The Goldwater Institute is crowing about how Easter Sunday was “Tax Freedom Day” in Arizona:
Tax Freedom Day for Arizona this year was Easter Sunday. According to the Tax Foundation, that’s the day by which Arizonans have earned enough money to pay their total 2010 tax burden. After 94 days or 26 percent of the year has passed, the average Arizonan finally gets to work for himself!
The only problem: Tax Freedom Day came a long time ago for the “average Arizonan.”
Because of the progressive income-tax structure, the entire premise of Tax Freedom Day is flawed—and Goldwater’s Byron Schlomach is smart enough to know that he’s passing along a big stinky load of horseshit.
Sharon Ward at the Pennsylvania Budget and Policy Center explains the big math mistake here:
The Foundation generates an estimate of average tax burden for Americans and for residents of each state. The Chairman of Comcast and the mailroom clerk do not have the same income, but the Foundation assumes that to be the case in assigning a tax freedom date for all Pennsylvania taxpayers.
The Center on Budget and Policy Priorities, using Congressional Budget Office analysis of taxpayers in 2006, finds that the Tax Foundation overstates federal taxes for 80% of taxpayers. That year, the Tax Foundation
assumed an effective federal tax rate of 21% in its Tax Freedom calculation, which is higher than the rate paid by all but the top 20% of earners. The lowest 20% of taxpayers nationally paid 4.3% of their income in federal taxes and taxpayers in the middle paid 14.2% in federal taxes. Only the top 20% of taxpayers (people who earn $142,000 after deductions and exclusions) are paying 21% or more of their income in federal taxes.
It’s not unusual for Goldwater to skew its numbers to back up its point. Blogger David Safier at blogforarizona.com has nailed them on their phony estimate that there’s one bureaucrat for every teacher in Arizona’s public schools. It’s only true if you consider bus drivers and janitors to be bureaucrats.
This article appears in Apr 8-14, 2010.
You are confusing “average” and “median.” The median tax freedom day was earlier, but the average was when Byron Schlomach says it is.
Good to hear you confirm that the tax code is already pretty progressive, though.
Median has nothing to do with it.
The Goldwater Institute says says Tax Freedom Day the day when the average Arizonan has finished paying off his tax burden. That’s clearly not true because you can’t calculate the burden of the average taxpayer in the manner that the Tax Foundation does.
If you collect $100 in taxes from five people and four of them pay five dollars each and one of them pays $80, then the average is $20. But that’s not an accurate representation of how much they paid. The entire exercise is nonsense. And that’s before you start calculating how much a taxpayer gets back from what he puts in.
There is only one way to measure tax burden and its % of GNP.
Well, that’s certainly easier–and more consistent–than trying to figure out individual tax burdens! I do think it’s useful to compare how much people in various income brackets pay in income taxes, though, because most people are so unaware of how the progressive tax system works.
Here’s a great example of that, from a conservative who is disturbed by the ignorance of the Tea Party:
http://www.forbes.com/2010/03/18/tea-party…