I put Middle Earth Journal in hiatus in May of 2008 and moved to Newshoggers.
I temporarily reopened Middle Earth Journal when Newshoggers shut it's doors but I was invited to Participate at The Moderate Voice so Middle Earth Journal is once again in hiatus.

Friday, April 14, 2006

The New Math

By now we all realize that the Bush administration is made up of a cabal of serial liars. Well Paul Krugman gives us another example today. I don't have too much else to add so here it is without comment.
Weapons of Math Destruction
Now it can be told: President Bush and Vice President Dick Cheney based their re-election campaign on lies, damned lies and statistics.

The lies included Mr. Cheney's assertion, more than three months after intelligence analysts determined that the famous Iraqi trailers weren't bioweapons labs, that we were in possession of two "mobile biological facilities that can be used to produce anthrax or smallpox."

The damned lies included Mr. Bush's declaration, in his "Mission Accomplished" speech, that "we have removed an ally of Al Qaeda."

The statistics included Mr. Bush's claim, during his debates with John Kerry, that "most of the tax cuts went to low- and middle-income Americans."

Compared with the deceptions that led us to war, deceptions about taxes can seem like a minor issue. But it's all of a piece. In fact, my early sense that we were being misled into war came mainly from the resemblance between the administration's sales pitch for the Iraq war - with its evasions, innuendo and constantly changing rationale - and the selling of the Bush tax cuts.

Moreover, the hysterical attacks the administration and its defenders launch against anyone who tries to do the math on tax cuts suggest that this is a very sensitive topic. For example, Senator Charles Grassley of Iowa once compared people who say that 40 percent of the Bush tax cuts will go to the richest 1 percent of the population to, yes, Adolf Hitler.

And just as administration officials continued to insist that the trailers were weapons labs long after their own intelligence analysts had concluded otherwise, officials continue to claim that most of the tax cuts went to the middle class even though their own tax analysts know better.

How do I know what the administration's tax analysts know? The facts are there, if you know how to look for them, hidden in one of the administration's propaganda releases.

The Treasury Department has put out an exercise in spin called the "Tax Relief Kit," [see below] which tries to create the impression that most of the tax cuts went to low- and middle-income families. Conspicuously missing from the document are any actual numbers about how the tax cuts were distributed among different income classes. Yet Treasury analysts have calculated those numbers, and there's enough information in the "kit" to figure out what they discovered.

An explanation of how to extract the administration's estimates of the distribution of tax cuts from the "Tax Relief Kit" is here. Here's the bottom line: about 32 percent of the tax cuts went to the richest 1 percent of Americans, people whose income this year will be at least $341,773. About 53 percent of the tax cuts went to the top 10 percent of the population. Remember, these are the administration's own numbers - numbers that it refuses to release to the public.

I'm sure that this column will provoke a furious counterattack from the administration, an all-out attempt to discredit my math. Yet if I'm wrong, there's an easy way to prove it: just release the raw data used to construct the table titled "Projected Share of Individual Income Taxes and Income in 2006." Memo to reporters: if the administration doesn't release those numbers, that's in effect a confession of guilt, an implicit admission that the data contradict the administration's spin.

And what about the people Senator Grassley compared to Hitler, those who say that the wealthiest 1 percent of Americans will receive 40 percent of the tax cuts? Although the "Tax Relief Kit" asserts that "nearly all of the tax cut provisions" are already in effect, that's not true: one crucial piece of the Bush tax cuts, elimination of the estate tax, hasn't taken effect yet. Since only estates bigger than $2 million, or $4 million for a married couple, face taxation, the great bulk of the gains from estate tax repeal will go to the wealthiest 1 percent. This will raise their share of the overall tax cuts to, you guessed it, about 40 percent.

Again, the point isn't merely that the Bush administration has squandered the budget surplus it inherited on tax cuts for the wealthy. It's the fact that the administration has spent its entire term in office lying about the nature of those tax cuts. And all the world now knows what I suspected from the start: an administration that lies about taxes will also lie about other, graver matters.


April 13, 2006
Reverse Engineering the "Tax Relief Kit"

The Treasury department's "Tax Relief Kit" is a propaganda and spin exercise on behalf of the Bush tax cuts. It's an embarrassing document in many ways. But it contains a couple of useful nuggets.

First, the document asserts that 111 million taxpayers will see their taxes decline by an average of $1,877. This tells us the administration's estimate of the size of the tax cut: 111 million × $1,877 = $208 billion this year.

Second, table S-8 of the administration's fiscal 2007 budget predicts that income tax receipts will be $997.6 billion in fiscal 2006 (which started in October 2005) and $1096.4 trillion in fiscal 2007. Interpolating, we get income tax receipts in calendar year 2006 of $1022 billion. In the absence of the tax cuts, revenue would be $208 billion higher: $1230 billion.

Now let's go back to the tax kit. According to the table at the bottom of page 4, “Projected Share of Individual Income and Taxes in 2006, the richest one percent of Americans will pay 32.4 percent of income taxes this year, compared with 32.3 percent in the absence of the Bush tax cuts. This means that they will pay 0.324 — $1022 billion = $331 billion. Without the tax cuts, they would have paid 0.323 — $1230 billion = $397 billion. So tax cuts for the top one percent were $66 billion, which is 32 percent of $208 billion. Again: as best we can make out, the administration's own numbers say that the richest one percent of the population got 32 percent of the tax cuts.

A similar calculation shows that the top 10 percent got 53 percent of the tax cuts.

And one last thing. The fiscal 2007 budget predict that the estate tax will yield $27.5 billion this year. But that tax is due to be eliminated in 2010. Since the tax only affects estates larger than $2 million for an individual or $4 million for a couple, repeal will overwhelmingly benefit the very wealthy. If we assume that all of the $27.5 billion would go to the top one percent of Americans, the end of the estate tax would raise their share of the Bush tax cuts to 39.7 percent.


This article contains copyrighted material, the use of which has not always been specifically authorized by the copyright owner. I am making such material available in my efforts to advance understanding of democracy, economic, environmental, human rights, political, scientific, and social justice issues, among others. I believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material in this article is distributed without profit for research and educational purposes.

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