Tuesday, October 30, 2012

Taxes, Lies, and the King Kong Effect

 "Figures don't lie, but liars figure" - Some Unknown Sage

This morning I was reading about how you can lie--or at least mislead--with perfectly accurate numbers and graphics.  People commonly present accurate numbers in a way that gives a completely inaccurate impression.  The book I was reading quoted an editorial in 2003 by the Wall Street Journal which lamented the tax burden of wealthy Americans, saying, "taxpayers with incomes over $200,000 could expect on average to pay about $99,000 in taxes."

This is technically true, but entirely deceiving, because it implies that once you hit an income of $200,000, you can expect to make pay nearly half your income in taxes.  That's not true.  The figure of $99,000 is the average tax for everyone with an income of over $200,000--from a doctor who makes exactly $200,000 all the way up to Bill Gates and Warren Buffett.  These ultra-rich people pay millions in taxes, and that drives the average way up, even for people with very high incomes.  I had a professor in grad school who called this the King Kong effect.  If you took 14 normal-sized gorillas, and then King Kong, and computed the average weight of all 15 gorillas in your sample, your average would be a whole lot more than the average (normal) gorilla weighs, because King Kong is skewing the average.  In the same way, most people making around $200,000 per year (the gorillas) would pay much less than $99,000 in income taxes, and those with very highest incomes (the King Kongs) would pay far more.  And they will still be very, very rich.

But I don't want to suggest that only anti-tax crusaders play this game.  This afternoon, I saw this rather compelling video: Why Obama Now?  The video shows a figure based on the one below (I should point out that, while the video is based on a speech by President Obama, this graphic was not cited in the speech--I'm calling foul on the makers of the video and the graphic, not the speech the video is based on).

From ReadyThinkVote.com

Here we have people against tax cuts for the rich, using the same tactic used by the Wall Street Journal when arguing for those cuts.  But what is exaggerated here are tax cuts, not taxes.  A more honest chart would continue showing higher and higher incomes, instead of lumping vastly different incomes together on the right.  A chart like that would show a gradual rise in tax cuts with income, not a sudden jump at the top 1%.  Of course, if that chart were drawn to the same scale as this one, and included the highest-paid CEOs, it would be around 75 feet across.  Those folks get paid a lot.

But that's a whole other issue, and I want to be clear that this post isn't about taxes or income distribution.  It's about deception.  Statements like the Wall Street Journal's, and charts like the one above, are deceiving--whether deliberate or not, I don't know.  But whatever side of the tax issue you're on, I hope you'll agree that deception is wrong.  Truth is what matters, not ideology.  As far as I'm concerned, the whole point of having an ideology is that it reflects what I think is true and right.  If I have to resort to deception to serve my ideology, then I've lost sight of the truth.  And then I've missed the point entirely.