Taxes and Averages.
Nan Madden writes about why Tax Freedom Day protesters like to use "average" as a way to describe the tax share paid by Americans.
But 80% of American households pay a smaller share of their incomes in federal taxes than the average found by the Tax Foundation. According to the Congressional Budget Office, “typical” Americans - the 20% of households in the middle of the income distribution - paid 14.2% of their income in total federal taxes in 2005. In contrast, the Tax Foundation’s average share of income paid in taxes for that year is 20.2%.
This is typical of the ways tax data are selectively reported to heighten grievances. Minnesota's anti-taxites also choose:
- Per capita dollars over percentage of income. Minnesota ranks 12th versus 23rd on the two measures. Per capita doesn't reflect differences between low- and high-income states. Plus, people respond more negatively to thousands of dollars than to percentages.
- Income tax over all state and local taxes. This obscures differences in how states fund government services at different levels. Minnesota's greater reliance on the income tax places makes it look worse compared to states that raise more revenues through other taxes and fees. Minnesota ranks 12th versus 23rd.
- State rankings over percentage differences between states. A one percent difference can mean an 18-place difference between Minnesota and Mississippi.


Comments