Joe Klein, Journamalist: "I'm Fake But Accurate!"
links for 2007-04-24

Why Oh Why Can't We Have a Better Press Corps?

Alan Reynolds, once again sighted in the Washington Times trying to degrade the quality of debate about economic issues:

What is income? -- The Washington Times: Alan Reynolds: Two French economists, Thomas Piketty and Emmanuel Saez, can count on a flood of publicity every time they release a new estimate of the share of U.S. income supposedly received by the top 1 percent. Even veteran columnist Robert Samuelson of The Washington Post approached their latest "astonishing" estimates as unquestionable scripture. "The biggest gains occurred among the richest 1 percent," he exclaimed. "Their share of pretax income has gradually climbed from 8 percent in 1980 to 17 percent in 2005." Gradually? On the contrary, half of that increase happened in just two years, 1987 and 1988. The top 1 percent's share (of what?) was 13.2 percent in 1988, 14.9 percent in 2003....

Increases in the top 1 percent's income after the 1986 Tax Reform came from more business income being reported on individual tax returns, rather than corporate tax returns. The share of the top 1 percent income coming from business profits jumped from 11 percent in 1986 to 21 percent in 1988, and continued rising to 27 percent in 1994, the year after individual tax rates were increased. The business share was still 27 percent in 2002, but it rose to more than 29 percent in 2005 after individual tax rates were once again reduced. How and why that happened is a textbook example of why tax return data cannot be used to measure income distribution...

29% of 17% is 5% as the tax-return-estimate based share of business income reported by the top one-hundredth. If the tax law were different today, a good chunk of that 5% would be reported as capital income, and a smaller chunk as labor income. The estimates the people I talk to come up with is that the 1986 Tax Reform boosted the long-run measured share of the top one-hundredth relative to the true share by between 0 and 2 percentage points, leaving between 7 and 9 percentage points as the true underlying increase in the income share of the top one-hundredth.

Can anybody point to anything, anywhere, that Alan Reynolds has ever written that I would advise anybody who actually wants to learn stuff to read?