Wednesday, October 13, 2004

Charles Murray's Question For Kerry

The New York Times published something by this famous wingnut in their today's opinion columns. Specifically, Murray was one of the people asked to submit questions for tonight's presidential candidates. (These are not actual questions for the debate, just opinions about questions). This is one of the questions Murray chose to pose:

Five percent of Americans pay 54 percent of all personal income taxes. They do not use more government services than other Americans; they use fewer. Why is this fair?

There is a sense in which nothing that Murray says should be taken seriously, given his history as a supporter of pretty racist ideas and the belief that poverty is ones just desserts for laziness and sloth. But I can't resist his bait. So here it goes:

Murray appears to be using data from 2001 for his information, and the five percent he refers to are the five percent with the highest incomes of all Americans. No doubt these individuals also have wealth so that their total assets are much higher than just their earned incomes. Other types of assets are not taxed as strictly as incomes, and it's pretty likely that if we compared overall taxes paid as a proportion of total assets we'd find that this group pays less than 54% of the total. For example, the same five percent only paid 14.6% of social insurance tax liabilities during the same year.

Still, let's play Murray's game and focus only on the income taxes. What is the impact of this 'tremendous tax burden' on the highest earning five percents of Americans? The answer: while they earned 27.5% of all pretax incomes, their after-income shared dropped by an enormous three percent, to 24.5%.

This was to clarify Murray's first sentence. To clarify his second sentence, note that he makes an assertion backed with no evidence. How do we know if the well-paid Americans use fewer government services?

In fact, there is a pretty good case for the opposite argument: that the wealthier individuals benefit more from the government than the less wealthy. Who benefits from the legal system the most: those who hardly ever use it or those who use it routinely to acquire property rights to various inventions, to litigate over various issues and to resolve corporate lawsuits. Who benefits from the financial systems supported by government oversight and legislation? Those who have hardly a penny to set aside, or those who use all financial services to their utmost ability? And it's good to remember here that the whole society, including its markets, its educated workers and consumers, its national defence and so on benefit us all and surely benefit the higher earners at least proportionately.

So is this all fair? I could make a strong case for arguing that the higher earners should be taxed more than they currently are, given the above arguments and the fact that money can be argued to be worth more to those who are poor than those who are rich. Just consider being given a ten dollar tip by someone. Its effects on your well-being are very different if that's the first ten dollars you've earned today than if your name is Charles Murray, and your income is quite nice and well protected by government arrangements such as copyright laws, thank you very much.

But what this question reveals most clearly is the way a very simple and short question can hide a wealth of nasty secrets. John Kerry faces this sort of thing all the time, and the media appears to agree that long and careful answers are just another sign of flipfloppery. Never mind that truth often is long and complicated.
The Charles Murrays of this world prefer soundbites.