I can’t understand how that got printed with such an obvious mistake.

I gather Mankiw linked to it without comment. I’d bet he saw the mistake but since he’s decided being a political hack is more important than honesty, he wouldn’t mention it out loud.

I think my confusion originates in a slippery problem:
CBPP compares two identical ‘glasses of water’ and concludes that they cannot possibly hold the same amount of ‘tax money’; consequently, the tax loophole revenues can never fill the ‘amount drained’ by tax expenditures. CBPP bases its analysis on households >$200,000.

However, Feldstein claims that the closed tax loopholes (revenue) ‘are equal’ to the tax expenditures – as if the amounts are equivalent.

Unfortunately, instead of using two identical glasses of water as the basis for his comparison, Feldstein is probably comparing one 16 oz glass of water (Tax Expenditures) against one 3-inch high shallow glass bowl (i.e., revenues from more taxable households > $100,000).

In Feldstein’s analysis, each piece of glassware may be ’3/4 full’, but that does not mean they hold equivalent amounts of liquid, nor of tax revenues.
Feldstein may be comparing a 16 oz glass against a 10 oz bowl. The fact that ‘each is 3/4 full’ does not mean they hold ‘equivalent amounts’.
This kind of squishiness and confusion leads to trouble.

Yet the current vblog shows us only the two glasses – per the CBPP analysis – that appear to be roughly similar, which makes it a bit tough to make the intellectual leap to the fact that Feldstein’s claims are probably based on comparing Glass #1 against a shallow bowl.
Unfortunately, this difference, *if it exists*, is not clear to me from this video. (Nevertheless, with that said, the video is a great idea because now my brain is chewing on this puzzle.)

As I puzzle this out, CBPP is saying, “We compare exactly equivalent things: Glass #1 and Glass #2 are each 16 oz, identical pieces of glassware. Also, >$200,000 is our base tax level for analysis.”

But Feldstein is *not* comparing equivalent things; he’s comparing a 16 oz glass to some kind of bowl, which in order to fit in all the additional households between >$100,000 and >$200,000 needs to be a largish, shallow bowl.
In other words, these two things are not equivalent.

People like me need to *see* that.
Preferably, at a glance
I think that if the talented 10-year old videographer could be enlisted again, a revised video could do a lot of good in unpacking the nature of the problem with Feldstein’s analysis — assuming that I have sussed out what is puzzling me about this post and linked video.

If the underlying problem lies in the different units of comparison between CBPP and Feldstein, then I don’t think this intellectual quicksand is clear enough yet to most viewers. At least, it isn’t to me. (Which is really bugging me…)

Humble suggestions:

1. I had to peer at my computer screen to make out the relative heights of clear water in the two glasses in that video. Any chance for a reshoot, and this time use cola or root beer?** A darker liquid would make it easier to see comparisons at-a-glance.
Also, if you drew a line with a marker on each glass to show the original level of liquid in each the viewer would see ‘how much less’ the glass has after you pour the contents of Glass #2 into Glass #1. (Or, if Dr. B wears the blue shirt again, orange juice would be a good contrast.)

2. Is there any way in a reshoot video to make sure the viewer knows that Glass #1 and Glass #2 are ‘exactly identical’ in shape and size for the CBPP analysis?

I think the intention in this version of the video was to show: large glass != small glass; however, I would find it more useful to see comparisons between two identical glasses of liquids as the basis of the Comparison #1: The CBPP Analysis, and then in contrast, Comparison #2: The Problem With Romney-Feldstein’s Metrics in their Analysis, compare a 16 oz glass to a 10 oz shallow bowl.
(NOTE: supposing that a 16 oz glass was Glass #1, I have not done the math for the accurate, relative size of Feldsteins’ glass ‘bowl’. CBPP probably has stats software to do that in a nanosecond. I’m taking a rough guestimate when I toss around figures like 16 oz vs 10 oz, simply to make my point. I think the relative sizes are a big deal, and lend credibility when done correctly.)

3. Does the left glass (from viewer’s perspective, Glass #1) represent the $251 bn figure? If so, why not put up a little tag in front of that glass to state the amount? Is the right glass (Glass #2) the $165 bn figure? If so, please show us.

Apologies for such a long comment.
Hope it is useful.
The video is a terrific idea, and the topic matters.

** Far be it from me to advocate anyone drink sodas made with high fructose corn syrup. However, there are colas and root beers made with cane sugars. The point being that the height of the liquid would be **a lot** easier to see on the video if it were a dark, opaque liquid.

“What of the estate tax? Eliminating it would cost $21 billion of revenue in 2009 terms, an amount easily offset by other base-broadening changes. More importantly, eliminating the estate tax could be a revenue gainer in the longer term. That’s because its current high rates induce high-wealth individuals to bequeath most of their money to foundations, universities and other tax-exempt institutions where the future investment earnings are untaxed. If the estate tax were abolished, more of those funds would go to children and grandchildren, who in turn would generate higher income taxes for generations.”

After decades of hearing about GOP charity works – not government, Martin “Trickle Down” lets the cat out of the bag. It’s really all about greed for the rich and their families – not creating jobs, endowing colleges, giving to churches and synagogues.

As for paying taxes on the inheritances, you don’t pay capital gains until realized, dividends until received.

Wait a minute. Mitt and Martin also want to eliminate all dividend and capital gains taxes. So, what vapor is the economic genius Feldstein selling? No taxes on estates and no taxes on investments and no donations to charity?