[Vision2020] Cost of Government Day: ATR BIAS?

[Ted Moffett]

Dale et. al.

I think ATR (Americans for Tax Reform) provides misleading figures.  I 
present data from the Tax Foundation below to support my claim.

http://www.taxfoundation.org

See below for an brief analysis of different conclusions than ATR on percent 
of government costs paid out of their income by the "average American 
worker" (ATRs wording) based on a brief excerpt from a study by the Tax 
Foundation.

Ted

The data Dale presented can be found at:

http://www.atr.org/pdffiles/2003cogd.pdf

The following is based on a Tax Foundation organization study available 
through their web site:

http://taxfoundation.org/prmedianfamily.html

Though the study quoted here does not give information for recent years, it 
does include data through 1998.  Federal, state and local taxes paid as a 
percent of income, not the absolute amount, according to this study, were in 
1997 40.9 % of a median two income families income.  A median one income 
families tax burden was 38.6 % in 1997.  Translating this into days worked 
to pay this percent of tax, comes out to 149 days for the two income median 
family in 1997, and 142 days for the one income median family.  This means 
they had paid their taxes towards the end of May in 1997.

However, on the ATR website, according to the chart they provide, 
"government costs" for the year 1997 paid by the "average American worker," 
were not paid till around June 30, over a month later than the data from the 
Tax Foundation would suggest.

The misleading aspect of their calculations may involve including the huge 
taxes paid by the wealthy, and then averaging them in with the taxes paid by 
the "average worker."  I don't think it is fair, certainly it is misleading, 
to average in the huge taxes paid by the wealthy, and then claim the data 
represents the "average worker."  I did not find information in the ATR 
report on whether or not the high taxes of the wealthy were averaged in with 
the taxes of the "average American worker."

Dale, can you provide the data on this question about averaging the high 
taxes of the wealthy in with the taxes paid by the "average American worker" 
in the ATR report on number of days worked by the "average American worker" 
to pay the cost of government?

Another variable is how the cost of government regulations are included in 
the "cost of government" figures used by ATR to determine the number of days 
worked to cover all government costs.  There could be much room for 
disagreement on this variable.  But this may also explain ATRs larger 
numbers for number of days worked to pay for government than what the Tax 
Foundation study suggests.

An excerpt from the Tax Foundation study is below:

http://taxfoundation.org/prmedianfamily.html

For release March 9, 2000
Contact: Bill Ahern, (202) 464-5101

New Study Profiles Total Tax Burden of Median American Family

Washington, D.C., March 9, 2000– The total tax burden of a median two-income 
family dipped below 40 percent in 1998, according to a new study by the Tax 
Foundation.

J.D. Foster, Ph.D., executive director and chief economist of the Tax 
Foundation, unveiled the new study at a tax policy conference on Capitol 
Hill. Titled "The Tax Burden of the Median American Family" (No. 96 in the 
Foundation's Special Report series), the study confirms that even adjusting 
for inflation, recent prosperity has resulted in higher taxes. The $26,759 
total tax burden that a median two-earner family paid in 1998 is the highest 
ever.


Taxes as a Percentage of Median Family Income

(The chart is missing.  See the link to this study.  Ted)

Federal, state and local taxes claimed 39.0 percent of a median two-income 
family’s total income ($68,605), down from 40.9 percent in 1997 and down 
from the historical high of 41.5 percent in 1996. The median one-income 
family’s tax burden was 37.6 percent of its 1998 income ($36,579), down from 
a high of 38.6 percent in 1997 (see column chart).

Against a backdrop of steadily rising tax burdens, the Taxpayer Relief Act 
of 1997 reduced federal individual income taxes on the median family so 
dramatically that federal income taxes as a percentage of total income were 
about the same in 1998 as they were in 1955. The almost two percent decline 
in the two-earner family’s total tax burden between 1997 and 1998 can be 
attributed almost entirely to this legislation. It brought such substantial 
tax relief to the median family because its new tax credits, the Per-Child 
Tax Credit and the Hope and Lifetime Learning Education Credits, are 
especially valuable to the demographic group that the median family falls 
into.

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