Tuesday, April 9, 2013

Income complexity and misleading inequality claims

Mike Konczal has a new piece in Ezra's Wonkblog about how there are multiple ways to determine what someone's income is and all are correct in some sense.

Income sources should include wages from a job, but there is a debate if one should count benefits like health insurance, taxes the employer must pay on behalf of the employee, money from investments, government welfare programs and tax credits like deductions for children and the earned income tax credit.

Konczal does a good job of summarizing a point I've made on at least four different occasions - that looking at monetary compensation as the sole form of income leaves out meaningful data. Which, of course, is why people do it - they want to make things look worse than they really are.

I choose to count all of those factors as important when comparing income because it gives a meaningful response. What good is it saying John Doe has to live on $14,000 a year when the government gives him thousands more? Why should we ignore the generous benefit packages when hearing the latest gripe about teacher compensation? All of these factors need to be taken into account if we want the government to intervene.

Because it's Ezra's blog, Konczal put a left-wing spin on this issue:

Politically, conservatives are in a double-bind when it comes to the policy solutions for inequality. Many conservatives use the all-inclusive definition of income — one that includes, and in fact heavily relies on, government benefits — to argue that income hasn’t stagnated. But many conservatives would also like to see government programs cut significantly.

He has a fair point, of course. I came to the same conclusion when I started factoring in progressive income taxes to inequality claims while observing my fellow right wingers continue to push for flat taxes.

But progressives do something even worse. Left-wing activists tell us the government should be doing more to "fix" income inequality, but they ignore everything the government is doing now towards that goal when they make their case. It's completely dishonest.

1 comment:

  1. I'm a little more cynical and partisan than you, I think.

    It's not clear to me that Republicans are trying to cut the means-tested programs, only to slow their growth. Then the Democrats claim they're cutting them.

    Clearly, though, the Democrats are trying to expand the programs, and they have a natural advantage in the debate. They can always point to someone who's in bad shape in some way, but it's harder for the Republicans to argue "We already do enough" without seeming insensitive.