This happened a couple of weeks ago, but a link in Tim Noah's story in Slate about Kerry's international tax proposal led me to actually look at the Treasury's politically motivated analysis of the Kerry tax plan. This attracted a bit of attention, because public employees are prohibited from working on such political projects. (In this case, they prepared the analysis at the request of Tom DeLay, so it might more accurately be called the DeLay tax plan.)
In addition to the obvious misuse of public resources, I noticed three things in this analysis that I hadn't seen mentioned before:
1. The Treasury actually did a distributional analysis, of sorts, on the Kerry plan. This is exactly the kind of analysis that they have not been willing to do on most of the Bush proposals, leaving independent organizations such as the Tax Policy Center of the Brookings Institution and the Urban Institute to do the work of figuring out how policy changes would affect different income classes.
2. Treasury didn't use the standard categories that would go into a distributional analysis, such as income quintiles or households with income in certain ranges. Instead, they used a category of their own devising: "Hardworking Individuals and Married Couples."
3. And what's the definition of the new population category called "Hardworking Individuals and Married Couples"? To me, it brings to mind the guy who guts chickens for a living ten hours a day and his wife who works at Wal-Mart. But I must have too bleak a view. Apparently this category refers to people who earn more than $200,000 and get much of their income from dividends and capital gains. I don't want to engage in class warfare, and I'm sure some of these people are very hardworking, but that just doesn't seem like the appropriate term.
This whole thing is just disgraceful. To top it all off, every Treasury release now has the following useful public service announcement at the bottom:
America has a choice: It can continue to grow the economy and create new jobs as the President's policies are doing; or it can raise taxes on American families and small businesses, hurting economic recovery and future job creation.
I'm sure Brad DeLong can confirm that this is the kind of thing that, in the Rubin/Summers Treasury Department -- and in fact in every Treasury Department from Hamilton and Gallatin forward -- not only would not have been done, but wouldn't even be considered.
Finally, by the way, Noah's piece wasn't about this at all, but rather, made the very important point that there's nothing protectionist about Kerry's international tax proposals. Sure, Kerry talks about "Benedict Arnold companies," and there's a little populist bluster there. But basically this is a proposal to restore tax neutrality between foreign and domestic income, which is something everyone agrees is desirable, and to eliminate the incentives for purely paper transactions that have no value except to reduce taxes. It took a long time for someone to point that out!