Cutting Both Ways, Ctd

by Patrick Appel

A reader writes:

I strongly disagree with Mr. Kain's assessment of your charts on the effective tax rate of top earners. As someone who has worked in international economics, I have produced a lifetime's worth of charts, and I would hardly label your charts deceiving. Mr. Kain's charts, on the other hand, excel at being uninformative.

Mr. Kain's point seems to be that your chart exaggerates the downward movement of effective tax rates since 1993, and so he produced a chart demonstrating that relative to 0%, effective tax rates haven't budged all that much. How one should adjust the scale in charts like these is dependent on the context of what is being analyzed, and in the case of tax rates, allowing the reader to visualize a 0% effective income tax rate isn't necessary because levels that low are nowhere to be in found in the range of the data. If we were looking at a graph of rainfall, then it would be entirely reasonable to base the scale at 0, because the reality of receiving no or very little rainfall is not unrealistic. Additionally, seeing as how these tax rates move each year by a handful of percentage points at most, it makes absolutely sense to restrict the scale given the short time frame.

In the end, the point I believe you're trying to make is that tax rates have come down quite a bit since 1993. From your chart, this point is easy to see. From Mr. Kain's chart, the truth is murky. Eyeballing the numbers from the charts, tax rates dropped from a high of 36.1% to roughly 31.3%, a decrease of roughly 13%, a number not to be brushed away.