Talk:Progressive tax/Archive 2

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Davis-Moore Hypothesis and Structural-Functionalism

EllenCT: You removed the phrase "(mentioned in the Wikipedia article on Structural functionalism)" following "the Davis-Moore hypothesis." I have no serious objection to your having done that but may I ask your reasoning? I thought the phrase you removed added some context from another field of social science that many would find useful and/ or interesting. SteveT (talk) 04:22, 25 September 2013 (UTC)

In addition to being a WP:SELFREFERENCE, when I removed it, the wikilink was red. I see that it is blue now, so I'm not opposed to replacing it if the reference to Wikipedia can be removed, e.g., "the Davis-Moore hypothesis (as in structural functionalism)" or the like. EllenCT (talk) 09:04, 25 September 2013 (UTC)

Thanks, Ellen, that makes sense (and, yes, I noticed that the link did not work and fixed it here!). I was unaware of the SELFREFERENCE style directive (I haven't contributed very frequently since I joined by in July 2012) -- thanks for that! I don't think the verbiage you propose is of sufficient value to justify an edit [no fault of yours, whatsoever], so I won't bother but thank you very much for the suggestion! SteveT (talk) 22:41, 25 September 2013 (UTC)

Graph comparing different tax functions?

How about this one? EllenCT (talk) 23:35, 6 October 2013 (UTC)

Would it be possible to graph some select tax rates as functions of income to show the difference between the various methods graphically? It's very hard to envision the difference just by looking at the formulas. — Preceding unsigned comment added by 46.15.73.118 (talk) 05:04, 23 September 2013 (UTC)

That would be difficult given the complexity of the tax code. A household's location (state and local taxes), income composition (earned income, investment income) and deductions all impact progressiveness.Mattnad (talk) 14:56, 23 September 2013 (UTC)

For the purpose of education, a simplified graph would do. MilesMoney (talk) 14:57, 23 September 2013 (UTC)

No, the chart offered by EllenCT was not acceptable when it was introduced in 2012 by the SockPuppet Cupco, it wasn't acceptable when put in text form, and it's not acceptable now. It implies a correlation which is not supported in any mainstream or even fringe sense (WP:FRINGE). It is WP:SYN lacks support by secondary sources WP:SECONDARY. EllenCT, please stop trying to insert this material - it's becoming disruptive. Morphh ^(talk) 00:21, 7 October 2013 (UTC)

The chart has the same provenance as the statement you are objecting to in the previous section. The correlation it implies is supported by [1] and [2]. EllenCT (talk) 00:33, 7 October 2013 (UTC)

Secondary sources - extraordinary claims require extraordinary sources. The chart that higher tax rates increases employment growth is an extraordinary claim. First, you have to make a lot of assumptions about government spending, which this article should not get into. The entire thing looks like WP:SYN and doesn't meet WP:WEIGHT on the subject of Progressive Taxation. Morphh ^(talk) 00:44, 7 October 2013 (UTC)

Both of those sources include secondary literature reviews in agreement with the findings to which you object. EllenCT (talk) 01:21, 7 October 2013 (UTC)

As an example to refute MilesMoney "Let the chart speak for itself".[3][4][5] The chart still needs to follow WP:V and WP:WEIGHT, which it does not. Morphh ^(talk) 00:27, 7 October 2013 (UTC)

The chart cites [6] and [7], both of which have been subsequently deleted from the internet. It still passes WP:V. As for WEIGHT, it is precisely on topic. Why would you think that it isn't? EllenCT (talk) 00:45, 7 October 2013 (UTC)

The viewpoint implied is a tiny minority and the entire thing focuses not on taxation (or the method of taxation - Progressive or otherwise), but on spending. Morphh ^(talk) 00:48, 7 October 2013 (UTC)

What supports the statement that the implied viewpoint is a tiny minority? It has been proven mathematically per [8] and [9]. EllenCT (talk) 01:08, 7 October 2013 (UTC)

Even the marginal tax rate itself is misleading because there were so many exemptions on those top rates that the real rate was much lower. So not only is the correlation between the two axes without causality, but the single axis is misleading. The entire chart is extremely bias and paints a picture which is wholly inaccurate and unsupportable. Morphh ^(talk) 00:56, 7 October 2013 (UTC)

You are opposed to including the chart's facts because it can imply other facts you don't like? EllenCT (talk) 01:21, 7 October 2013 (UTC)

The vast majority of economic thought on this matter is that increasing income taxes will reduce economic growth, but we don't mention that in the article (showing graphs of all the empirical and researched data). Yet, we are to include a chart that suggests that higher tax rates actually increases economic growth? It doesn't imply facts I don't like - it doesn't imply facts (or more accurately, it correlates facts which have little causality presented using misleading terms). It's WP:UNDUE and does not present to the reader anything that is not extremely misleading. Morphh ^(talk) 01:22, 7 October 2013 (UTC)

What do you expect the reader to take away from this chart? Even assuming we could strip away all the other economic forces during these time periods that effected the economic growth on the Y axis (which we can't), the chart does not accurately reflect the average tax burden after exemptions on the X axis. The entire thing misleads the reader on both the Y axis, the X axis, and the causality between X & Y. Morphh ^(talk) 01:45, 7 October 2013 (UTC)

I'll also note that it's U.S. centric and we should try to keep this article global. So one more reason... Morphh ^(talk) 01:51, 7 October 2013 (UTC)

Increasing the progressiveness of the tax incidence is not the same as increasing income taxes. That is why I want to include the statement about how U.S. federal taxes were 14% of GDP in 1950 compared to 19% of GDP last year. The reader deserves the facts. What are you trying to hide by removing the statement and the chart? If you object to the data, then find better sources. The inaccuracies you describe are small, and do not contravene the mathematical reality of the conclusion. The facts are the same world-wide. EllenCT (talk) 01:54, 7 October 2013 (UTC)

The average tax applies to progressivity as well. The 75% tax rate is not what they paid - if I recall, the rate on those high earners was averaged closer to 30-35% during that period after all the exemptions. I'm not trying to hide anything except misleading figures that have no causality. I don't object to the data - I object to the WP:SYN of the data. I'm not the only one - this discussion goes back over a year based on the same sentence and the same graph on different articles. This is not a new debate and the consensus has been not to include it. Morphh ^(talk) 02:05, 7 October 2013 (UTC)

EllenCT, if we presume that high (and progressive) taxation leads to job growth, then what's the mechanism for this job growth? Government spending? Last time I checked, the government share of GDP has continued to grow steadily, recently peaking at 40% of GDP even has tax rates and revenues have fallen relative to 1950s. The government didn't stop spending and has done that by borrowing. So why then aren't people doing better financially? Mattnad (talk) 02:18, 7 October 2013 (UTC)

Increased income equality, per the sources already cited in Progressive tax#Income equality. EllenCT (talk) 05:58, 7 October 2013 (UTC)

It would be inappropriate to quiz Ellen about these mechanisms because she didn't do the original research. Rather, she reproduced a graph from a reliable source. Your attempt to outthink that source is itself a form of original research that is, quite frankly, not allowed to us as editors. The scope of this discussion must be limited to the realm of editors, to questions of reliability, relevancy and policy. MilesMoney (talk) 03:49, 7 October 2013 (UTC)

Not really original research except to point out that correlation is not causation. I suppose EllenCT could have a point - if we use taxes to reduce the the income of rich people to that of the middle class and lower classes, then they would lead to income equality. But I don't think that's her point, or that of the research she cites.Mattnad (talk) 13:46, 7 October 2013 (UTC)

The graph shows the correlation. It makes no claims about causation. You're arguing against a point that's not being made, and you're doing it on the basis of your refusal to accept what the sources say. You're an editor here, not an independent researcher. MilesMoney (talk) 14:24, 7 October 2013 (UTC)

The point of a chart like this is to show a correlation. What is the point of showing a correlation without causality - Global Warming / Pirates. The information is purely misleading on multiple levels. I don't agree the graph is reproduced from a reliable source on tax policy (or a proper secondary) and I don't see that the statement / chart holds any mainstream acceptance as a correlation. To Mattnad's comment, even if it were EllenCT's point, that's extremely dependent on spending, which is not the point of this article. We need to focus on the structure of the tax code - its relative progressivity. Morphh ^(talk) 14:52, 7 October 2013 (UTC)

I looked at the source for that chart. Ironically, it's used to make the point that LOWERING taxes for the rich doesn't necessarily lead to job growth. Michael Linden (the source) makes the point that that there's no causation between tax rates and job growth. That alone should be enough to disqualify it, as it's being used in this article.Mattnad (talk) 17:30, 7 October 2013 (UTC)

Sometimes economics is one of those fields where math like [10], [11], [12] and [13] come along and change the sign of a previously accepted conclusion. Blame Arthur Okun in the 1970s. EllenCT (talk) 20:15, 7 October 2013 (UTC)

Come on, Morphh; you know better than this. While the graph doesn't prove causality, it does show a correlation that a reliable source considers relevant. That's completely different from your warming/pirate graph, which arbitrarily takes two items whose correlation is uninteresting. Such behavior is entirely counterproductive. If you keep this up, I'm going to have to ask you to take your jokes elsewhere and let more serious minds discuss the article. MilesMoney (talk) 04:40, 8 October 2013 (UTC)

WP:NPA - What reliable source considers this correlation relevant? I haven't seen it in the ones offered by EllenCT. The only source I see that offers a correlation is from the Center for American Progress (a primary source), which appears to use it to make a non-correlation. The material, certainly in the way it is presented here that suggests causality, is not published anywhere that would lend weight to the correlation. The data used fluctuates greatly. In 1950 with 91% marginal rate, the growth was 7.7% - by 1953 with the same 91% rate, the growth was -0.9%. Even with a consistent tax rate during a short period of time it makes no sense. It's not in any way a scientific analysis, trend, or proper comparison, and has no place in this or any other article. Morphh ^(talk) 13:30, 8 October 2013 (UTC)

A proper analysis of such figures would look at the short term and adjust for external growth factors - does the growth rate following a tax code change increase or decrease growth in the proceeding years. Here is a good article on the topic That Wishful Thinking About Tax Rates "Of course, many factors affect the economy, so a lack of correlation doesn’t prove that marginal-rate changes have little impact. That’s why economists have devoted thousands of pages in journals to testing the effects more scientifically." Morphh ^(talk) 14:12, 8 October 2013 (UTC)

The final paragraph of that New York Times article you link to specifically indicates that high marginal rates will lessen the (now known to be very deleterious) effects of income inequality. EllenCT (talk) 13:11, 9 October 2013 (UTC)

EllenCT, that final paragraph merely states the obvious - raising taxes on the weathly will reduce income inquality and help reduce the deficit. It does that by making the rich less wealthy. It does not state that it would improve the condition of the non-rich and it does not support your desire to add that chart.Mattnad (talk) 14:12, 9 October 2013 (UTC)

(edit conflict) Right EllenCT, but that's not what this chart or that sentences says. You seem to be making an WP:OR WP:SYN leap that something that can improve income inequality necessarily leads to economic growth since certain studies show that higher levels of income inequality can reduce economic growth in the long term. For one, progressive taxation would need to be coupled with high progressive spending to provide the type of wealth distribution needed to effect income inequality, which is beyond the scope of this article. Also, it's not certain that the economic effects of one (since most studies show high marginal rates can hurt growth) don't balance out the other (gains from better income equality) or to what degree one is needed to achieve the other. None of the studies make the type of causality or correlation that you're trying to insert. Morphh ^(talk) 14:28, 9 October 2013 (UTC)

Which specific studies show that higher levels of income inequality can reduce economic growth in the long term? EllenCT (talk) 03:31, 11 October 2013 (UTC)

You're right; it was a personal attack for you to denigrate that graph by falsely comparing it to global warming/pirates. And your subsequent original research added nothing of value to the discussion. I'm going to move on now. MilesMoney (talk) 18:22, 8 October 2013 (UTC)

There is further discussion of this at Wikipedia talk:WikiProject Economics#Progressiveness versus amount of tax. EllenCT (talk) 03:17, 15 October 2013 (UTC)

This is becoming disruptive. There is no consensus for this contentious material. We need to take it to an RFC or further conflict resolution if you insist on continuing with including this information. Otherwise, we'll just edit war over it. Until a consensus is gained, leave the content out. Morphh ^(talk) 15:19, 15 October 2013 (UTC)

Agree with Morph. You cannot use this information to imply a correlation. Arzel (talk) 15:31, 15 October 2013 (UTC)

In your opinion do [14], [15], or pages 362-70 in Peterson, W. and Estenson, P. (7th ed., 1992) Income, Employment and Economic Growth, Chapter 9, "Public Expenditures, Taxes, and Finance" (which describes progressivity in terms of transfers) support the inclusion of the statement and the graph? Does Berg and Ostry (2011)? If you don't think so, please help me understand why. EllenCT (talk) 23:05, 15 October 2013 (UTC)

Excuse me, but I'm going to have to caution Morphh and Arzel against making false claims of consensus. As I see it, there's just the four of us discussing it and we're evenly split in numbers. More to the point, two of us are willing to discuss it in terms of policy, while the other two are reverting each attempt at compromise and insisting that they have consensus. MilesMoney (talk) 01:31, 16 October 2013 (UTC)

Let me add my voice to the two other editors who do not see the cited materials supporting graph. This is classic WP:SYN. Since we are not able to come to consensus, I suggest this get taken to a neutral board.Mattnad (talk) 01:41, 16 October 2013 (UTC)

MilesMoney, this debate goes beyond this discussion. It's been discussed by many editors (and widely rejected) since the graph and sentence was added back in 2012 by Cupco. There has been no compromise offered and I'm not sure there can be - the material is just not supported and fails several policies. We're also discussing it at the Economics WikiProject. I'm probably going to open a formal RFC on it so we can put an end to this once and for all. Morphh ^(talk) 02:52, 16 October 2013 (UTC)

A formal RfC can put an end to it for a whole month. What would put an end to it once and for all is a strong argument. MilesMoney (talk) 03:01, 16 October 2013 (UTC)

As I replied at WT:ECON#Progressiveness versus amount of tax:

1. "Taxes are a leakage from the income stream in the same sense of saving. Equilibrium requires that leakages in the form of net taxes plus saving must be offset by investment expenditures and government purchases of goods and services.... 'our fiscal policy targets have been recast in terms of "full" or "high" employment levels of output, specifically the level of GNP associated with a 4-percent rate of unemployment.'" —Peterson, Wallace C. (1992). "Chapter 9. Public Expenditures, Taxes, and Finance". Income, employment, and economic growth (7th ed.). New York: Norton. pp. 364–70. ISBN 0-393-96139-7. {{cite book}}: |access-date= requires |url= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help) Quoting Walter Heller.
2. "inequality in land and income ownership is negatively correlated with subsequent economic growth.... there will be a strong demand for redistribution in societies where a large section of the population does not have access to the productive resources of the economy.... rational voters have to internalize this dynamic problem of social choice." —Alesina, Alberto (1994). "Distributive Politics and Economic Growth" (PDF). Quarterly Journal of Economics. 109 (2): 465–90. doi:10.2307/2118470. Retrieved 17 October 2013. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help); Unknown parameter |month= ignored (help)
3. "high unemployment rates...have a negative and significant effect when interacting with increases in inequality.... increasing inequality harms growth in countries with high levels of urbanization, as well as in countries with low levels of urbanization in which there is high and persistent unemployment.... High and persistent unemployment is likely associated to increasing inequalities. Furthermore, there are sensible reasons to expect that this process of high and persistent unemployment, in which inequality increases, has a negative effect on subsequent long-run economic growth.... In sum, unemployment may seriously harm growth not only because it is a waste of resources, but also because it has serious distributional effects: it generates redistributive pressures and subsequent distortions; it depreciates existing human capital and deters its accumulation; it drives people to poverty; it results in liquidity constraints that limit labour mobility; and finally it erodes individual self-esteem and promotes social dislocation, unrest and conflict. Hence, the experience of the 1980s, and the subsequent cycle of low long-run economic growth is a cautionary tale about the future risks for growth of high unemployment and increasing inequality in our current times. «The economic slowdown may entail a double-dip in employment... exacerbating inequalities and social discontent... and further delaying economic recovery» (ILO, 2011). Policies aiming at controlling the dramatic rise in unemployment associated to the current crisis, and in particular at reducing its inequality-associated effects, are not just pressing for the obvious current difficulties that they represent for society today, but also because of the handicap that they represent for future long-run growth." —Castells-Quintana, David (2012). "Unemployment and long-run economic growth: The role of income inequality and urbanisation" (PDF). Investigaciones Regionales. 12 (24): 153–173. Retrieved 17 October 2013. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)

These and the historical facts about the U.S. tax rate should all be included. EllenCT (talk) 05:22, 17 October 2013 (UTC)

Thanks EllenCT. These sources do not provide support for the graph in the least. The first argues the if the government is going to tax, it should spend so the impact is neutral. The second quote basically says that income inequality leads to less growth, but given they mention land ownership, aren't they referring to more agrarian economies? The third say that high and persistent unemployment, particularly in urbanized cultures, leads to income inequality and lower economic growth. Not one of them discusses top marginal tax rates, and applies it to the US. It's WP:OR. Mattnad (talk) 09:16, 17 October 2013 (UTC)

I will reply to the identical comment at WT:ECON#Progressiveness versus amount of tax to keep the conversation from fragmenting. EllenCT (talk) 09:42, 17 October 2013 (UTC)

Contentious aggregate demand / consumer spending / 1950 vs. 2012 comparison

I was the one who asked about this deletion when it was first made almost a month ago, at Wikipedia talk:ECON#Review request. The text is:

When income inequality is low, aggregate demand will be relatively high, because more people who want ordinary consumer goods and services will be able to afford them, while the labor force will not be as relatively monopolized by the wealthy. For example, in 1950, U.S. federal taxes were 14% of GDP, the top income tax bracket rate was effectively 88%, and jobs grew by 7.7%; in contrast during 2012, federal taxes were 19% of GDP, the top tax bracket rate was 35% (but effectively much less) while jobs only grew 1.4%.

I realize that it was added by a banned sockpuppet, but I agree with its sentiment and the facts it states, I think the sources it cites are sound, reliable, and important sources for the article, and I think it needs to be discussed. Income inequality prevents the private sector from operating as efficiently as it otherwise would, and progressive taxation is a legitimate fiscal policy to increase income equality. I think this passage has some important lessons, and I think I understand generally why it has become contentious, but before I state my assumptions, I would like to know why it has been repeatedly deleted and the subject of further complaints. EllenCT (talk) 03:48, 11 May 2013 (UTC)

A couple of points - progressive taxes and tax levels do not in themselves solve for income inequality or grow employment. It depends on how governments spend that tax revenue. And if we look at the United States, the OECD has cited it as the most progressive as far as taxes go (from a 2008 report, recent tax increases have pushed that even more) [16] and yet there is still a lot of income inequality.

As for the the top income tax bracket comparison from 1950 to 2012, from a macro economic point of view, it's a bit of apples and oranges. The paragraph suggests causation without explaining how. The US economy and it's position in the world has changed a lot since 1950. Global competition, automation, computerization etc, have changed the job market. Even in a car factory, there are more robots doing the work that used to be done by people.

I worry that the second argument in particular is poor scholarship, even if people like to present the halcyon days of the 1950s as proof positive that high taxes = high employment. I won't even get into how in the 1950s minorities and women were excluded from the workforce and not even counted in unemployment figures. Another often unmentioned point is that everyone's taxes were higher then too. Mattnad (talk) 16:03, 11 May 2013 (UTC)

Sources earlier in the section state that progressive taxation does mitigate income inequality, without regard to concurrent fiscal spending. (That is because almost all government spending is either gross fixed capital formation, debt service, or transfer payments overwhelmingly to the less wealthy -- none of which negate the transfer from the more wealthy, and most of which reinforce it.) The US has a lot of income inequality under progressive taxation (but differing opinions on the incidence of corporate taxation might cause some to argue with that OECD characterization cited) because the income distribution is wildly more skewed toward the wealthy than anywhere else to begin with, and has been over the past half century, and has been becoming much more so over the same time period. I think the sources do support the argument made. While most people's nominal tax rates were higher before credits and deductions, the fact that the IRS took 14% instead of 19% of GDP indicates that most people taking tax credits and interest deductions were paying a lot less in taxes. That means the private sector was larger, and because it is more efficient, and per the sources, that is a legitimate comparison and a legitimate reason to believe it created more jobs and growth.

It seems like there is a libertarian / Austrian tendency to ignore the greater efficiency of the private sector when it is being supported by the greater income equality of progressive taxation. But is this a well founded, source-supported tendency or is it a knee-jerk reaction to higher taxes on the rich? We have sources supporting the argument being made. We have editors who want to delete those sources because they believe the opposite. But are there any reliable sources -- even Austrian Econ or libertarian source -- which actually make the opposing argument? If so, then we should include both sides per NPOV. If not, then the contentious material should be restored. I'm pretty sure it's a serious mistake to delete the argument and the sources supporting it in any case, unless there is some reason that the sources are unreliable or the facts are wrong or not supported by the sources. EllenCT (talk) 08:39, 12 May 2013 (UTC)

I'm less concerned about the first half of the paragraph, which is cited and follows the logic that income redistribution through taxes lowers inequality and increases spending (since people getting gov't assistance are more likely to spend.) However the later sentence comparing tax receipts, uncited, is suspect. It's not that the calculation of relative tax receipts is incorrect (I have no idea, but lets assume it's correct). It's that those difference in receipts are proposed as the reason for slower job growth between 1950 and 2012. It also ignores significant and persistent deficit spending by the federal government that also bumps up the share of the economy fueled by the Fed. Finally, the lower tax receipts is due in large part to the low taxes/high tax credits among middle and lower income households. See [17]. It come back to the fact that the US tax system is more progressive and skews towards a smaller tax base, which is why there's federal lower revenue now than before. Ergo, the tax system is progressive AND we have lower tax revenue.Mattnad (talk) 10:09, 12 May 2013 (UTC)

I believe the figures in the final sentence are correct, but I agree they should be cited. As for that NYT story, it may say taxes are more progressive, but it doesn't say they've had any appreciable impact on income inequality. ("...every American is paying a lower burden currently than they did then. In fact, the total federal tax rate is still vastly lower for the very rich than it was at any point in the 1940s through 1970s. It has risen from historical lows, but is still closer to those lows than where it was in the postwar decades.") EllenCT (talk) 06:00, 13 May 2013 (UTC)

EllenCT, taxes are also vastly lower for everyone else, even more so than it was in the 1950s. But that's the point - the argument that progressive taxes reduce inequity is not always true. Inequity reduction requires progressive spending by governments. Most other 1st world countries have broader tax bases including much higher taxes for middle and lower income people, but then they redistribute it to things that matter like free healthcare, highly subsidized schooling etc. which really helps where it matters. At any rate, I'm fine restoring the first part of the paragraph, but still dubious of the second part.Mattnad (talk) 10:09, 13 May 2013 (UTC)

I think the last sentence is major correlation without causation. Aside from major points made by Mattnad regarding all the external economic factors, the marginal tax rate itself doesn't even really imply what the average tax rate was on the high end after all the loopholes of that time were taken into account, and I believe as stated above the actual tax level as a share of GDP was lower, which would have a greater effect on economic growth than the actual marginal rate. So the last sentence is WP:OR and not acceptable for the encyclopedia. As for the first part, I've looked at the sources (which might be considered WP:PRIMARY), but I don't see anything directly stating that. I worry the content is an "interpretation of primary source" and would constitue WP:OR and WP:SYN, which is being used in WikiVoice as a statement of fact without any attribution. The sources would seem to support that well-designed progressive taxes can decrease income inequality, which we already include in the article. However, these following statements try to get into something unnecessary in this article - a jump from tax policy to spending (redistribution), then to a simplistic and bias description of the economic effects of income equality under certain static conditions. I'll note that the content was also added to the Welfare state article by the sockpuppet Neo Poz,[18] where it still exists. It was also copy / pasted to the comments of this Forbes article,[19] where it was refuted by the Forbes article's author. Low income equality does not equal economic growth - there are lots of things that effect the economy and each change has dynamic effects. Plenty of poor countries with low income inequality and many rich countries with high income inequality. Certainly the common argument is that such a capitalist system that creates these inequalities drives economic growth, bringing more people out of poverty. Static pie vs grow the pie. I think the evidence supports that while the gap increases with the rich get richer, the poor are also getting richer, just not as fast. In any case, I don't think this material should be included. The argument that progressive taxes can reduce income inequality is included and fine, but the economic effects of reducing income inequality is best left for another article. Morphh ^(talk) 14:40, 13 May 2013 (UTC)

I'll also note that EllenCT's last entry into Economic inequality is not supported by the sources.[20] In fact, the intro of one of them seems to state the exact opposite "Over the past two decades, China has moved towards a market-oriented economy. Such a transformation initially entailed a marked rise in inequality, which was an inevitable consequence of the transformation of the economy that has delivered a higher and more sustained growth in incomes than observed in any other major economy". Certainly these things level out, inequality can be reduce which can contribute to increased growth, but this black / white statement of fact is misleading and not supported. Morphh ^(talk) 15:19, 13 May 2013 (UTC)

Why isn't causation supported?

I believe that the causation implied in the recently re-deleted passage, "in 1950, U.S. federal taxes were 14% of GDP, the top income tax bracket rate was effectively 88%, and jobs grew by 7.7%; in contrast during 2012, federal taxes were 19% of GDP, the top tax bracket rate was 35% (but effectively much less) while jobs only grew 1.4%," is actually well-supported by the sources in the surrounding paragraph. What are the reasons that it doesn't seem to be? EllenCT (talk) 11:30, 22 September 2013 (UTC)

If we're doing original research, bringing together these facts to paint a picture, then we've gone too far. If someone reliable -- an economist writing in a peer-reviewed mag -- did the work and we're just repeating it, then we can definitely keep it. At most, we'd want to attribute it to them, but even that depends. MilesMoney (talk) 16:14, 22 September 2013 (UTC)

Hi EllenCT, I'd be happy to review reliable sources that support causation if you point me to them. But I'll not that just because something is written, does not make it credible (see the controversy around the MMR Vaccine and Lancet Study. Mattnad (talk) 20:17, 22 September 2013 (UTC)

Thanks Miles and Matt. What are the reasons you think the existing sources might not support any causation which could be inferred from the facts? EllenCT (talk) 22:17, 22 September 2013 (UTC)

We don't need causation. We just need a single source that brings all these facts together so that's their research, not ours. Do we have one? MilesMoney (talk) 00:29, 23 September 2013 (UTC)

Hi EllenCT, I read both From extortion to generosity, evolution in the Iterated Prisoner’s Dilemma and Inequality and Unsustainable Growth: Two Sides of the Same Coin? and neither refer to a comparison between 1950s tax rates and now, and tie it to current income inequality. Perhaps there is another source you had in mind? In previous discussions in this talk page, I proposed reasons for why it's an apples and oranges argument even without being an expert on the topic (which I will admit, I am not an expert). You're bumping up against a pretty firm rule of Wikipedia - we are editors - so no original research is allowed. We depend instead on reliable third party sources. I will add, the more technical the article, the higher the standard for the source. In the end, your comment that a conclusion can be "inferred from the facts" is proof-positive of original research.Mattnad (talk) 03:00, 23 September 2013 (UTC)

Actually, I don't believe that it is possible to draw a statistically significant inference from the factual statement in question. Which is why I need to ask: Which specific inference(s) do you believe are most likely to be drawn by readers? Are those inferences directly supported in turn by [21] or [22]? EllenCT (talk) 23:27, 23 September 2013 (UTC)

I was able to access the second article. It makes points that progressive taxes can reduce inequality which is non-controversial and in the wikipedia article. No inference required for that.Mattnad (talk) 03:35, 24 September 2013 (UTC)

I've stated my objections above to the inclusion of this material and nothing has changed. It's not appropriate, unless as MilesMoney suggests, we are directly quoting and attributing that opinion to a specific person / organization. Morphh ^(talk) 16:30, 24 September 2013 (UTC)

You are objecting to the inclusion of facts which are not in dispute, because you believe they imply something which is not necessarily true or because they are not themselves citing a source? If the former, then what exactly do you think those facts imply, and is that inference supported by [23] or [24]? (To get to the first of those, try clicking through on the "PDF full text" link a second time.) If the latter, I will gladly include sources for the factual statements. EllenCT (talk) 01:35, 25 September 2013 (UTC)

To recap, the text that's being considered is as follows:

"...in 1950, U.S. federal taxes were 14% of GDP, the top income tax bracket rate was effectively 88%, and jobs grew by 7.7%; in contrast during 2012, federal taxes were 19% of GDP, the top tax bracket rate was 35% (but effectively much less) while jobs only grew 1.4%...."

First, without getting into whether this is prohibited original research, the proposed text is problematic. The highest marginal tax rate for individuals under the U.S. federal income tax law for 1950 was 91%. There is no such thing as a "top" bracket rate that is "effectively" lower than the nominal rate. Perhaps the author was trying to factor in the fact that the lowest levels of income in a given year aren't taxed at all -- I'm not sure. At any rate, the highest marginal tax rate for a given tax year is what it is: the highest nominal rate provided in the law. The effective rate of tax on a given level of income, in a progressive system, is of course generally lower than the highest marginal tax rate on that income (that is, the rate imposed on the "highest" dollar at the very top of the "stack" of income that's being taxed is generally higher than the rate computed by dividing the total dollar amount of tax by the total dollar amount of income).

Similarly, the statement that for 2012, the "top tax bracket was 35%" and yet was "effectively much less" is problematic. For 2012, the highest U.S. federal income tax marginal tax rate for individuals is 35%. Period. The effective rate of tax is a different concept.

However, I'm not sure what the author was actually trying to say with the use of the term "effective," so I'm not going to try to provide a corrected version of the text.

As to my two cents worth on whether the material is, in my view, prohibited original research, I will try to address that subject soon. I'm a tax practitioner myself, and I just finished with another tax season (yes, October 15th is a U.S. federal tax return filing deadline for many people), and I just wanna get to bed right now.... Yours, Famspear (talk) 04:26, 16 October 2013 (UTC)

I would like to know how you would correct the text. I think we should include text and graphics that make it clear that when total taxes were less but progressivity was greater, job creation was very much greater. That is certainly historical fact, the obvious implication is supported by the sources, and most of the editors who want to suppress it seem to be ideologues more interested in arguing that the facts should be suppressed than reading about the subject. EllenCT (talk) 11:42, 19 October 2013 (UTC)

How progressive the US is.

This is a matter of proper sources, not controversy about the facts. I suggest http://www.nber.org/papers/w12404. MilesMoney (talk) 18:12, 19 October 2013 (UTC)

If you are referring to the last paragraph in the lede; I don't think the main point about that sentence is the exact progressive rate in the US, but rather to point out that there are many ways to measure how progressive a tax system is. Your edit missed that point, imo. We may find another example than the US, if that proves controversial. This article should be international in scope, so if we are to compare how progressive taxes are in different countries, we should include several countries; not write solely from an American point of view. Regards, Iselilja (talk) 18:30, 19 October 2013 (UTC)

I just had my source deleted by people claiming it was unpublished? Though it is clearly a paper published by the Brookings Institute: http://www.hamiltonproject.org/papers/just_how_progressive_is_the_u.s._tax_code/Lance Friedman (talk) 18:47, 19 October 2013 (UTC)

My view is that regardless of sources, a sentence like " Views differ on how progressive the United States tax code is relative to other economically advanced nations." is very US-centric and offers very little insight and information about Progressive tax. Why should we specifically mention such a non-information about the US in the lede? If you want to make a comparision, then mention something more meaningful. Which countries are thought to have the most progressive taxes, which have the least progressive and how progressive is the tax system in various leading countries: Germany, UK, Italy, Japan etc. Besides the sentence "For example, when refundable tax credits and other tax incentives are included across the entire income spectrum." is kind of nonsencical. If you think the current version is wrong or misleading, you can argue that it should be removed. But I frankly don't think the alternative you have offered, add much to the article. In addition, the lede is meant to be a summary of the body, which probably means that none of the two alternative versions should be in the lede, but rather in the body. Regards, Iselilja (talk) 19:04, 19 October 2013 (UTC)

Hi Iselilja, I'm totally open to changing the text to make it less U.S. centric. R U agreeing with me that my source is a reliable source?Lance Friedman (talk) 19:14, 19 October 2013 (UTC)

I'd like to add that the Atlantic article [25] was also added earlier, and I reverted, uses an interpretation of progressive taxes that's incorrect. This graph demonstrates a progressive tax system but the author considers progressiveness by government revenue relative to an income percentile's share of income. Ironically, the graphs show wealthy pay more in taxes than the poor (both in rate and amount). Quite bizarre and frankly, should not be cited.Mattnad (talk) 19:44, 19 October 2013 (UTC)

Hi. I am not so used to working with ThinkTank sources, so I am not quite sure how they are considered as sources. You may know this better than me. I would think it is a reliable source, but not as good as a peer-reviewed source. Regards, Iselilja (talk) 19:47, 19 October 2013 (UTC)

This article should not be about the United States and should remain global in scope. I think any reference to the U.S. should only be as an example of how a progressive tax may look or to economic effects - to attribute the material. Material like this would be better placed in Progressivity in United States income tax, not in a global article that tries to define a Progressive tax. So I would suggest removing the content. Morphh ^(talk) 22:34, 19 October 2013 (UTC)