1% of all households pay no federal income tax?
02-10-2012, 05:41 PM
Quote: (02-10-2012 04:56 PM)tenderman100 Wrote:
Quote: (02-10-2012 03:51 PM)gringochileno Wrote:
Obviously countries with a higher per capita GDP are going to have more people above a given absolute income threshold even if they don't do as good of a job at reducing poverty
I so hope you're smart enough to see the illogical nature of your statement here, and its internal contradictions.
Not really. Say we have country X, a poor country, and country Y, a rich country. Country X has a median income of $30,000 and decreases its
relative poverty rate from 25% to 10%, while country Y has a median income of $60,000 and decreases its relative poverty rate from 25% to 20%. Country Y could well have more people above a given
absolute income threshold than country X even though its social expenditures have done less than country X's to increase the income of its poor people. It isn't a fair comparison because the two countries are starting from different absolute poverty levels.
Now what you
could do if you wanted to is reproduce the chart and replace the numbers for poverty rate with a number indicating the percentage of the population above a given absolute income threshold, for both the pre- and post-tax and transfer figures. What would the graph show? Virtually the same thing: the difference between pre- and post-tax and transfer rates would be vastly wider for the US than for other countries. All that would change is that there would be more variability in the pre-tax and transfer column since that number would no longer be defined in terms of median income for that country.
No matter how you measure it, the conclusion supported by the data is that the US does far less to reduce poverty through social expenditures than other OECD countries.
Quote:Quote:
Quote: (02-10-2012 03:51 PM)gringochileno Wrote:
(it's also not clear why you'd throw out Norway just because a large portion of its income comes from oil exports--lots of countries have export-driven economies).
In that case, let's put in Saudi Arabia and Kuwait in this graph, and you'd see % poverty level for them even though NO ONE IN THOSE COUNTRIES IS TRULY POOR. Some nations, like Norway, and Saudi Arabia, have won the natural resources lottery. This is very different from having an "export economy." Compare China -- which exports all kinds of shit at dirt cheap prices -- to Norway, which exports a whole bunch of oil at, in case you didn't notice, very high prices.
You also have many African countries that are rich in natural resources but still have a very low standard of living, and on the flip side there are countries like Japan that are among the highest in the world despite being very resource-poor. I'm not denying that natural resources play a role in countries' economic development, but they're neither a necessary nor a sufficient condition for economic success, and I don't see any reason to exclude countries based on that criterion when we're not excluding based on any other kinds of inputs.
Quote:Quote:
Quote: (02-10-2012 03:51 PM)gringochileno Wrote:
If you're trying to argue that having a more robust tax and transfer system causes the GDP level to be lower, then that just isn't supported by the evidence--long-run per capita GDP growth rates are comparable across the US and other OECD countries and do not correlate to the level of government expenditure.
I am not arguing that. I am arguing that normalizing poverty rates across countries using a percentage measure of income ignores the nominal LEVELS of that income in any given country. If median household income in the USA is $60K, and in the UK it's $30K, then 50% below the median income is $30 and $15K respectively.
Given that, whose poverty level is "worse?" Of course, it's obvious on the face of it, but the makers of the graph are trying to snooker you (and it looks like they've done a good job).
Here's another thing: I do this sort of analysis for a living, and I can smell the bullshit a mile away. And this, frankly, stinks to high heaven.
I think this is where the confusion lies. You think I'm trying to assert that the data show that America's poor are worse off than the poor in other countries. That may or may not be the case, but what the data show is not that, but rather that other countries achieve a greater
reduction in their poverty levels through taxes and transfers than America does. If you recall, the whole reason why I posted it was to further show that the US's tax and transfer system is not very progressive by international standards. I think I have done that.
Quote:Quote:
Quote: (02-10-2012 03:51 PM)gringochileno Wrote:
Even if you don't buy any of that, though, the US's social expenditures are so low that I think the answer to your question would still be that it's better to be poor in most other OECD countries than it is in the US, even if you ignore differences in per capita GDP levels.
Have you been to the UK? Have you see the "estate" (i.e., public) housing? Give me a trailer park in Indiana any day.
This chart doesn't allow us to directly test that question, but we can take a guess by adding in the median income levels in the US and UK. I couldn't find it on the OECD's website, so I took this from
Wikipedia:
Median household income, 2007 ($USD, PPP):
United States: 31,111
United Kingdom: 25,168
From the chart, we know that both the US and the UK have poverty rates of 26.3% before taxes and transfers, while after taxes and transfers the US rate was 17.1% and the UK rate was 8.3%. Using the median income numbers, we convert that to the following statements:
Before taxes and transfers, 26.3% of the US population had an income below $15,555. After taxes and transfers, 17.1% had an income below $15,555.
Before taxes and transfers, 26.3% of the UK population had an income below $12,584. After taxes and transfers, 8.3% of the UK population had an income below $12,584.
So this data alone doesn't give us an apples-to-apples comparison of the proportion of people below a given absolute income threshold, but it still seems evident that the UK's poor are better off than the US's: since the 18th percentile in the US is at $15.5k, it seems likely that the 9th percentile would be substantially lower than $12.5k. But you're right, it's theoretically possible that this might not be the case because we don't have enough data on each country's income distribution. Once again, though, that wasn't what I was trying to show.
