Book of the week
The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay
The rich really are paying less than their fair share, said David Leonhardt in The New York Times. In the “most important book on government policy that I’ve read in a long time,” economists Emmanuel Saez and Gabriel Zucman offer shocking findings based on their analysis of decades of tax data. Per their calculations, America’s wealthiest 400 households now pay an overall tax rate of just 23 percent—less than the middle class, the working class, or virtually any other income group in the country. If you want to know where Elizabeth Warren and Bernie Sanders got their ideas about inaugurating a wealth tax on billionaires, look no further. Both Democratic presidential candidates tapped Saez and Zucman to help shape their campaign proposals.
But don’t accept the authors’ findings as established fact, said Robert VerBruggen in NationalReview.com. Within days of their book’s publication, “the debunking came from everywhere.” Even Jason Furman, the former head of President Obama’s Council of Economic Affairs, questioned how Saez and Zucman could justify not counting as income the federal aid that poor families receive in tax credits and food stamps. Though anyone attempting to quantify how income and tax burdens are distributed has to make assumptions open to debate, Saez and Zucman made choices at every step of the way that cast billionaires in the worst possible light. You wouldn’t know that when reading some mainstream coverage of the authors’ findings, said Tyler Cowen in MarginalRevolution.com. “I hope The New York Times is properly upset at being ‘had.’”
The critics miss the larger picture, said Edward Hadas in Reuters.com. By taking into account such factors as sales taxes and payroll taxes, Saez and Zucman show that the progressive tax system of our nation’s midcentury boom years has been entirely leveled, so that almost all working Americans—except the lucky billionaires—pay roughly 28 percent of their income toward taxes. That’s entirely at odds with what Americans considered just in the 1950s, and whatever can be argued about the numbers at the margins, “the situation will only reverse when the public mood shifts again.” Some of the authors’ proposed remedies—such as an international treaty to ban tax havens—are sensible, said Steven Pearlstein in The Washington Post. But their proposed 75 percent top income tax rate and 3 percent wealth tax would be politically and economically damaging. “This is the rhetoric of class war that most Americans don’t want.” ■