Lies, Charts, and Statistics

Posted on by Pastabagel and tagged , , , . Bookmark the permalink.

Click to enrage.


Some pretty damning charts from the Center for American Progress show that Americans are relatively undertaxed compared to other countries.

The usual tricks are on display here, such as setting the axes such that a small differences appear to involve precipitous drops, etc. But what interests me much more about these debates is the comparison of countries.

Why would anyone compare the United States to the UK? Because both speak English? That’s about the only thing the countries have in common. Consider this: the US population is 5 times the UK population, but it has 10 times more paved roads than the UK. 12% of the UK population lives in London, while only 6% of the US population lives in LA (the largest US city). And less than 10% of the US population lives in the 10 most populated cites. The US is much more spread out, much more geographically diverse than the UK. Comparatively speaking, the UK enjoys much greater economies of scale for public services and infrastructure than the US.

And this is always the tactic when some aspect of life in the US is the focus of a policy debate. How often was US healthcare compared to that of Denmark (pop. 34) during last years debate? And these charts here compare the US alternately to the UK, Norway, and Australia.

Why not do the obvious, and compare it to all of Europe? Because then you’d have to include the parts of Europe that aren’t also France and Germany. As great as Norway is, what with it floating on North Sea oil, it has only 1/5th the population of Romania, but 5 times the per capita GDP. And that’s Romania. I don’t see Greece, Portugal, or Ireland on those charts either. Remember Moldova? No one else does either, but I assure you it exists, right there in the center of Europe. It has 3.5 million people to Norway’s 4.9 million, but a per capita GDP of $3,000, roughly in line with Ghana.

And before we sing Norway’s praises too much, let’s remember that22% of Norweigians are on welfare and 13% are too disabled to work, the highest proportions in the world. That means, higher than in the US, by the way.

Cherry picking the countries to compare the US to is akin to throwing out data that doesn’t fit some scientific hypothesis solely because it, well, doesn’t fit. What is obviously going on here is that the people who put this chart out are pushing for higher taxes on the wealthy and corporations. They are trying to get the public to buy into that by convincing them that the current system is unfair. This is an important tactic, because really what we are talking about is getting 50% of voters to increase the taxes on about 5% of the voters. That is called democracy.

One more thing missing from these charts that you think would be the first graph they included: in Europe, they tax wealth. Not just income, but wealth. They tax you on how much you have accumulated, in addition to how much you make. If you did this in the US, if you taxed, for example, the Forbes 400–a list of only 400 people–10% on their net worth, you’d get an additional $120 billion in revenue. Each year.

But they don’t talk about that, because if they did, all their support would vanish. Warren Buffett is fond of relating how the tax system is so screwed up his secretary pays a higher percentage on her income than him. Okay then, Warren, how about we forget about income taxes and talk about a mere 10% tax on net worth? All of a sudden the system isn’t so screwed up. Consider how that same message would resonate with people like George Soros, and you realize why no one in the US ever talks about a wealth tax. Those 400 people are, shall we say, highly influential.

It is true that the economy in the US is in trouble, but sloppy statistics and cherry-picked comparisons aren’t the way to solve the problems, they are simply the ways that one side consolidates power over the other.

 

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18 Responses to Lies, Charts, and Statistics

  1. barrkel says:

    Don’t let your cliches get in the way of your opinions.

  2. BHE says:

    So, what happens if you throw Moldova in the mix? Or include all of Europe? An interesting idea but I’d still like to see the actual numbers before getting too critical of the cherry-picking.

    Also LA is the largest metropolitan area but NYC is by far the largest city.

  3. JohnJ says:

    According to that renowned authority Wikipedia: “As of 2005, the official estimate of the population of the Los Angeles metropolitan area is more than 12.9 million, while in 2009 the larger five-county region had a population of over 17.6 million. Either definition makes it the second-largest core-based statistical area in the country, behind the New York metropolitan area.[2] The term “Southland” has also been used to refer to all of Southern California.”

  4. JohnJ says:

    in Europe, they tax wealth. Not just income, but wealth. They tax you on how much you have accumulated, in addition to how much you make.

    Too many people don’t understand the difference. In America, “raising taxes on the wealthy” means raising taxes on the productive. Wikipedia (again) has a nice article on Wealth Tax.

  5. DJames says:

    Goddamn it, Pastabagel. I had planned to disagree with you. I’ve done that same shit as a newspaper reporter years ago.

    A bit of math goes a long way. So, well done.

  6. Rudd-O says:

    Wow.

    I agree.

  7. Comus says:

    I quickly did some maths.

    I counted the mean corporation tax for 40 European countries combined, using this document as a reference.
    It was 20,6% (mean of Europe). In the United States it was, according to Pastabagels data, at 13.4%. To be noted that I included also Estonia, which has no corporation tax.

    I also counted the total tax revenues as a percentage of GDP (based on the OECD library, cont. 43 countries in Europe, incl. also Turkey and Russia). The percentage landed at 35.4% (with or without Russia it stayed the same). The same document lands the US at 26.9% (the same as South Africa).

    It was only a quick calculation, so there might be some errors though. But roughly, the notion would appear to stand.

    • Pastabagel says:

      First, I don’t recall having provided any data. Second, I don’t know how the average US corporation tax can be 13.4% when the lowest federal corporate tax bracket is 15%.

      But you continent to make another assumption, which I didn’t address in my article in the in test of brevity, which is the assumption that the differing tax rates between the US and elsewhere are because the US rate is too low. Why aren’t we arguing instead that the rates elsewhere are too high?

    • Pastabagel says:

      Also, that document you linked to is VAT rates, which has absolutely nothing whatsoever to don with corporate tax rates. The US does not have a VAT. We have sales taxes which differ by state, but no federal sales tax.

      • JohnJ says:

        But other than all that, Comus, you were completely accurate!

      • Comus says:

        Yeah, I noticed that I inadvertantly linked the wrong document. Sorry about that, multiple windows, sleeplessness. You can find the rates for example in wikipedias Tax Rates of Europe in a clear enough format, as I quickly glanced there weren’t much difference in the reported data there to the one in my calculators memory.

        I was not meaning to argue, someone asked for data, and I, albeit rather shittily, counted it. Because Moldova is quite a tax miracle (34% of GDP) and the world should know.

        Taxation is an ideological question. Especially in a country valuing individuality above all else. Taxes often are the main weapon against structural violence, like the lack of a social welfare healthcare system. There’s no use in arguing for wealth tax without a change in value climate.

        The thing is not how much tax one carries, it is about what the state does with the money.

  8. DataShade says:

    Consider how that same message would resonate with people like George Soros, and you realize why no one in the US ever talks about a wealth tax.

    I thought no one ever talks about it because of the inertia of ignorance – you have so many armchair-pundits talking back and forth about issues in only the way it’s always been discussed, and if you try to point out that the debate’s been framed incorrectly – if you say that both parties are arguing the wrong premise – you usually just get asked if you’re some kind of hippy Green or weirdo Libertarian and then they stop listening. I’m not sure if it actually counts as a cognitive kill-switch; I think it’s more just that too many people put too much of their political party affiliation into their personal identity despite the obvious contradictions with reality (“I’m a rugged individualist, I was raised in a log cabin I built myself!” “I’m a cultured liberal, just like my censorship-promoting hero, Bono!”) that any attempt to redefine or question that affiliation, or party, results in at least a sense of unease if not outright fear and rage.

  9. Guy Fox says:

    You want a comparison? Try Canada – and despair.

  10. Hypocrisy Illustrated says:

    Tax regimes are really hard to compare.

    Just one look at the source of the charts and one should already know what kind of bias to expect. This is not to criticise their agenda; they may or may not have a point. It’s too bad that so many pressure groups use such too clever statistical tactics. But does it undermines their credibility? Nevertheless, it must work or they wouldn’t do it.

    The public loves corporate taxes, because they think they can get something for nothing. Want more public and social services? Let somebody else pay! Raise the taxes on those “evil” and “greedy” corporations. Let them carry the burden for our public’s moral priorities. Corporate taxes are popular because the impact is invisible and the costs to consumers, workers, and owners (pensioners, retirees, savers, etc) are well hidden and hard to grasp.

    In fact the US corporate tax rates are actually quite high in international comparison, even if the Charts 8 and 9 seem to show that they yield relatively little revenue.

    See this KPMG data based chart for a overview of the actual rates:

    <img src="http://wac.0873.edgecastcdn.net/800873/blog/wp-content/uploads/201012_blog_edwards151.jpg&quot;

    Many argue that, it is actually because of the relatively high rates of corporate tax that many multinational concerns prefer to realise their profits in lower tax jurisdictions. Our dear Yanks could get clever and potentially collect more corporate tax revenue by lowering rates and making it more attractive to pay tax in the US. But alas corporate taxes are more popular with voters than anything honest. You’ll never hear a politician say, “Yes that is an important priority, and that’s why all citizens should directly and visibly share the burden; higher taxes for everybody!” Although Chart 10 is somewhat revealing. Well connected businesses and industries with effective lobbies enjoy support from both left and right. There is little consensus to just make things simple and lower taxes for all. It’s sad that smaller and newer businesses don’t enjoy the same favour as the big fat market incumbents.

    What the charts catastrophically miss are probably the biggest source of revenue for the most important public services in the United States, i.e. schools, education and public safety. Does anybody here own a home? Ever paid property taxes?

    You can bet that if residential property taxes were also lower in the US than in other countries, the Center for American Progress wouldn’t have neglected to show it.

  11. Hypocrisy Illustrated says:

    Sorry so sloppy. Wish I could preview or edit.

    The link…

    http://wac.0873.edgecastcdn.net/800873/blog/wp-content/uploads/201012_blog_edwards151.jpg

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