Paul Ryan’s solution to inequality helps the rich, does nothing for poor (updated)

[ProSense]

Paul Ryan’s solution to inequality helps the rich, does nothing for poor

By Greg Sargent

Yesterday Paul Ryan released a very serious looking report entitled: “A deeper look at inequality.” Ryan’s effort — a rebuttal to that recent CBO report on growing inequality that got so much attention — was applauded by conservatives as an important contribution to the debate...I thought I’d ask Tim Smeeding, an expert on inequality at the University of Wisconsin, to evaluate his report.

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But Smeeding says this is a typical fallacy committed by those who oppose progressive taxation. Even if it’s true that the tax burden of top earners has gone up, that’s because their incomes have gone up, and have in fact gone up at a faster rate than their tax rate, meaning they now pay a smaller percentage of their overall income in taxes.

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Ryan claims the real problem exacerbating inequality is not income disparity, but the lack of mobility of those at the bottom. Smeeding agrees with Ryan that mobility is key. But Ryan then argues that rather than try to promote equality through redistributive taxation, we should instead “promote upward mobility, increase broadly shared economic growth, and ensure that more and more Americans are able to freely earn their success.”

Smeeding, however, rejects this as a false choice. He says we can simultaneously make the tax system more progressive while also pursuing policies that enhance mobility. Indeed, Smeeding argues that those goals are two sides of the same policy coin — they are linked. The goal of raising taxes on the rich isn’t merely to promote equality by redistributing wealth. Rather, it’s about generating more revenue to invest in policies that enhance the mobility Ryan hopes to achieve.

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Republican proposals = Gimmicks to protect the rich and increase income disparity (read: screw everyone else)

It would be great if House Republicans spent as much time coming up with realistic proposals to create jobs as they do drafting scams to increase the fortunes of the top one percent.


Updated to add this from Krugman: Delusions Of Mobility

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Greg gives us a thorough takedown by Tim Smeeding, who really really knows his inequality stuff. I’d just add that Ryan repeats the familiar line about how we have vast income mobility, so that the picture given by static inequality comparisons is misleading.

But as I’ve pointed out, the CBO report itself takes that argument on and refutes it. Multi-year measures of inequality, it turns out, aren’t much lower than single-year measures. How is that possible, when many people change income quintiles? Because they’re usually moving short distances on the income scale. A lot of people move from, say, the top of the second quintile to the bottom of the third quintile or vice versa — but such moves are trivial in terms of their true income position. Big moves, jumping more than one quintile, are much less common; yet it’s those big moves people have in mind when they talk about ,mobility.

And in the end, Ryan’s answer is that we need strong economic growth, the kind that we get by cutting taxes on the rich. Because that’s why the Clinton years were an economic disaster and the Bush years so prosperous.

[ProSense]

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