ADDITION, MULTIPLICATION, WHATEVER….We can’t be too nice to National Review, can we? So to make up for our last post let’s take a look at Stephen Moore’s latest scribblings about the dividend tax:
The company must pay a 35 percent tax on the profits that it earns and then if that after-tax money is paid to the shareholders in a dividend, they get smacked with a tax as high as 38 percent. That?s a 73 percent tax on dividends.
My goodness, 73%. That is high.
That is, it would be high if Moore’s arithmetic were reliable. But it’s not. His example actually amounts to a 60% tax rate.
Well, who cares, that’s pretty high too, isn’t it? Sure it is, although in reality virtually no one actually pays taxes at that rate. But can you really trust any economic analysis by a guy who mistakenly adds percentages instead of multiplying them? Brad DeLong’s 9-year-old probably could have gotten this one right.
Nor is this is merely a game of “gotcha” with someone who just punched the wrong button on his calculator. Rather, it shows either a genuine lack of number sense or else a deliberate attempt to deceive. In either case, it’s pretty obvious that he can’t be trusted with more complex issues either.
UPDATE: It’s been fixed. No explanation given.