For the love of all things holy, stop distorting the tax debate

Pulitzer Prize-winning author Buzz Bissinger has a column today on the Daily Beast titled “Why I’m Voting for Mitt Romney:”

By instinct I still cling to my Democrat roots. But I admit that as I get older, on the cusp of 58, I am moving more to the center or even tweaking right, or at least not tied to any ideology. Those making more than $250,000 should pay more taxes, and that does include me. But I also am tired of Obama’s constant demonization, of those he spits out as “millionaires and billionaires,” as pariahs. Romney’s comments at a fundraiser were stupid, but 47 percent of Americans do not pay federal income taxes. Yes, a majority are poor and seniors. But millions do not pay such taxes with incomes of more than $50,000, and whether it’s as little as $10, every American should contribute both as a patriotic obligation and skin in the game. This is our country, not our country club.

This constant emphasis on the “47 percent of Americans [that] do not pay federal income taxes” is as boring and repetitive as it is completely and utterly irrelevant. The fact that this figure continues to play a large role in our national tax discussion is proof positive of the utter lack of due diligence on the part of journalists around the nation, who’ve collectively abdicated their responsibility to readers by failing to dig deeper.

So for the millionth time, federal income tax rates do not matter. Total tax rates matter. Think about it: what is the central issue in today’s tax arguments? The key question is one of progressivity and fairness: how much, if at all, should tax rates rise with income levels? Should the poor have to pay the same percentage of their total income to their federal, state, and local governments as the rich do? Or should taxes paid to all levels of government rise relative to income, as income itself rises? Responses to this question are as numerous as respondents, and that’s OK.

It’s absolutely absurd, on the other hand, for people to continue basing their tax system preferences on deliberately misleading data. Federal income taxes cover only one portion of total tax liabilities. There are, additionally, payroll taxes, state taxes, and local taxes. And this is the key problem with using only federal income tax rates as indicative of anything.

The Republican Party knows this. It’s why its standard-bearer, Mitt Romney, insisted on the self-victimization of the 47% who don’t pay federal income tax — because it’s a number that sounds incredibly high, a number that advances the GOP’s agenda and lends legitimacy to the accusation of “class warfare” against Barack Obama.

The problem is that, just as one would expect, isolating the most politically advantageous portion of Americans’ total tax liabilities produces a phenomenally distorted piece of data. (Imagine if the Democratic Party insisted its national platform was widely supported throughout the entire nation, based on a poll conducted exclusively among New York City residents. This is an extreme hypothetical, to be sure, but it’s illustrative of the type of thinking being used by Republicans to disguise the truth about taxes.)

So what is the total income and tax intake of Americans? Here’s a helpful graph, courtesy of Mother Jones, that includes 2009 income and tax data:

Notice a couple things. First, the bars are not equally distributed: the first four pairs represent the lowest four quintiles of the American population by income level, while the last four pairs collectively constitute the top 20%. This is necessary because the top income quintile dwarfs the other quintiles, and leaving it in one piece would render the graph more difficult to interpret in a useful way.

Secondly, the share of total taxes paid by each slice of the population is roughly equivalent to its share of national income. In other words, our tax system is much, much less progressive than Mitt Romney & Co. would have us believe. And this is why, when politicians and — even worse — journalists start throwing around numbers like 47%, it would behoove us to look into the data instead of taking it at face value. It also means that, if anyone’s conducting class warfare, it certainly isn’t Barack Obama.



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