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In Which I Disagree with the Very Sharp David Leonhardt

David Leonhardt writes:

Economic Scene - Yes, 47% of Households Owe No Taxes. Look Closer: That’s the portion of American households that owe no income tax for 2009. The number is up from 38 percent in 2007, and it has become a popular talking point on cable television and talk radio. With Tax Day coming on Thursday, 47 percent has become shorthand for the notion that the wealthy face a much higher tax burden than they once did while growing numbers of Americans are effectively on the dole. Neither one of those ideas is true. They rely on a cleverly selective reading of the facts. So does the 47 percent number.... All the attention being showered on “47 percent” is ultimately a distraction....

The 47 percent number is not wrong. The stimulus programs of the last two years — the first one signed by President George W. Bush, the second and larger one by President Obama — have increased the number of households that receive enough of a tax credit to wipe out their federal income tax liability...

And here I want to stop the tape. David: look at the headline above your article: "Economic Scene--Yes, 47% of Households Owe No Taxes. Look Closer." That's false: 47% of households do not "owe no taxes." As you know and as you say, 47% of households owe no federal income taxes.

When a number "that 47% number" leads your headline writers to automatically write a headline that is false, that number is false as well. You should not say "the 47% number is not wrong." You should say "the 47% number is highly misleading, and is crafted to be part of a deliberate lie..."

David Leonhardt goes on to explain in the rest of what is an excellent article:

[T]he modifiers here — federal and income — are important. Income taxes aren’t the only kind of federal taxes that people pay. There are also payroll taxes and investment taxes, among others. And, of course, people pay state and local taxes, too... poor families generally pay more in payroll taxes than they receive through benefits like the Earned Income Tax Credit.... Focusing on the statistical middle class — the middle 20 percent of households, as ranked by income — underlines this point. Households in this group made $35,400 to $52,100 in 2006... a household with one full-time worker earning about $17 to $25 an hour... firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers, according to the Bureau of Labor Statistics... the average household in this group paid a total income tax rate of just 3 percent. A good number of people, in fact, paid no net income taxes. They are among the alleged free riders. But the picture starts to change when you look not just at income taxes but at all taxes. This average household would have paid 0.8 percent of its income in corporate taxes (through the stocks it owned), 0.9 percent in gas and other federal excise taxes, and 9.5 percent in payroll taxes. Add these up, and the family’s total federal tax rate was 14.2 percent.... If anything, the government numbers I’m using here exaggerate how much of the tax burden falls on the wealthy. These numbers fail to account for the income that is hidden from tax collectors — a practice, research shows, that is more common among affluent families. “Because higher-income people are understating their income,” Joel Slemrod, a tax scholar at the University of Michigan, says, “We’ve been overstating their average tax rates.”...

So why are those radio and television talk show hosts spending so much time arguing that today’s wealthy are unfairly burdened? Well, it’s hard not to notice that the talk show hosts themselves tend to be among the very wealthy. No doubt, like the rest of us, they don’t particularly enjoy paying taxes. They are happy with the tax cuts they have received lately. They would prefer if other people had to pick up the bill for Medicare, Social Security and the military — people like, say, firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers.

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