I continue to miss what all the fuss is about on the ProPublica piece, both in the sense that (as this article points out) it’s not, in broad strokes, surprising, and in the sense that it’s very far from journalistic malfeasance.

This author argues that ProPublica “misunderstand” the difference between taxing unrealized gains and taxing income. I’ve seen this same argument on HN comments, as though knowing what a 1040-B is somehow makes one a tax policy expert.

Of course, there are countries that tax wealth directly, so “taxes paid as a percentage of wealth” is certainly a valid metric! And if the public are concerned about tax policy disparities between the ultra rich and the rest, it’s the only metric to look at[1]; as everyone knows, the ultra rich tend to earn their wealth primarily as capital gains, so a metric like “effective tax rate on earned income” would simply not be very informative across social classes.

I’m really surprised that this argument has taken off; it feel almost like some sort of astroturfing campaign. There’s no reason we shouldn’t talk about effective tax rates on wealth, even though this isn’t how the US tax code works; indeed, that’s really the point of the article.

1. As someone else noted, looking at returns on capital vs labor after taxes and transfers over time is a better approach to understanding trend, but as a snapshot view, I think this is quite reasonable and easier for readers to grasp.