Wednesday, March 23, 2011

Entertainment by Blogging Economists

It started with this post by The Tax FoundationNo Country Leans on Upper-Income Households as Much as U.S..

Conservative Harvard economist Greg Mankiw link to it in a short post titled What nation has the most progressive tax system?.

Mankiw then updates with: "This brief post--really just a link to another blog--proved more controversial than I expected. Matthew Yglesias accuses me of irresponsibly misleading America's youth. Scott Sumner responds to Yglesias, pointing out "if you are going to argue that people who make mistakes should be ostracized, it’s best not to make a serious mistake in your attack.""

One he didn't like to was Karl Smith who just graphed the chart and found the US right on the end of the trend line.

But Mankiw's update includes a useful comment from Yglesias' blog from the author of the data in the table. "So while the US tax system is progressive and reduces inequality, the US welfare state is much less effective at reducing inequality. And because the US has a very unequal distribution of income from capital and a much wider wage distribution than many other OECD countries, it ends up as a relatively unequal country after taxes and benefits...So the implication is not that the USA either needs to increase or reduce the progressivity of the tax system. If you want to reduce inequality, you need to increase the level of taxes collected and spend it more effectively."

1 comment:

Richard said...

Everyone but Karl Smith, who actually plotted the data, gets a fail in today's how to present data class. I suspect it is because a plot didn't make their point and support their agenda.

This is why school children and every citizen should be given access to all of this data and the tools to plot it and draw their own conclusions.

(Yes, I live in Utopiaville.)