Tuesday, February 1, 2011

Misleading use of charts

I don't usually find much to critique or complain about in the posts published by the Powerline group, however here is an exception.  As long as one is going to show a graph depicting the percentage of taxes paid by various income groups over a given period of time, as is done in this case, it is incumbent upon the presenter to show the percentage of income accruing to those various income groups over the same time frame.  Why?  Because it is possible that the change in income accruing to those group suggests a widening of income disparity over time.  For example there was a time in the recent past (50 years or so ago) when a Fortune 500 company's CEO was compensated 30-40 times the average worker in that company.  That compensation differential is now 200 times and often more.  In other words the top quintile (1% in this case) may now be making infinitely more than they were 50 years ago as a percentage of the total compensation measured.  If there has been stagnation in incomes of the lower percentiles as has been suggested by some (maybe incorrectly) then there is justification for the 1% bracket paying an increasing percentage of the tax load.  After all, they may have the lion's share of the income now.  This is in no way an argument for equalizing incomes or anything like that.  It is an argument for getting the data out there to properly frame the issue.  Powerline owes us an accompanying chart to present the whole picture.

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