes? The Rich, Mostly". What a surprise! The people with the most income pay the most income tax!

DeSilver then diverges into a discussion of payroll taxes, which again is tangential to the income tax queston posed in the title, and then concludes that "the U.S. tax system as a whole is progressive." As to whether the overall tax system is fair, something at least close to the question proposed in the title, he waffles with a milquetoast some-say-yes and some-say-no.

As a reader, what the hell am I supposed to make of this? What I make of it is that DeSilver wants to slap the "progressive" label on our tax system to imply that the status quo is acceptable, or at least not "unfair".

The problem is DeSilver does not address the question in proper historical context, and I think he does this deliberately. Consider a few things omitted from his article:
  1. A chart of effective income tax rates over time for varying levels of income. Top tax rates used to be far higher than they are today. 
  2. A chart showing income over time in deciles. The rich keep getting richer.
  3. A chart showing the income tax composition (earned income and unearned income) over time for varying levels of income. The poor generally have no unearned income, while it now makes makes up a majority for the wealthy.
  4. A chart showing tax rates over time for earned income (wages) and unearned income (interest, dividends, and capital gains). Tax rates are historically low on unearned income, which favors the rich.
I claim DeSilver deliberately omits this information, because he doesn't seem to be a bad writer. If ten journalism students were asked to do a report on income taxes in America, it seems highly unlikely that even one of them would simultaneously omit all four of these points. I also expect that DeSilver has an editor who signed off on this, which indicts the Pew Research Center. They may not be publishing outright lies, but they're not publishing the outright truth either.

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