In an attempt to dismiss the conclusions advanced by Piketty, Saez and Stantcheva here, a certain right-wing personage pointed to an alleged factual error made by Piketty in his CAPITAL IN THE 21st CENTURY. In their paper, Piketty, Saez, and Stantcheva argue, on the basis of a model they have built, that:
The top 1% of US earners now command a far higher share of the country’s income than they did 40 years ago. This column looks at 18 OECD countries and disputes the claim that low taxes on the rich raise productivity and economic growth. It says the optimal top tax rate could be over 80% and no one but the mega rich would lose out.Summary of the online column linked to above
Our right-wing personage refers us to some musings made by Thomas Sowell here, who asserts the following:
Thomas Sowell, in column linked to directly above
In Thomas Piketty’s highly-praised new book, “Capital in the Twenty-First Century” he asserts that the top tax rate under President Herbert Hoover was 25 percent. But Internal Revenue Service records show that it was 63 percent in 1932. If Piketty can’t even get his facts straight, why should his grandiose plans for confiscatory global taxation be taken seriously?
Our right-wing personage implied this alleged error made by Piketty renders it prudent to dismiss anything written by Piketty, including the column linked to above arguing that that the top marginal tax rate could be higher than 80% without harming the economy.
Now of course the right-wing slime machine is infamous for playing fast and loose with quotes in order to defame those who challenge the established hierarchies (witness the recent slime job done on Nathan Phillips to defend Nicholas Sandmann’s obvious racism). So it would behoove us to look at what Thomas Piketty actually said:
Roosevelt increased the top marginal rate of the federal income tax to more than 80 percent on extremely high incomes, whereas the top rate under Hoover had been only 25 percent.Thomas Piketty, CAPITAL IN THE 21st CENTURY, trs by Arthur Goldhammer (Cambridge, The Belknap Press of Harvard University Press, 2014), p. 473
Now ” …the top rate under Hoover had been only 25 percent ” is a bit ambiguous. It could mean, as Sowell (disingenuously?) takes it to mean, that the highest tax rate reached only 25 percent throughout the Hoover administration. In that case, Sowell’s remonstration “But Internal Revenue Service records show that it [the top marginal tax rate] was 63 percent in 1932” would be a fair criticism of Piketty’s assertion.
But Piketty’s assertion could also mean: ‘the top marginal rate under Hoover had been 25 percent,’ which would be true even if that top marginal rate had been 25 percent just for one month of Hoover’s administration. Taken strictly, the assertion does not state for how long the top marginal tax rate had been 25 percent during the Hoover Administration, only that it had been 25 percent. Of course, this (top marginal rate of 25 percent for one month) would not be the most natural interpretation of Piketty’s sentence. But it does become a natural interpretation if the top marginal tax rate had been 25 percent throughout at least three-fourths of the Hoover administration, which, given the fact the top marginal rate had been increased to 63 percent only in 1932, it was.
If one is to avoid being a hack and a propagandist, which I do believe Sowell to be, one adopts a principle of charity in interpreting ambiguous statements — especially statements translated from French that are ambiguous in English! — and, especially those made by an opponent of one’s views. If only to make it easier to brush away the annoying right-wing lightweights hovering over passages like this like gnats (DO FIND SOMETHING — ANYTHING THAT CAN BE USED TO DISCREDIT PIKETTY!!!!) Piketty definitely should make the following revision in the second edition of his book:
Roosevelt increased the top marginal rate of the federal income tax to more than 80 percent on extremely high incomes, whereas the top marginal rate under most of the Hoover administration had been only 25 percent.
That Sowell takes a malicious interpretation of Piketty’s ambiguous statement to try to render Piketty so unreliable as to warrant our ignoring Piketty’s recommendations regarding global taxation hardly reflects well on Sowell. It is one data point among others that reveal him to be a right-wing hack and propagandist. That our young right-wing personage cites Sowell’s malicious interpretation to try to discredit Piketty/Saez/Stantcheva’s assertions regarding how high the top marginal tax rate can go without harming the economy in general reflects equally badly on him.
Even pointing all of this out makes one feel ridiculously pedantic. But someone has to do the intellectual garbage collection work, and I guess this unsavory work has fallen on me regarding this particular point.