Thursday, September 9, 2010

Stupid stupid stupid

Think Progress tries to argue that the new Obama tax cuts benefit the ultra-rich far more than they benefit the poor.
Let's look at the bar graph that they use to argue the point:

Does something strike you about this graph? It takes the numbers as an absolute number. But it makes more sense to measure is as a relative percentage.

So in terms of returns as a percentage of your income, those making between $20k and $40k are getting the highest percentage of their money back. In other words, Think Progress, you're wrong.

Wait a sec you may ask, why do you want to measure things in relative terms? Well, an absolute approach assumes that one dollar is the same to everybody. If you have 10,000 a year in income, 1 dollar is a lot more important than if you have 100,000 dollars. A person with $10k in income has a lot less disposable income than a person with $100k. It makes more sense to view it as a relative percentage.

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