July 29, 2011

TODD ZYWICKI: FALLING FOR THE TWO-INCOME TRAP. “But here’s the catch (as I have noted previously here and here)–while that conclusion is what Professor Warren says is the upshot of her analysis and is the what appears to be the conclusion of her analysis, that is not actually what her own data actually shows. . . . I should stress that I don’t blame Caldwell at all for misunderstanding this point from The Two-Income Trap. Warren and Tyagi provide no explanation why they would present all other expenditures in terms of percentage change in dollar amounts but taxes, and taxes alone, in terms of the change in the percentage of income dedicated to taxes. . . . In fact, based on their data once the math is done the real conclusions of Warren and Tyagi are inescapable and in fact (as Caldwell will be pleased to know) extremely conservative: the financial problems of the middle class are caused by an astonishing rise in the tax burden on middle class families over the past three decades. Nowhere, however, will one read Professor Warren advocating income and property tax cuts as the obvious policy implication of their book–although that is unambiguously the logical inference.” (Emphasis added).