It’s been known for people over here to do the same thing:
The eye-catching result here is they have consumption taxes being *sharply* regressive, e.g. 12% for the lowest income group. I’m not aware of any US state that has state + average local sales rates tax that high. And lots of goods are exempt from sales tax. So how do they get this? Well, suppose someone earns $1k in labor earnings and gets $9k in transfers, and consumes it all paying a 5% sales tax = $500 in tax. What sales tax rate have they paid (as a % of their income)? The method Treasury uses says 500/(1k+9k) = 5% (this is also what Auten-Splinter do). Saez-Zucman exclude transfers from the denominator, and thus say 500/1k = 50%. This is a matter of definition, so it’s hard to call it right or wrong, but it does seem misleading and yield some rather nonsensical implications. For example, it means that if welfare to the poor is increased, this will be measured as an increased tax rate.
Pikety, Saez and Zucman just aren’t even trying to do science. They’re just politics.
And get this:
As I noted the other day, excluding the EITC breaks from multiple standard tax-data reporting conventions including the treatment that the CBO has been using for the past 40 years. Zucman’s defenses of making this change amount to a tendentious argument that the credit — as a transfer — cannot be differentiated from other forms of public spending such as defense and health care. He therefore claims it is necessary to remove the EITC from consideration as a feature of the tax system
Yet on their new website, Saez and Zucman are all too eager to incorporate different aspects of health care into their total “tax” estimates — provided it further augments the patterns in their new data.
This practice may be seen through their bizarre treatment of private health insurance premiums as a component of taxation. A PowerPoint slideshow on the new website includes an Orwellian rebranding of private insurance payments as a “health insurance poll tax,” and Zucman has deployed similar language while defending this designation.
Tax credits aren’t part of the taxation system while health care insurance is?