Alan Reynolds

I wrote a Wall Street Journal op-ed in December showing that the top 1 percent did not receive 16.1 percent of personal income in 2004, but just 10.6 percent. Most of the post-1980 increase in that number happened between 1986 and 1988, when tax rates fell. Any apparent rise since then is due to business income shifted from the corporate tax to the individual tax and investment income of middle-income taxpayers shifted from taxable to nontaxable savings.

Two "liberal" blogs went predictably apoplectic, but in ways that had absolutely nothing to do with what I had written. Berkeley professor Brad DeLong initially said there is never any point in paying attention to anything on the Wall Street Journal editorial page. Someone balked at that, so he tried describing two clear, consistent and distinctly separate statements from my article as "three-card monte."

Such amusing irrelevancies led to the usual swapping of links between like-minded cheerleaders at another blog run by Mark Thoma of the University of Oregon. He somehow imagined my article relied mainly on Census Data, and therefore borrowed some curious comments from a New York Times column by Paul Krugman.

Krugman complained that Census estimates are from a "limited sample" (as if IRS estimates are not) and wrote "the questionnaire is 'top-coded': if the individual interviewed has earnings higher than $999,999, those earnings are recorded simply as $999,999." Someone thought those words were mine, and posted an angry but correct rebuttal. Top-coding is almost entirely confined to "public use" files, censored for privacy. Census officials employ internal data with the missing details, including incomes far above $1 million.

In the process of changing the subject -- away from his own error and from everyone's inability to find any fault in my article -- Krugman posted a link back to DeLong's blog. DeLong, in turn, had harvested two "demonstrably false accusations" from the hundreds of articles I have written. One dates back to 1992.

My only "false accusation" since 1992 involved a careless but irrelevant mistake last March, which I acknowledged at the time on DeLong's blog. It concerned a Washington Post column that claimed "the Internal Revenue Service" had reported that the top 10 percent of households earned 44 percent of all pretax income in 2003. The source was a short paper by three statisticians, two of whom -- Michael Strudler and Tom Petska -- work for the IRS. But that does not make it official IRS data.


Alan Reynolds

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