Earlier this week, we pointed out that David Frum needed intensive remedial training in all matters economics. Frum, you might remember, argued that between 1993 and 2003, “the lion’s share of Canadian economic growth” was pocketed by the federal government. How did he know?
Easy: while Canada’s GDP grew by 67% during that time, federal tax revenue grew by 45%. 45% is almost all of 67% after all — hence, the lion’s share. Because we are a helpful people here at Sadly, No! we had emailed Brad DeLong who also pointed out the error of his ways to David Frum.
Well, today Frum responded and, in case you were wondering, he pretends not to get the point. After throwing in a few gratuitous insults aimed at Brad (who does that moron Frum think he is, Sadly, No!?) Frum writes:
Anyway, DeLong disputes my claim that the cost of government has depressed Canadian living standards since 1993.
David you ignorant slut. DeLong (and we!) pointed out that 1/8 isn’t the lion’s share of anything. DeLong doesn’t even discuss living standards in his post, so he can hardly be said to be disputing that “claim.” What DeLong (and we!) pointed out is that you (Frum!) obviously didn’t understand the numbers you were throwing around. That mistake was indefensible and — to his credit — Frum doesn’t try to do so. Instead he moves on to greener pastures, calling in the Fraser Institute for backup:
In 1993, the average Canadian household had cash income of $44,375 C$59,165 and paid $18,815 C$25,086 in taxes of all kinds. In 2003, the average household had cash income of $58,286 C$77,712 ? and paid $28,415 C$37,886 in taxes.
In other words, cash incomes rose by about $14,000 C$18,666 per household over the period, while taxes rose by almost exactly $10,000 C$13,333. You can see why people would be feeling restless. [Frum used US$ figures, which we converted using Oanda to avoid converting those used by the Fraser Institute.]
We can see — unfortunately the numbers Frum quotes (without a direct link) don’t match those contained in this PDF report from the Fraser Institute. [link to a PDF file with the relevant page only.] If we read the data correctly, from 1993 to 2003 federal taxes on the average Canadian family increased from just above C$15,000 to just above C$20,000. Total taxes went from slightly less than C$30,000 to slightly more than C$35,000.
In this other Fraser Institute report, in 2003 the average Canadian family is said to have had a total income before tax of C$113,612, with an income tax bill of C$12,081. (And a total tax bill of C$35,808.) So what happened?
For one thing, Frum apparently pulled numbers out of his ass, messed up when he converted them into US$, or the Fraser Institute can’t add and hence comes up with different answers in different reports. In addition boys and girls, Frum uses total taxes paid but only part of the income earned by the average Canadian family. Now that’s being creative! Is it at all possible that non-cash income grew as a share of total income during those years? Would you compare total taxes paid using as your baseline only part of your income? We wouldn’t.
Frum then opines:
On the other hand, the federal government collects more taxes than anybody else, and especially more of the highly visible direct taxes on incomes.
According to the Fraser Institute, income tax for the average Canadian family was C$11,855 in 2003. Is that the lion’s share of the total tax bill of C$35,808? You. Tell. Us. (In 2004 total federal taxes, at C$20,577 were at least more than half of the total tax bill of $C36,369.)
Yet another Fraser Institute table shows that the average tax rate paid by the average Canadian family went from 45.9% in 1995 to 48.3% in 2003. So how is it possible that an average increase of C$14,000 in income from 1993 to 2003 led to an increase in one’s tax bill of C$10,000. Try this: it isn’t.
Frum concludes with:
In other words: the lions are hungry.
No David: In other words, the lions are stupid. Tr?s stupid.