Kevin Drum

TAXES OF THE RICH AND FAMOUS....Ezra Klein is doing tax wonkery over at his place, and I can't let him have all the fun. So just for the record, here's a look at effective federal tax rates in general:

Not very progressive! Add in state and local taxes and it would look flatter still. And just to remind everyone of exactly what that "Top 400 Taxpayers" segment at the far right looks like, here are the pinkos over at the Wall Street Journal to explain it to you:

The top 400 taxpayers have greatly increased their share of individuals' income since the mid-1990s. The group accounted for 1.15% of total income in 2005....more than twice as large as its 0.49% share a decade earlier.

....The average federal income-tax rate for the group was 18.23%....well below the average income-tax rate of nearly 30% back in 1995, when Bill Clinton was in the White House.

So there you have it. The top 400 taxpayers, a group so rich and elite that I'd need scientific notation to properly represent their proportion of the population, have doubled their share of income in the past decade or two but have decreased their tax burden by nearly half. Nice work! As you can see, Warren Buffett wasn't exaggerating when he said his secretary paid a higher tax rate than he does. If she pays more than 18% — not exactly a tough hurdle when you figure that payroll taxes already account for about 8% of that — she probably does.

UPDATE: So how do the rich do it? Jonathan Stein interviews David Cay Johnston here to find out.

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OIL EXPLORATION....Dan Drezner is puzzled by news that that the oil majors are cutting exploration projects:

So, let me see if I have this right:

1. If oil prices are sky-high, the energy sector explains that it will be slow to develop new fields, because exploration requires massive fixed investments and no one knows what the price of energy will be 5-10 years from now;

2. If oil prices are low, the energy sector explains that it is unprofitable to develop new fields because… energy prices are low.
   

Seriously, am I missing something here? Given lag times and the natural propensity to consume more of something when prices are low, doesn't it make sense to "drill, baby, drill" when the price of energy is low?

High oil prices do spur extra exploration, but not by as much as you'd expect. And while uncertainty about future oil prices is certainly part of the problem, I doubt it's a major one: generally speaking, everyone knows which direction oil prices are going in the long term, and it's the opposite of "down."

No, the underlying issue here is that there really aren't that many great places left to explore. Last week, for example, Lesley Stahl of 60 Minutes did a breathless segment on Saudi Arabian oil exploration that would have done credit to a nine-year-old. She went out to Shaybah, a drilling project that's been three decades in the making, and spent ten minutes gushing over the almost impossible odds the Saudis overcame to get the project up and running. 135 degrees in the shade! Hundreds of miles from nowhere! One hundred million cubic feet of sand! 400 miles of pipeline! Oil that didn't want to flow! Storage tanks with roofs that move!

But she never asked the one question she should have: if Saudi Arabia really has as much easily extractable oil as they say they do, why are they building projects like Shaybah? Why not just sink a few holes into the easy stuff instead?

Almost certain answer: because there isn't any easy stuff left. It's either Shaybah or nothing. And that's pretty much the story in the rest of the world too. There just aren't any easy sources of oil left. It's almost all in desolate wildernesses, deep underwater, in polar regions, or locked up in tar sands. And just to make it worse, projects to extract this stuff are risky too. At least half will come up dry after tens of billions of dollars worth of test drilling.

This is why oil companies are so eager to open up the American coast to drilling. There's not really very much oil there in the big scheme of things, but at least it's relatively easy to get to. In the rest of the world, the easy pickings are gone, and the appetite for sinking vast sums to get what's left just isn't always there. Like it or not, we're running out of oil. Spending money on alternatives is looking like a better and better bet to everyone, including even the oil companies.

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QUESTION OF THE DAY....From professor Henry Farrell, responding to Robert Samuelson's latest maunderings in the Washington Post:

Should people pretend to take this sort of horseshit seriously?

Well? Should they? Argument for the affirmative: if you don't respond, horseshit takes on a life of its own because no one ever knocked it down. It may be an unwelcome task, but someone has to do it. Argument for the negative: Serious debate merely gives horseshit a stature it doesn't deserve. Laughing at it is much more effective.

Anyway, Samuelson's argument in today's column is that poor people have powerful advocates just like rich people, and he then suggests that the techno-wonks at the CBPP have the same kind of clout as, say, the Club for Growth. This is indeed laughable, but Larry Bartels tells us that it's even more laughable than you think:

I know of two systematic attempts to measure the relative influence of affluent, middle-class, and poor people on government policy. One is in the next-to-last chapter of Unequal Democracy, where senators' roll call votes are moderately strongly affected by the preferences of high-income constituents, less strongly affected by the preferences of middle-income constituents, and totally unaffected by the preferences of low-income constituents. That's the more optimistic view. My Princeton colleague Marty Gilens (in a 2005 article in Public Opinion Quarterly and a book-in-progress) has a parallel analysis focusing on aggregate poilcy shifts over two decades. He also finds no discernible impact of low-income preferences, but argues that middle-class people also get ignored when they happen to disagree with rich people.

Italics mine. So: mockery or wonkery? Which works better? Leave your vote in comments.

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NO ROYALTY, PLEASE....From the New York Times today:

Caroline Kennedy, the daughter of an American political dynasty, has decided to pursue the United States Senate seat being vacated by Senator Hillary Rodham Clinton of New York, a person told of her decision said on Monday....Ms. Kennedy will ask Gov. David A. Paterson of New York to consider her for the appointment, according to the person told of her decision.

For what it's worth, I'd like to join the almost unanimous blogosphere consensus that Paterson should choose someone else. Rich and famous people already have a huge leg up when it comes to winning political office, but at least they still have to run and win. Appointing them instead so they can avoid the whole messy business of engaging in a campaign is just a little too Habsburgian for my taste.

Needless to say, I've got nothing against Kennedy. But appointing her to the Senate just isn't the right thing to do.

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