Take Up the Rich Man’s Burden

June 17, 2014
Posted by Jay Livingston

Pity the wealthy. How their burden has increased. At least that’s what Mark Perry would have us believe. The income tax burden, he says in the title of this chart that he tweeted today, has become “more progressive.”

It certainly looks as though the rich man’s burden has increased.  Perry is careful not to say that “taxes” have become more progressive. That would mean that rates have increased more on the wealthy than on others. Instead he says that the “burden” has become more progressive. 

The burden might have become more progressive, but did tax rates on the wealthy increase? No.

Except for the period from 1990 to 1993, tax rates fell or were level.

Why then did the burden increase?  Since it’s unlikely that the wealthy were voluntarily kicking extra bucks into the IRS coffers, there’s only one explanation: the wealthy were getting an increasing share of income. This possibility seems not to have occurred to Perry.

It has occurred to Piketty and Saez, who have been providing us with information on the income shares of those at the top.  Here is a chart of the top 10%.

From 1985 to 2010, their share of income increased from roughly 34% to 47% – a 38% increase. Their tax burden rose by only 29%. 

And the 1%.

Their income share increased from 12% to 20% – a 67% increase. Their share of the tax burden increased by only 45%.

According to the bio at the American Enterprise Institute website, “Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan's Flint campus.”

A scholar. Is this what passes for scholarly work at the AEI? I am not an economist or a finance expert. But even I know enough to see that the chart and its title are deliberately misleading. 

(And with apologies to Kipling)
.

Take up the rich man’s burden, and shower him with praise,
For at the AEI, this style of economics pays.