How the Free Press Distorts Reality
For every dollar paid in income taxes by 60% of the population, the other 40% pays $19.00. This is tax fairness?
The USA Today’s editorial Tax Rhetoric vs. Reality (April 17, 2009) is the perfect example of the many ways our so-called free press distorts accurate reporting by burying details, through exaggeration, and by omitting what should be said. To report the average tax rate as 9.1% of income (.091) suggests that the tea-tax demonstrators are misguided and biased. This smells like the average as explained in graduate statistics courses: that a man with his head in the oven and his feet in the freezer is comfortable, – on the average. The USA Today is clearly not free to deal with tax fairness on the average, nor to give credit to millions of Americans who demonstrate that our government, including both parties, do not represent our views on the average.
While one out of ten dollars in income taxes is implied as fair, shortly thereafter the editor revises this low tax rate upward to include all combined federal taxes to 20.7%. As an across the board average, this is one of every five dollars going to the federal government. To expand upon this fairness, in California with a state income tax of almost 10%, the total in federal and state tax is now 30%. That is three in every ten dollars in California, and not a penny has been spent yet on food, clothes, housing, transportation, or cell phones.
If three in every ten dollars in federal and state taxes is not an issue of concern, but simply amounts to Tax Rhetoric, the editorial writer is living in Wonderland, certainly not in California. By simply waving a magic wand, the writer’s lead-in 30% in federal income taxes actually becomes 30% of taxes somewhere. Is this not an outrage? In the writer’s perverted mind it is not an outrage because this editor and journalist is simply in the tank with Obama and friends. Welcome to the cult in a crisis.
While income taxes account for half of the revenue collected by the federal government, a portion of these taxes are paid by individuals, while the balance is paid by private businesses and corporations. Individuals who actually file and pay income taxes know full well what they pay. Businesses and corporations actually do not pay taxes, but imbed their taxes in the cost of merchandise, services or benefits sold to customers. Consequently business taxes are a hidden tax on individuals which increase the cost of goods and services for all who deal with these businesses. A tax on a cow or a farmer simply increases the cost of milk, cream, beef, leather and glue, and most of the consuming public pays little attention to these hidden costs, which they pay directly through price increases.
In the final analysis all taxes paid on tax day are paid for by individuals through a combination of (1) individual income taxes and (2) hidden taxes on what one purchases throughout the year.
The following visual, Table 1, is offered for contrast using the same average technique as that applied by the editorial writer. Unlike a 9.1% income tax across the board, the taxpayers in the tenth decile (D10), those paying the most in taxes, actually pay 63% of all income taxes. This leaves only 37% of the taxes to be paid by the remaining 90% of those paying taxes. The taxes shown for the other nine groups are averaged, and show nine bars of about 4% tax each. Those with working brain cells recognize this as complete nonsense.
The only group displayed accurately in Table 1 is D10, while all the others represent graphic distortion through using the average, a mean calculated across all the other groups.
Even this distortion is seriously misleading as it suggests that the lowest groups, D1, D2, and D3 actually pay income taxes. Transposing the entire bar graph to represent tax reality is shown in Table 2 as published by the Congressional Budget Office.
Lest the editors and journalists in the tank have difficulty interpreting the table, each colored area represents two deciles in table 1. There are five quintiles of taxpayers. As may be seen it does not represent a straight line from left to right at 9.1%, but rises precipitously right of the midpoint (50%) of the tax paying population. Those left of the midpoint pay essentially nothing in income taxes, while the bulk of all taxes are paid by those to the right.
As even this clear graph may be misinterpreted, the following pie charts offer the same data representing tax burden, and who carries this burden.
Editorial rhetoric aside, the taxpayers’ burden is illustrated in pie-graph form so simple that editors and journalists who have never had an introductory course in descriptive statistics can still understand it. Surprise! In 1999 the highest quintile of taxpayers paid 79% of the federal taxes. They pay $4.00 in taxes for every dollar paid by anybody else who paid taxes. This small group of taxpayers, 20%, are carrying 80% of the load for everybody else. Adding the taxes of the fourth and fifth quintiles (79% + 16% = 95%) produces the statistical basis for a taxpayer’s revolt, and explains perfectly why many taxpayers (40%) are very upset.
For every dollar in income taxes paid by 60% of the population, the folks in the highest two groups (40%) pay $19.00. That is a 19 to 1 ratio. Yet Obama and friends suggest that fairness has not yet been achieved, that considerably more redistribution is needed in the name of fairness. The smaller pie chart to the right shows the atrocious taxes of the top 10%, 5%, and 1% of taxpayers.
These same journalists will say: “Yes, but the greed of the Bush administration and the Wall Street crowd changed all this since 1999.” Absolutely wrong!
Since 1999 the actual tax burden continued to increase throughout the Bush administration, so that they paid a bigger share in taxes in subsequent years. The 79% shown above for the highest quintile increased to 82.5% by 2006. Obama conveniently overlooks this finding in his quest for fairness. More fairness is what Bush provided, but in the name of fairness, more is never enough when folks are looking for a free ride.
It is past time for a good tax revolt. While the ignorant and otherwise uninformed among us may be excused, the blatantly biased journalists and editors in the press are complicit in spreading lies and half-truths about tax fairness. Together with Obama, such outright political propaganda will kill the primary incentive in the world’s most productive economy. It amounts to biting the hand that feeds you.
Stop to consider. Business and corporate income tax rates are higher in the United States than in any other developed country. For this reason businesses which are profit driven are pushed to cut costs to cover expenses in the global economy. It is reported that IBM will outsource 10,000 jobs (to India) in the next two months. This outsourcing both cuts global expenses, and allows IBM to pay the highest corporate tax rates in the world. The higher the corporate taxes, the more American companies will outsource. This is fairness and redistribution?
Maybe Obama will save the world through his green jobs. According to Debug on the internet, the only high paying green jobs out there at present are landscaping and selling marijuana. Hello, Obama and friends. Have you any idea where you are leading America? Those who know what is going on will never follow your distorted sense of fairness. Have you ever considered lowering corporate tax rates to keep American workers employed and restore the economy? Individual income tax rates are already skewed so badly that many individuals, particularly Obama’s Democratic appointees, prefer not to pay their fair share of taxes.