Saturday, April 23, 2011

In the land of the blind, the one eyed pundit is still a dope

The tax wars are at least entertaining. On the right, pundits often point out that many Americans pay no federal income taxes and even more pay very little.

On the left, pundits counter by saying there are more taxes than federal income taxes. For example, everyone with a job pays federal payroll taxes.

For example, here is Jon Chait, citing and debunking the rights point's about who pays taxes.

Are right leaning pundits deliberately trying to pull a fast one, hoping that people will gloss over the modifiers "federal" and "income" and think the stats apply to total taxes?

Maybe. Couldn't put it past them, though Chait (and his source, Emmy winner Leonhardt) do a poor job making their case.

But who pays federal income taxes is an important issue because we are debating raising them! If everyone votes and the median voter doesn't pay federal income taxes, then there is little direct cost to the majority in voting higher tax rates.

That, I think, is the important public choice issue here, and it makes question of who pays federal income taxes is important in it's own right, irrespective what other taxes exist, given that it's the federal income tax we are proposing changing.


John Thacker said...

It also matters when people like Kevin Drum here talk about "we need to raise the Federal Gov't's revenue by one-third" to eliminate the deficit, and then switch to just focusing on the effects of raising federal income taxes by one-third. Since payroll and other taxes make up roughly 60% of federal revenue, if we only raise federal income taxes to cover the deficit, that really means raising federal income taxes by some 80%.

MF said...

I don't get it: why is the US military so precious? it would be so easy to end the silly wars and cut spending tremendously.

Tom said...

Notice how FICA is a tax when we're talking about who pays, but it's an insurance premium whenever the topic is limiting the benefits supposedly payed for by "Federal Insurance Contributions Act" money.