Denmark, the VAT Tax and Paul Krugman
So Sanders and Clinton are arguing about soda taxes — Clinton for, as a way to raise money for good stuff while discouraging self-destructive behavior, Sanders against, because regressive. I have no illusions that rational argument will make much difference in the short run; we’re in that stage where anything Clinton supports is ipso facto evil. It’s like that point in 2008 when Obama supporters hated, hated the individual mandate that eventually became, as it had to, a central piece of Obamacare.
But anyway, it does seem worth pointing out that progressivity of taxes is not the most important thing, even when your concern is inequality. Notably, Nordic countries — very much including Denmark, which Sanders has praised as a model — rely heavily on the VAT, which is a regressive tax; but they use that revenue to pay for a strong social safety net, which is much more important.
If we add in the reality that heavy soda consumption really is destructive, with the consequences falling most heavily on low-income children, I’d say that Sanders is very much on the wrong side here. In fact, I very much doubt that he’d be raising the issue at all if he weren’t still hoping to pull off some kind of political Hail Mary pass.
— A Note on the Soda Tax Controversy, Paul Krugman, yesterday
One of the hallmarks of this Democratic primary season is the extent to which high-profile liberal baby-boomer political journalists and pundits have been willing to make what are, at least to me, transparently illogical arguments in support of Hillary Clinton.
One particularly annoying canard, offered originally by Jill Abramson in an op-ed published in The Guardian last month, is that Politifact found Clinton to be the most honest of the candidates. Specifically, Abramson wrote:
As for her statements on issues, Politifact, a Pulitzer prize-winning fact-checking organization, gives Clinton the best truth-telling record of any of the 2016 presidential candidates. She beats Sanders and Kasich and crushes Cruz and Trump, who has the biggest “pants on fire” rating and has told whoppers about basic economics that are embarrassing for anyone aiming to be president. (He falsely claimed GDP has dropped the last two quarters and claimed the national unemployment rate was as high as 35%).
Referencing both the Abramson op-ed and the Politifact statistic that Abramson used, but dropping the qualifier “on issues” that Abramson had used, Nicholas Kristof wrote in his column last Sunday titled “Is Hillary Clinton Dishonest?”:
One basic test of a politician’s honesty is whether that person tells the truth when on the campaign trail, and by that standard Clinton does well. PolitiFact, the Pulitzer Prizewinning factchecking site, calculates that of the Clinton statements it has examined, 50 percent are either true or mostly true. That compares to 49 percent for Bernie Sanders’s, 9 percent for Trump’s, 22 percent for Ted Cruz’s and 52 percent for John Kasich’s. Here we have a rare metric of integrity among candidates, and it suggests that contrary to popular impressions, Clinton is relatively honest — by politician standards.
Apparently it didn’t occur to either of these writers that the statistic was a mathematical function of the high number of statements of Clinton’s that fact-checking websites, including PolitiFact, are asked to and do fact check. And that a high percentage of those statements are ones citing statistics of one type or another.
A review of a number of Clinton’s statements that PolitiFact examined shows that she usually is accurate when stating simple statistics but often misrepresents her opponent’s—Sanders’s—policies, statements or positions, sometimes explicitly, sometimes by clearly-intended inference. An example of both in a single sentence was one I’ve mentioned in earlier posts: her recent statement that she “couldn’t believe” that Sanders opposes the Paris climate change agreement. The express falsehood was that Sanders opposes the agreement. The intended inference, clearly false, was that he opposes it because he thinks it goes too far. Sanders supports the Paris climate agreement but thinks it doesn’t go far enough and believes much more is necessary.
A favorite tactic of Clinton’s in this primary campaign has been to rely upon the public’s presumption that her statements support (or at least are relevant to) the claim she’s clearly trying to make, in order to mislead by stating something that may be true—e.g., Sanders complained about the Paris agreement—but is irrelevant to her presumed point. In that instance, Clinton slyly told her listeners that Sanders opposes the agreement because it goes too far. These pundit apologists for Clinton fool mainly themselves with their obliviousness. They get neither the substantive policy reasons for the strength and durability of the Sanders movement nor the nature of the distaste for Clinton herself among progressives. Sleight-of-hand-as-prime-modus-operandi tends not to instill confidence about the general veracity of the hand-sleighter. People do catch on when it’s a habit.
But Krugman’s Clinton-vs.-Sanders writings stake out a territory all their own. They are rants notable less for their Clinton puffery than for their vitriol toward Sanders and his supporters, and sometimes include what seems to me real intellectual dishonesty. That’s how I read his VAT tax remark in the excerpted post above.
It is, as Krugman says, worth pointing out that progressivity of taxes is not the most important thing, even when your concern is inequality. And the Nordic countries’ strong social safety net, I agree, is much more important than the progressivity of the tax to fund it.*
But the Nordic VAT taxes are on all, or at least most, types of products. The social safety net, or any one part of it, is not funded mainly by lower-income people by applying the tax only to a product or products favored more by lower-income people. And since the gap there between lower and higher income people is tiny compared with the gap in this country, and since lower-income people have access to a full panoply of safety-net and other government programs and therefore can better afford to contribute substantially to the funding of the safety net, Krugman’s invocation of Denmark as a slam against Sanders for voicing objection to the soda tax proposed by Philadelphia’s mayor is a real sleight of hand.
Krugman links to a blog post from last Friday in the New York Times by Margot Sanger-Katz titled “A New Policy Disagreement Between Clinton and Sanders: Soda Taxes,” which reports:
Last week, Mrs. Clinton became the first presidential candidate to explicitly endorse a tax on sugary drinks. At a Philadelphia event Wednesday, she said a proposal there to use a soda tax to fund universal prekindergarten was a good idea.
“It starts early with working with families, working with kids, building up community resources,” Mrs. Clinton said, according to a CNN report. “I’m very supportive of the mayor’s proposal to tax soda to get universal preschool for kids. I mean, we need universal preschool. And if that’s a way to do it, that’s how we should do it.”
Yes, that’s a way to do it. But of course there are other ways to do it, too. One would be a small across-the-board sales tax increase, rather than a large one on this one product. Another, albeit not one available to city mayors, of course is a slight income tax increase or a securities-transaction tax.
Clinton’s statement that “[i]t starts early with working with families, working with kids, building up community resources” strikes me as really troubling. She’s running for president. Does she really think the best way to fund universal preschool is to build up community resources? How about building up federal resources, via a more progressive tax code, and funding universal preschool universally? A municipal soda tax may be okay as a stopgap funding method. But beyond that? That’s it?
The issue of whether or not to tax soda pop as a way to discourage its use, especially by kids from lower-income families, is separate. I think there are better ways to try to accomplish that goal, just as I think there are better ways to fund universal preschool. But my concern here about Krugman’s post is his disingenuous use of Northern European VAT taxes in the service of another of his gratuitous attacks on Sanders and Sanders’ supporters. Including me.
*Sentence rewritten for clarity and typo correction. 4/26 at 11:25 p.m.
So people are too stupid to be trusted with soda, but are smart enough to vote?
And why do we NEED universal preschool?
“The intended inference, clearly false, was that he opposes it because he thinks it goes too far.”
That was not the intended inference of this single reference in an interview. Within the context of the competing campaign themes, it was absolutely clear that her inference was, “There goes Bernie again, throwing out the good because it’s not perfect.” At most, it was ambiguous, but your interpretation would be absurd because Sanders has been perfectly clear and vocal in raising climate change as a major issue. It was a good and legitimate political point by Clinton, because although he probably did not intend it that way and would probably wish he had used other language, he was implicitly and rather thoughtlessly denigrating the efforts of scores of countries who were taking great pride in the agreement. Even Bernie says things in the heat of the campaign that are not expressed in the best way or are even misleading to some extent.
Agree with the message or not — that she is the practical one who will actually get things done and he is the idealist who won’t be able to accomplish anything — it has resonated with a lot of voters. It is nothing more than a typical effort at positioning in a political campaign — needed by her in the primaries since he has staked out the progressive/dream big position and that has resulted in her image being pushed in a conservative direction not justified by her history. It’s a way to put a good face on the underlying message, I’m progressive, too, but not as progressive as he is. But trying to cram this into the “dishonest Hillary” meme doesn’t work. It’s worth noting that the fact checkers bar has basically declared a tie between the two for campaign honesty — and a huge win for both over the two main Republicans.
This piece by Krugman is hardly a rant, and to say it’s full of vitriol is over the top. To the extent there is any, it is expressly directed at Sanders’ supporters (some of whom do, in fact, direct enormous vitriol at Krugman), not at Sanders himself. It’s just a partisan post. Saying you think someone is wrong is not vitriol.
The VAT comparison looks to me like a legitimate one for making the point, because low income people in Denmark — to the extent there are any — pay a lot more in total VAT taxes than the people here will in soda pop taxes. The distinction that one is applied only to a specific product and the other to all or most products seems to be one without a difference. In regressive impact, the VAT is far more damaging. Both Clinton’s and Sanders’ positions are defensible, and that’s about as much as you can say about this extremely minor issue. We probably won’t ear anything more about it.
“That was not the intended inference of this single reference in an interview. Within the context of the competing campaign themes, it was absolutely clear that her inference was, ‘There goes Bernie again, throwing out the good because it’s not perfect.'”
Well, EXACTLY, Urban Legend. The problem, of course, was that it was flatly untrue. Sanders DID NOT say the agreement should be thrown out. He said it was a start and further agreements are necessary, as are additional actions by this country and other countries beyond the Paris agreement and before further agreements among a large number of nations was reached.
He said he was disappointed that this agreement doesn’t go further, and said he thought it might have been able to. He did not say the agreement shouldn’t be signed, by this country or the others, and instead should be junked and the process should start all over. In other words, he said the opposite of “We should throw out the good because it’s not perfect. Which actually is a charitable interpretation of what Clinton did say.” Her words “I couldn’t believe” that he “opposes” the agreement–with no elaboration–strikes me as suggesting that he thinks the agreement goes too far.
This is the kind of thing Clinton does regularly, and a few journalists have noted it too. She takes two sentences or clauses in a single sentence–one immediately following the other or separated by another, short sentence or clause–that anyone presuming that her point is actually relevant to the subject and shows something negative about her opponent’s position or action will interpret as saying what she wants voters to think but didn’t say expressly. She does this again and again, and it’s really, really off-putting.
The word is IMPLICATION, not INFERENCE.
The speaker IMPLIES, and the hearer INFERS.
Um, no, Warren. What a speaker IMPLIES is what that speaker intends the INFERENCE to be.
Ah, so an “intended inference” is an implication. Got it.
Well, Berverly, I guess you have really shown what a dishonest fraud Hillary really is. She uses actual data in her overly numerous statements to puff up her truthfulness figures! What a sneaky scoundrel! Shame on her!
As for the VAT business, Urban Legend is right. The tax on soda pop is not obviously more regressive than the VAT in Denmark.
“The tax on soda pop is not obviously more regressive than the VAT in Denmark.”
That doesn’t seem to be true at all. If soda is a product bought more often by poor people then it is clearly more regressive than a general sales tax that taxes all products from soda to Beluga caviar. Would you argue that cigarette taxes (where the evidence is clear now that cigarette smoking is much more common among low income people) is not more regressive than a general VAT?
If inequality is a big problem — which it is –, then taxing the poor and then giving them money is not the most efficient way to deal with it. In addition, that way of doing things opens the safety net up to questions such as whether those receiving the money are deserving. In Anglo culture that question goes back to the 14th century, when giving alms to unqualified beggars was outlawed. It also gives rise to paternalistic bureaucracy for administering the safety net. Besides, US legislators are quite capable of attacking the safety net without making taxes more progressive.