February 11, 2012

CLIVE CROOK: US Taxes Really Are Unusually Progressive.

If you ask me, Jonathan Chait, a writer I respect, has made an ass of himself in a fight he picked with Veronique de Rugy over taxes and progressivity. She offended him by saying that America’s income taxes are more progressive than those of other rich countries. Chait assailed her “completely idiotic” reasoning, called her an “inequality denier”, “a ubiquitous right-wing misinformation recirculator” and asked if it was really any wonder he cast insults now and then at such “lesser lights of the intellectual world”. (Paul Krugman said he sympathises. With Chait, obviously. The only danger here is in being too forgiving, Krugman advises. Chait may think the de Rugys of this world are only lazy and incompetent, but we know them to be liars as well.)

Just one problem. On the topic in question, De Rugy is right and Chait is wrong. . . . Why, according to the OECD, is the US system so progressive? Not because the rich face unusually high average tax rates, but because middle-income US households face unusually low tax rates–an important point which de Rugy mentions and Chait ignores.

Not surprising. Next we’ll learn that income inequality is actually down, not up! Oh, wait. . . .

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