Grading ZFC: More Republican Math!

PolitiFact Bias (PFB) writer Bryan White, via his conservatively skewed website Zebra Factcheck (ZFC), has committed a very similar error it pointed out in a recent PolitiFact Georgia fact-check on Cato Institute's Michael Cannon's statement concerning Obamacare "exchanges" being outlawed in Georgia. And I have to admit they both had a point: Cannon was talking about Obamacare exchanges in Georgia and in context he said--right at the beginning--that "by default" the feds would do their own exchanges in response. PolitiFact seemed to ignore this part of Cannon's claim and conflated it into something that should not have been called false. Yes, score one for PFB and Michael Cannon.

 

The error in this case is one which ZFC's writer Bryan White might call, if I had done the same thing, a logical "Red herring" or "Straw man." He does this in his fact-check of a statement by the Congressional Progressive Caucus (CPC)--that "Across the board tax rate cuts are regressive because a 20 percent tax cut for a millionaire – even as a share of income – amounts to a far greater benefit than a 20 percent cut for a hardworking low income American.” Instead of examining the premise of the statement he goes into a multifaceted dissertation on "effective tax rates" complete with pretty graphs, on how the overall rates were truly progressive up until seven years ago, and why poor Mitt Romney pays a lot more than Joe the Plumber.

 

He did not even try to actually calculate in numerical terms  whether there was a disproportional benefit to the rich of the across the board tax cut in and of itself. He even had something in his fact-check on how to "get there", quoting the IRS: “A tax that takes a larger percentage of income from low-income groups than from high-income groups.” So I will "get there", using two hypothetical progressive tax rates very close to what we have today, utilizing the 20% across the board factor.

 

Click to enlarge:  The 3rd thru 7th columns only needed formulas.

In the example above, we are using a 10% rate for a person with taxable income of $25,000 and a 25% rate for someone with income of $250,000, the current taxes paid using those rates, then re-calculated for a uniform across the board tax rate reduction of 20 percent. All other factors--excise taxes, corporate taxes--would be ignored because we are only concerned with the income tax cut itself and its effect on after-tax income (as that is the premise of the CPC statement). As shown in the last, highlighted bright yellow column, as a percent of after-tax income, the $250K earner has three times the additional income than that of the $25K earner. Now, you might say that it's because of the difference in tax rates, but even if you factor that in, the $250K earner still has 20% more after-tax income. THAT is the "far greater benefit" the CPC is talking about. The (yes, liberal) Center for Budget and Policy Priorities explains this "concept" as well in a website article. They chart the "regression" by income category.

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Grading PolitiFact *Liberal*-Style: Flat Tax Fever

Rick Perry's Tax Plan appears to have a different satirical pop culture twist than the “9-9-9” Cain Tax Plan: Herman Cain’s plan comes from the game SimCity 4, while Perry’s pandering “Taxpayer’s Choice” is not taken from anyone (except maybe Steve Forbes) and amounts to nothing more than maybe one of the Seven Dwarves: Dopey. Well, he was acting that way recently himself, so maybe there’s a connection.

According to Rachel Maddow, this plan “accomplishes the same goal of huge tax cuts for rich people and big tax hikes for everyone else." The “same” refers to Cain’s “9-9-9" Plan. PolitiFact’s verdict on the ruling:

Some other Americans--including 45 percent of residents earning $19,343 to $39,862--also would see tax cuts, a projection that does not support the claim that the plan means big tax increases for everyone but the wealthy. Perry’s plan allows every taxpayer to continue under the current system. No one would pay more unless he or she chooses the flat tax against their financial self-interest.

Maddow’s statement, leaving the incorrect impression that Perry’s tax plan hugely benefits the rich while everyone else pays more, rates Mostly False.

Here’s what FactCheck.org has to say about the Perry Tax Plan: (emphasis added)

But that’s not true for everyone, even though the Perry plan would result in a dramatic decrease in overall revenues, according to the Tax Policy Center analysis. The Tax Policy Center predicts that Rick Perry’s “flat tax” plan would amount to a tax cut of $570 billion in its first year after enactment, compared with current tax rates. More than half the benefits would flow to persons making more than $1 million a year.

However, many lower-income persons and families would see taxes go up. That’s because, although Perry has said he would continue the “current” income-tax system for those who prefer it, the TPC said Perry’s plan seems to allow all the Bush cuts to expire on schedule, including lower marginal rates at the bottom.

As a result, either the new Perry flat tax or the “current” tax system (once the Bush cuts expire) would mean higher taxes for many, compared with what they would pay at current rates. The TPC projected, for example, that taxes would go up for 63 percent of individuals and families earning between $40,000 and $50,000 a year, for an average increase of $248 in 2015. For those earning between $20,000 and $30,000, the tax hike would be even more painful, amounting to an average of $462 in higher federal income taxes.

Based on this information we can conclude that the Perry Tax Plan:

Grading PolitiFact *Liberal*-Style: Slam Bam Bachmann!

Or:  How to give Michele Bachmann a *True* in 240 words or less

The United States in 1913 was far different than the it is today. “Unions” were limited to craft guilds (and I believe that “collective bargaining” as we know it today was illegal). There was no Social Security, no Medicare, no Medicaid. The freeing of the slaves in the south gave way to rampant Jim Crowism along with racial subordination. Women could not vote. When you went to the hospital, it meant you were going to die. There was no infrastructure yet—such as the interstate highway system—as cars were just coming of age. And it would be another year before a major world war would start, necessitating a stronger defense, and the U.S.'s coming new world role as a formidable foreign power. Military investments by our government later enabled the space age and the advent of NASA.

So yes, Michele Bachmann saying that income taxes were 7% in 1913 and were 70% by 1980 (in this PolitiFact ruling) was True, but it was a far different country we lived in as far as what services our tax revenues  provided. And, taxes didn’t rise on a straight line, either, as writer Lou Jacboson briefly recognized in two short paragraphs, “…For every year between1944 to 1963, the top tax rate exceeded 90 percent.” That’s a period of 19 years, until it was lowered to the rate Bachmann specifies.

The other implication of her statement seems to be that taxes rose steadily until about the time Reagan became president, to give Ronald Reagan credit where credit wasn’t really due, as the one who started the movement to cut taxes (since shortly after his initial cuts, he went on to raise them several times). One Facebook commenter, Dean Hare, put it this way:

I would have ranked this as Mostly True due to the cherry-picked dates, because the rates during the Eisenhower administration were 91%, and all the current Republicans want to out-Reagan Ronald Reagan by making 'Historic" tax cuts. You were a little generous and need to re-visit this. I think you need to keep in mind with ALL your tax policy rulings the facts that the World War II debt was paid off with these high tax rates and an economy booming with publicly funded physical and intellectual infrastructure spending (ie: Government Stimulus on roads, the military and education). Too many of your rulings forget the tax policy and federal spending history from the 1945-1980 era -- and you also refuse to cite the eleven tax increases Reagan signed into law after it became obvious his initial cuts were too deep, requiring additional revenues.

Another Facebook commenter (or topic page) with the  name "Economics Online Tutor" published a comparison of U.S. economic performane and tax policies since 1913 on their Facebook wall, and it's worth a view in the context of Bachmann's other implication in this statement, that tax cuts stimulate the economy.

If a Democrat had said this I could just hear my conservative counterpart screaming that writer Lou Jacobson was ignoring the underlying argument (but neither blog post nor Facebook comment could be found on that from him, being as Bachmann is a Republican). Without underlying context Bachmann’s statement means very little, and there’s more than a few caveats here. This is not the usual Bachmann whopper, but PolitiFact certainly appears to be throwing her a bone in the way it was ruled on.

Lil White Lies: The Tax Cut Billemma

Emphasis added is a very important feature of this critique, for it spells out the differences for which PolitiFact’s critics think it can be rebuked.

PolitiFact Virginia’s fact-check reads as follows (emphasis added): that Robert C. “Bobby” Scott (D-Va.) claimed “The tax-cut deal [Tax Cuts Compromise] ‘adds more than $800 billion to the deficit over two years -- more than the cost of TARP and more than the cost of the Recovery Act’ and about the same as health care reform.”  It ruled his statement Mostly True.

Robert C. "Bobby" Scott (D-Va.) actually said in his statement: (emphasis added)

“This bill adds more than $800 billion to the deficit over two-years – more than the cost of TARP and more than the cost of the Recovery Act. It costs about the same over two years as the 10 year cost of the Health Care Reform bill, which we paid for." …

But Bryan White finds his loophole in the second paragraph: (emphasis added)

“We cannot add more than $800 billion to the deficit through tax cuts and tell the American people with a straight face that they won’t have to sacrifice anything in the future to balance the federal budget. If we didn’t have the political will to end the Bush-era tax cuts tonight, we certainly won’t have the political will to do it two years from now during a presidential election.”

According to Bryan, it’s “tax cuts” only that adds $800 billion to the deficit, and not “the bill”, and since it’s only tax cuts, the $800 billion is incorrect and also less, not more than the cost of the TARP, ARRA and the HCR bills. Note (1) That it is the bill he says adds more to the deficit than TARP and the Recovery Act, and that IT (the bill) costs about the same as HCR; and that (2) Scott initially calls it “the bill” and then (in the second paragraph) refers to it as tax cuts. It appears Scott is using “the bill” (or “tax deal” as PolitiFact refers to it) interchangeably with tax cuts. He could be talking about either one or both. Maybe he just didn't want to get into all the detail, since even Bryan admits, 90% of it was tax cuts.  So PolitiFact writer/researcher Wes Hester chooses (or as Bryan would say, selects “with bias”) the FIRST description—bill—the beginning subject line for the statement--but Bryan thinks it should be the second paragraph “context” line, which is “tax cuts”. Further aggravating the rhetoric is PolitiFact referring to the bill (or tax cut) as “tax deal” in its title which Bryan uses to further his cause.

As a believer in the “Laffer” curve, I find it troubling that the tax cuts, as they were originally put in place in 2001 and 2003, failed to increase tax revenues, and job creation remained flat. So, while there may be some economic recovery, there will likely be no “payback” for this tax compromise. This means in terms of “offsets” to cost, the TARP and HCR contain more “offsetting” factors than the Tax Compromise, while the ARRA is about the same, i.e., it’s hard to tell.