Liberals! Stop Posting This Chart!

Evidently this chart has become a popular post for Liberals on Facebook. However, as Politifact points out, the source of the information on the chart is not only unverified, but it contradicts other studies from Liberal think tanks:

We located a scanned version of the paper on the Internet, and it did appear to be written by Prof. Mark Kroll. His institution wasn’t listed, but after some additional searching, we found that Kroll had been teaching at the Louisiana Tech College of Business in 2005 and that he is now the business dean at the University of Texas at Brownsville. But it turns out he didn’t write the paper after all.  

"Actually, I am the ‘recipient’ of the paper you refer to," Kroll told us in an e-mail. "The paper was done as a class project by three of my students in a graduate class back in 2005. The 475-to-1 ratio that you reference is listed in a table in the paper the students wrote. They do not give a specific citation for the data in the table."  

The paper’s cover sheet fooled us -- as it fooled others -- because the professor’s name appears in the middle of the page, and the three students’ names appear together at the bottom in a less prominent spot. We tried to reach the co-authors -- Adam Choate, Dana Rowzee and Jerrod Tinsley, all of whom were working on their Master of Business Administration in 2005 -- but we did not hear back.  

So how about the substance of the chart? ...  

The most recent chart from the Economic Policy Institute shows a ratio of 185 to 1 for 2009. ...  

Meanwhile, the most recent ratio from the Institute for Policy Studies is also smaller -- for 2010, it was 325 to 1. (emphasis mine)

From the Economic Policy Institute:

From the Institute for Policy Studies:

As you can see, there is no need to throw bogus over-inflated numbers into public discourse. The real numbers are startling enough, especially given that, since the late 1970s, CEO pay has gone from 40x the average worker pay to 180x (Although it is worth noting that much of this increase occurred during the Clinton years)!

Politifact also linked to a few older posts on the issue:

From previous fact-checks, we knew that American CEOs are generously paid, and we had confirmed that for ordinary Americans, incomes are stagnating.

Politifact has also pointed out that "the typical white male worker's purchasing power has eroded by almost 11.5 percent in 37 years." I have also written before on how income inequality results in the popular argument that the rich pay the lion's share of taxes in the US.

Basically, there are plenty of very powerful figures and statistics which Liberal facebook-ers can post to make their case. So stop posting inaccurate ones!

Income Inequality Shows Up In Taxes (that fun 70% figure)

Ive been meaning to post on this for quite some time, but never got around to it. However, it looks like Chris Hayes seems to have already done essentially what I was going to do:



As Chris Hays points out, the fact that the richest 10% pay over 70% of income taxes doesn't necessarily suggest the rich are over-taxed. He mentions other taxes that are not factored into the analysis (but misses the Corporate Tax). However, he mentions that another cause of this income tax phenomenon could also be income inequality. His simple model makes this point rather well. I will use another more dramatic model later in this post. However, it seems that Chris also had another argument to make: The US is "Inequalistan."

Now for my model. Let's take a fictitious 2 person country where one poor person makes $10 a day while the other rich person makes $950 a day. Let us also say there is a regressive-style tax rate where the rich person pays only 10% of their income in taxes while the poor person pays 50%.

The poor person would contribute $5 to daily income tax revenue.

The rich person would contribute $95 to daily income tax revenue.

Since total daily income taxes would equal $100, that means the rich person would contribute 95% of income tax revenue, despite the fact that they are taxed at a much lower rate than the poor person! Do you think the rich person could make the case he is over-taxed by saying he is responsible for 95% of the tax revenue?

Unlike Hayes, I was not trying to make the last point that my fictitious country is actually any real country. My point was to show that the rich paying the lion's share of income taxes does not necessarily mean the rich are over-taxed. I did this with a simple counter example, extreme enough to make the point painfully obvious. Now we may never see any example this extreme in real life. However, this example does point out that one should not come to abrupt conclusions about statistics where the outcome is affected by more than one variable.