More nonsense from CATO, this time thanks to the NYT. From the very same article linked to at the end of my last post on our disappearing middle class, the NYT offers this defense of growing income inequality from CATO:
Chris Edwards, director of tax policy for the Cato Institute, the nation’s leading promoter of libertarian thought, said that even the income gains among the top 1 percent might be illusory because this group gets most of the income from business. He pointed to a report this week in Tax Notes magazine, by Peter Merrill of PricewaterhouseCoopers, that said partnerships and limited liability companies reported 51.5 percent of all business income in 2004, up from 47.3 percent in 2000.
Mr. Edwards said that income from such businesses shows up on the tax returns of individuals, not their companies, and so the rise in reported income at the top may represent a change in how income is reported.
The gains among the top 1% might be "illusory" because they come from business. What the hell is this supposed to mean? If a partnership or an LLC is making more money, it is making more money for its owners. That's why they are required to include it in their income taxes. It's income. The source is irrelevant when you are considering which group is gaining the most.
Rich, successful business owners are making more money than ever. They are doing so in part because the rest of us are making less money than we used to. These facts are opposite sides of the same coin. CATO's defense isn't a defense at all. It's merely a restatement of the problem. But reading today's NYT you'd never know that. Reading today's NYT you'd think it was actually a defense.
This is neither hard to explain nor to understand. Is it really asking to much to expect the NYT to understand the things it reports on?
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