Tuesday, September 18, 2012

Comment on Klein

I posted this comment on wonkblog


This is an excellent post but it contains a factual error which should be corrected.  "you see huge jumps after Ronald Reagan’s 1986 tax reform and George W. Bush’s 2001 and 2003 tax cuts. " is incorrect because of the words "and 2003."  No huge drop immediately following 2003 can be seen in the graph.  In fact, unlike the 2001 tax cuts, the 2003 tax cuts did not include significant cuts to already very low income tax liabilities.

It is much more minor, but it makes no sense to call the 1986 tax reform "Reagan's"  Reagan was not aware of the content of the draft bill -- he didn't know that it included corporate income tax increases.  It makes much more sense to call it the Bradley-Kemp tax reform -- they are the ones who developed a proposal and pushed for it.   Reagan just signed.

I mention the major ARRA making work pay tax cut.  That one of the two causes of the recent spike the other being reduced employment.  Most US adults have forgotten those tax cuts.  I'd guess most wonkblog readers remember them, but I'm sure not all do and a reminder would be useful for completeness.

Note also the effect of the 1993 Clinton tax increase (passed with 0 Republican votes) . In addition to increasing taxes on high incomes and increasing the gasoline tax 4.7 cents a gallong, the bill expanded the Earned income Tax Credit.  the effect is not as dramatic as the 1986 and 2001 reforms but it is clear in the graph.

In constrast note that nothing much happened to the fraction paying Federal income tax after the 1996 welfare reform bill which absolutely did not include significant (or any IIRC) work encouraging tax cuts.

You have a tweet up incorrectly claiming that the 1996 welfare reform push included such cuts.  I think you should definitely correct your tweet (which is fundamentally innaccurate).  I also think you should update to remove the incorrect "and 2003" claim.

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