Tuesday, October 21, 2008

Taxation Without Representation

There's a silly argument going around about taxes and especially about Obama's promise to cut taxes for 95% of working families. Hilzoy gives a good summary of the issues:

Cliff May at The Corner quotes Kimberley Strassel:

"To kick off our show tonight, Mr. Obama will give 95% of American working families a tax cut, even though 40% of Americans today don't pay income taxes! How can our star enact such mathemagic? How can he "cut" zero? Abracadabra! It's called a "refundable tax credit." It involves the federal government taking money from those who do pay taxes, and writing checks to those who don't. Yes, yes, in the real world this is known as "welfare," but please try not to ruin the show."

It is a silly argument, because what Obama's election promise (always to be remembered as an election promise) talks about is something to do with "working families", not with "all Americans." Lots of Americans are children, for one thing, and "families" often contain more than one person and some of those other members of the family are not actually paying income tax even though the family on the whole is. In short, "American working families" is a different counting concept than "Americans." They are both pretty fuzzy concepts, though, when it comes to defining who pays taxes in this country.

More generally, Americans pay all sorts of taxes, not just the federal income tax. There are payroll taxes, property taxes, estate taxes, sales taxes and so on.

The argument is silly not only for those reasons, but also because presidential candidates always promise the moon, on platter with parsley nicely next to it, and we know this. McCain's campaign promises have a small mathematics problem, too. Or rather, not so small a problem.