Income, taxes, and the hyperbole that binds

Not only does Jared Bernstein of the CBPP have the friendliest smile to come out of D.C., he’s been kind enough to round up the best of CBPP graphs for 2011. As we’ve learned this week graphs can be used for hyperbolic ill or (maybe still hyperbolic) good. Either way I love graphs. You love graphs. Let’s graph it out!

The first one represents a point I think often gets lost in the conversation about the growth of income inequality over time in this country. Some choose to spend their time arguing that such inequality doesn’t exist, but please remember that GINI don’t preach. It’s happening and if you don’t think it’s a problem then that’s fine, I suppose. Explain why it isn’t a problem but don’t pretend it doesn’t exist.

Side Note: Really, though, I’d thank you to notice that this is capturing after-tax incomes.

Which brings up the second graph. There are few other subjects that receive the sheer amount of hyperbole than the relationship of taxation to economic growth. Of course anyone outside the land of political fairytales knows full well that taxation doesn’t happen in a vacuum, and neither does GDP or employment growth. Even looking at this graph one shouldn’t take the incorrect view that tax increases drives employment and growth any more than tax cuts depresses employment and growth. This just illustrates that there is not a simple causation occurrence between taxation and economic growth.


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