Wednesday, April 28, 2010

Zero Hedge ---> Zero Credibility on tax withholding

- by New Deal democrat

There has been a blog war going on in the last month between Matt Trivisonno and Zero Hedge concerning tax withholding. Trivisonno contends that withheld taxes have been surging. Zero Hedge contends that there has been a "collapse" in tax withholding.

Considering this data is public record at the US Treasury's page, there should be no debate. You are about 5 clicks and less than a minute away from double-checking either of their claims.

Trivisonno has put himself under a disadvantage. Since Karl Denninger cribbed his work without credit last year, Trivisonno took his up-to-the-minute graphs offline, and then made them Member Only. You can see a pretty useless 90-day-old graph at his site. Zero Hedge, by contrast, has been updating its work (but selectively as we shall see) weekly.

As readers of this blog know, I include the daily statements in my Friday summary of Weekly Indicators. I should state that I started this because I believed Trivisonno failed to take seasonal factors into account, when he announced a catastrophic dropoff in collections between Q1 and Q2 in 2009, when records of past years showed that there has always been a substantial decline from Q1 to Q2, including during years of economic expansion.

I am going to take sides. Trivisonno is correct. Zero Hedge has zero credibility on this subject, and its most recent post appears to be actively misleading.

As I said, Zero Hedge has been updating its graphs weekly. For "week 15" (ending April 16, 2010), it included a nice weekly graph of tax receipts in its post. I haven't checked every single week, but I did check the last 3, and I can tell you that Zero Hedge did correctly total weeks 13 and 15, both of which showed 2009 receipts running ahead of 2010 receipts (by $2,831B and $5,723B, respectively).

But week 14 was suspiciously an outlier, showing less than $11,000B for receipts both years. Trivisonno called them on it, saying the total was laughable. And indeed it is. For the week ending April 9, 2010 (week 14), the Treasury took in $28,561B vs. $23,831B in 2009, meaning 2010 was ahead by $4,730B that week.

Zero Hedge not only failed to correct that glaring error, here is the entire text of their report for the week ending April 23, 2010 (week 16):
We promised we would update the US Treasury individual tax withholdings comparison between 2009 and 2010 by 4 week bucket. Week 16 data is now out and the result is below. It speaks for itself. As for withheld corporate tax, we would discuss that too... if there was anything to discuss.

And there is no weekly graph. Instead, there is a 4 week successive graph purporting to show that receipts have collapsed in the last 20 days.

So, what actually happened in week 16? In 2010, $32,594B was collected, vs. $29,332B in 2009. In other words, 2010 was ahead by $3,252. Zero Hedge, for some reason, didn't choose to tell that to its readership.

In short, in both weeks of April 2010 where tax withholding was comfortably ahead of 2009, Zero Hedge misprepresented or ignored the data. And they literally picked what may have been the only 20 day period (on a rolling basis) in the last month or so where 2009 taxes were slightly ahead of 2010's - by less than $0.6B My Weekly Indicator column used a 20 day result only 2 days before that showed 2010's results ahead by $130.0B vs. $118.6B, a gain of $11.4B or +9.6%. (The culprit is one single outlier: 4/23/10 vs. 4/22/09, on which $2.310B vs. $7.447B was collected, respectively).

For that reason, I say that Zero Hedge has Zero Credibility on withholding tax receipts.

And by the way, through the 26th, 18 workdays into the month, April 2010 as a whole is running comfortably ahead of April 2009, $121,724B vs. $113,067B.