I must admit, I was drawn to the title of Issac Bailey’s blog post, “Study says the poor pay a higher rate of local and state taxes -- including in Phil Mickelson's California”, not because I believed the validity of the assertion, but more as a challenge to myself to find within the body of the blog the motives, false premises, half truths, omissions, and misguided analysis that buttressed the claim. In particular, I read through “Who Pays?,” a 3-year-old study that was linked in Mr. Bailey’s article.
The answers to my curiosity unfolded as quickly as a child’s pop-up book. The report was published by what is supposedly a non-partisan think tank that somehow is constantly at odds with supply side economics, and, oh yeah, is partially funded by the Ford Foundation which seems enamored with the cause of opening the Mexican border to all comers. I’m sensing a liberal bias.
Dubious authors and contributors notwithstanding, I thought the make-up of statistics used to highlight the inequity in rates was not only misleading but incomplete and unbalanced all to advance the class warfare paradigm. Basically it demonstrated that the more state and property taxes were used as a larger percentage of the state’s revenue, the more “regressive” the tax rates were – and of course how awful is that? With such a conveniently narrow set of factors how could we think otherwise? The problem is it lacked information to do a more balanced analysis which would certainly have mitigated one’s view of how evil it was to be rich and successful. Here are some of the statistics that I thought were sadly missing or confusing:• Where was the chart that showed the total dollar amount paid by the various income brackets?
• Why break the top 20 percent into three brackets by themselves? (other than to give wider acceptance to the derogatory term “1 percent.”)
• How much of the sales tax paid by the low income brackets was paid off the EBT cards? For that matter, is there a way to quantify how much of the low-income property tax is being paid on the expensive cars owned by the EBT users?
• If the study was going to factor in the Federal Deduction Offset, why was there not an equally represented Federal Earned Income Credit offset?
• How much of the state revenue was reallocated to the various brackets in the form of redistribution (unemployment, social services, food, housing, and utility assistance, etc.)? Wouldn’t it be helpful to know the net figure of taxes paid to “benefits” received?
• How many jobs were created by the income earners within the various brackets – thereby propagating new taxpayers?
Are you starting to get the picture? I wasn’t, because the report didn’t have the answers to those questions. But my intuition is that it would neutralize the insidious premise that tax policy punishes the poor. It seems to me that in the end they are the beneficiaries of a greater proportion of their taxes paid than any other bracket. Also, to say it punishes the poor is a glass-half-empty argument. I prefer to believe that those who earn a larger portion of disposable income because of their extra intellectual, physical, tangible or intangible efforts have won their just desserts. Is that really unfair?
T. Edward Miller