Magical Thinking

Stage magic is very cool. For me, though, it gets even more interesting when I find out how the tricks are done. I'm not the only one - Penn & Teller, among others, frequently include the secrets behind (some of) their tricks right in the act, which tells me that a lot of other people like knowing about the reality behind the magic.

But the secrets are only cool when the trick works. Learning how to force a card is just not that interesting when the person teaching you can't shuffle without sending cards flying around the room. And finding out the trick of sawing a woman in half is much less impressive when it involves burying the assistant later - in two coffins. There has to be something real to go with the explanation.

Scientific theories are much the same, doubled and redoubled. A good theory not only tells us how and why something happens in nature, it lets us use that knowledge to make predictions, develop technology, and make our lives better. In science, the term "theory" is the highest accolade a concept can achieve, and the value we gain from them is hard to overestimate.

But the basis for any scientific theory is careful observations. You have to know what is happening before you can even try to explain why and how. A detailed theory of how sheep fly could lead to new concepts in aerodynamics, improved aircraft, maybe even a step towards anti-gravity - except for the indisputable fact that sheep don't fly so much as they plummet. Once again, there has to be something real to go with the explanation.

For the last few decades, conservatives have been championing an economic "theory" - in essence, that low taxes improve the economy, raise tax revenues, and create jobs. It's an attractive idea, fairly simple, and easy to see how it should work. After all, the people who own businesses are the ones who create the jobs and fund the paychecks - so if they have more money, they can do more of that. Makes perfect sense. There's only one problem - it doesn't appear to work. Ever. I can't find any evidence that lowering taxes provides those benefits - in fact, what little evidence I've seen seems to point the other way. It appears to me that the conservatives have ignored step one in creating their theory - observing what actually happens.

I mean, let's look at our current situation.

• The top tax rates for both corporate and personal income are nearly the lowest they've been since World War II, and they've both been that way for several years - and there are no jobs.
• Exxon-Mobil set new records for annual earnings in four of their last six years, and are on track to beat their second-best this year - and there are no jobs.
• A company that makes expensive tech-toys for wealthy people now has more cash on hand than the U.S. government - and there are no jobs.
• The top 1% of the nation's wealthy hold about one third of the total wealth. The top 10% hold two thirds. The gap between rich and poor hasn't been this bad since just before the Great Depression - and there are still no damn jobs.

Please, conservatives, stop telling us how and why keeping low taxes for the rich is supposed to benefit all of us. I've heard it enough that I can sing along. Instead, show us that it actually works - show us something real to go with the explanation. Or shut up and get out of the way.

Figures Don't Lie...

My son apparently developed an interest in the world around him, and has started watching CNN Headline News in the morning before school. That’s certainly not something I want to discourage…but it has the unfortunate side effect of forcing me to face the world before I’m fully awake. Ah, well, we all make sacrifices for our children, right?

Today, CNN was telling us about Congress’ recent approval to continue the Bush tax cuts, as they were modified last year. They posted a graphic showing the average savings for the cuts in various income brackets – taxpayers making $1,000,000 a year and up will save an average of over $42,000, while taxpayers making less than $25,000 a year will save only $9. There were two other brackets shown, but I was unable to locate them on CNN.com – at any rate, they clearly indicated that the rich would be getting richer, while the poor gained almost nothing.

On further reflection, though, I’m pretty sure that’s misleading. After all, how much taxes are those poor people paying? Looking at the 2005 Form 1040A, I see that for a married couple with two kids making $25,000 a year, $22,800 of that is exempt from taxes. That’s the standard exemption plus the deduction for four dependents. The tax bill on that $2,200 remaining is $279. Then, of course, they get the Child Tax Credit of $2,000 to apply against that $279 – that credit doesn’t allow for negative numbers to be paid to the taxpayer, but it does kill that $279. In fact, for our family of four to actually come up with a positive tax bill, they have to make at least $41,000 – and then they’ll have to pay $4.00. Yes, that’s four dollars. Anything less than that, and they get back every penny that was withheld from them. And that’s not with any fancy tax strategies… that’s just the basics.

Note that I didn’t include Earned Income Credit or the Additional Child Credit – those programs actually pay the taxpayer above and beyond what they put into withholding, so any changes in the tax plan that let them keep more of that money count, for me, as a savings. But as far as I know, this plan didn't make changes to those programs.

Of course, not everyone is in a family of four. For a family of three, you have to make $29,600 (for a married couple with one child) or $33,700 (for a single parent with two children) to pay a single penny in taxes. Even a single parent with one child has to make $23,700 to pay any taxes at all. No wonder the average savings for incomes under $25,000 is so low…you can’t cut the price below zero!

I don’t want to play around with the other end of the spectrum, the folks pulling down a million or more a year. The top bracket is 35%, so they should be paying somewhere near $350,000 on that million (a little less – they get deductions and exemptions, too)…but we all know that various stupid tax tricks can reduce that number considerably, and I’m not familiar enough with tax law to make a reasonable guess on those numbers. But when you start looking at averages at the top of the scale, you run into the skewing that results from people at the extremes. The average savings in that bracket is $42,000 a year…but if nine multi-millionaires are saving $1000 a year (that’s a third of a percent of their tax bill), while one Bill Gates is saving $411,000 a year (on his billion dollar tax bill, so that’s one-twentieth of a percent), then that works out to that average of $42,000 a year, while still being an insignificant savings for all of them! (Yes, I made up the numbers for Bill Gates – I couldn’t find any numbers on what he makes from investments and capital gains, and I couldn’t properly account for his incredibly huge charitable donations. Replace his name with the multi-billionaire of your choice. Or do your own math, and tell me what you came up with.)

I didn’t check out the Fox News version of the tax story. Somehow, I suspect that they focused on the percentage savings for various tax brackets, showing how much greater a savings it was for lower- and middle-income people…while still being just as misleading. I think all news organizations that display statistics of any sort should be required to provide a full disclosure of where they got their numbers and how they did their calculations – they could post it on their web site, or whatever. I expect we’d see a lot less statistics. But since most people can't or won't do simple math anymore, the press can get away with whatever spin they want to put on the numbers.