Back in August of last year, Paul Krugman attempted to rouse the rabble with his column “Now That’s Rich,” wherein he laid forth the following proposition when describing the extension of the so-called “Bush Tax Cuts for the Wealthy”:
But these same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.
Now, I don’t have a Nobel prize in Economics like Mr. Krugman, but that comes out to $360 Billion – am I right, check my math, that’s $3 million times 120,000 – yep, $360 Billion. That’s what Mr. Krugman says the tax benefits of the top 0.1% of income earners (with an average income level of about $8.4 million/year) would get $3 million each back in tax savings…
But if I follow through to the very handy link Mr. Krugman provided to taxpolicycenter.org and read their report entitled “The Debate over Expiring Tax Cuts: What about the Deficit?” I find that the average increase in tax savings provided to the top 0.1% of income earners would be $310,140. How could Mr. Krugman be so far off?
Later in the column, Mr. Krugman mentions that ten years of the tax cuts the Republicans wanted to keep in effect (on the top 1%, not just the top 0.1%) would cost $680 Billion over the course of ten years – how weird that he wouldn’t catch that internal inconsistency in his own article – how can one year of tax cuts for the top 1% cost $68 Billion/year, while the tax cuts for the top 0.1% (a subset of the 1% just mentioned) would cost $360 Billion/year?
Either Mr. Krugman made a simple error (it’s possible, but doesn’t the New York Times have editors and researchers to catch these things) or was Mr. Krugman trying to intentionally confuse the discussion with his alarmist numbers – either way, it’s another nail in the coffin of his credibility.
nytimes.com: Now that’s Rich
taxpolicycenter.org: The Debate over Expiring Tax Cuts: What about the Deficit?