It may not be immediately clear to everyone why taking a ratio of a ratio is not an acceptable way of assessing the "progressivity" of a rate change. So let me give another example: Sometimes governments announce tax or spending changes relative to a previously projected change. Thus, the diminution of a previously announced tax increase might be announced as if it were a "tax cut". Suppose deregulation would enable the utility companies to forego rate _increases_ that otherwise were projected? Suppose those foregone rate increases were of the same magnitude as the rate decreases projected in Gene's question. The effect of such a non-change in rates would be EVEN MORE PROGRESSIVE (using the two economists' logic) than the decrease in rates that they were talking about. Imagine that! More progress from standing still. Using these kinds of subtle spin techniques one can easily cook up a "progressive" rate change that is structurally regressive but nominally "progressive" because it is less regressive than another projected rate change. In plain language: compared to a banana, an orange is an apple. Not. Tom Walker
