UPDATE:I ran this last Friday afternoon after people probably had started their weekend rituals. I am now so worked up about it that I thought it made sense to repost. Sorry to not provide new content this morning. I promise to make it up to you.
Someone clearly is. David Henderson points out that this tax “analysis” implies that for a typical family earning $75,000 that the average tax deductions claimed are over $26,000. Here is one excerpt:
Taxpayers thinking they will get a tax cut from the Romney plan would be advised to check their tax returns first. According to data released earlier this year, taxpayers who declared between $50,000 and $100,000 of income in 2009, claimed, on average, $7,269 for medical expenses, $6,247 for taxes, $10,133 for interest and $2,775 for charitable contributions. That sums to $26,424 – well above both figures Romney has put forward.
Now there is much to discuss and debate. But one thing that should starkly stand out here is that this “average” middle income family pays $6,247 in state and property taxes if that is the average deduction. Based on a very crude estimate, this family will “only” pay about $4,300 in federal income taxes. And an even bigger Distraction than all of the above is that if you earn $75,000 in income, the payroll tax burden, directly, on you is $5,737.50. If you understand, as even Paul Krugman does, the actual amount paid (and yes people, I mean paid – just because it never comes to you and is taken doesn’t mean you didn’t pay it) is closer to $10,000.
So let’s recap. You can argue all you want about whether the deductions estimates are too large or too small. You can argue all you want about whether the
Rom-bama Romney tax plan will hit the middle class, but this is all a flippin’ major distraction, and one that got no airplay in any of the debates and will not get any airplay in the future. It is this. The serious tax burden on us has very little to do with the federal income tax.
For the “middle-class” guy above, he is paying $6,247 in state and local taxes, he is paying about $4,000 in annual sales and excise taxes based on his presumed consumption at those income levels and he is paying about $10,000 in payroll taxes.
So let’s add it up: $20,247 in “other” taxes versus $4,300 in income taxes. Arguing about the loopholes, rates, deductions, etc. on the federal income tax while doing nothing about the rest is like a salesman and a customer arguing about rounding up or down to the nearest nickel … when the price of an item is $500. And I’d remind readers that much of that $20,247 hits people regardless of their income and choices they make. It is indeed regressive. What a disaster. A disaster. And remember, none of these numbers include the implied cost of regulations and the implicit liability that we face when the feds decide to bail out ailing public pensions and health programs. Yeah. So keep talking about the federal income tax and congratulate yourselves on finding zingers and solving those problems. The rest of us will continue to be obliterated by the other stuff.
Have a nice day.