Think Tank’s Assertions Tax Credulity, Economists Say

WASHINGTON — The Cato Institute, one of the nation’s most influential think tanks, is under fire for its claims about the tax code.

In a news release targeted to coincide with the April 15 tax deadline, Cato asserts that “one of the primary reasons for the stagnation” of workers’ real wages has been that “taxes and government mandates on employers have been expanding steadily, crowding out the amount workers can put in their pockets.”

In fact, says economist John Miller, “corporate profits have increased appreciably as real wages have stagnated.” Miller, a professor of economics at Wheaton College in Norton, Mass., added: “Over the last 10 years, while corporate profits have nearly doubled, real wages have barely budged.”

David E. Kaun, an economics professor at the University of California at Santa Cruz, said that efforts to blame stagnated wages on taxation of employers are misleading. In Kaun’s words: “Most economists would agree that there are a number of factors that account for flatness in real wages ­ none of which have anything to do with taxes.”

Kaun took exception to the Cato Institute’s broad swipes at “hidden costs of the burden of government” involving taxation and regulations. “What Cato characterizes as the ‘burden’ of government includes a set of benefits ­ such as worker’s compensation, unemployment insurance, Medicare and Social Security ­ that are accepted and available in every industrialized society,” he said.

The Institute for Public Accuracy is a nationwide consortium of policy experts.