When average isn't average

USA Today is reporting that the average taxpayer paid just 9% of their income in taxes in 2009, the lowest level since 1950.

Federal, state and local taxes — including income, property, sales and other taxes — consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.

“The idea that taxes are high right now is pretty much nuts,” says Michael Ettlinger, head of economic policy at the liberal Center for American Progress. The real problem is spending,counters Adam Brandon of FreedomWorks, which organizes Tea Party groups. “The money we borrow is going to be paid back through taxation in the future,” he says.

Ever heard the axiom, “Figures don’t lie, but liars can figure?”

The fact is, 47% of households don’t have a Federal tax burden in the United States. In fact, the bottom 20% of taxpayers, on average, get back more from the government than they pay in thanks to “refundable” tax credits and other vote-buying schemes. The Bureau of Economic Analysis (where USA Today got its data) also counts Payroll taxes (Social Security, Medicare and Medicaid) as “insurance premiums”, not taxes.

The whole premise is laughable. The non-payers completely skew the data and make this type of “average” analysis totally useless when dealing with reality.

Americans who pay Federal income taxes pay significantly more than nine percent of their income. An unmarried person with no children and no house, earning $50,000 per year (slightly less than half the average household) is in the 25% tax bracket and has an estimated Federal tax burden of about 12%. Add payroll taxes (remember, the government claims these aren’t taxes) and the burden shifts to over 19%. State income taxes vary from 0-10%, so an average person might expect to pay 5%. Sales taxes vary but 6% is a good number, and about a quarter to one-third of expenditures are likely to be taxed this way.

Add it up. The average tax burden may be nine percent, but without tax deductions the “average” person pays about 26% (give or take) of their income in taxes.

See how this works? Use a slightly different data set based upon the same tax system and the result is a completely different answer than that given by USA Today.

I contest that my number is more realistic.

Now imagine that this person earning $50,000 is in their mid to late 20s, has student loans (the interest being tax deductible), a car payment, since she owns a car she’s also paying property taxes, rent, a credit card she ran up during college and is still paying off, electricity, gas, trash pickup, car insurance, health insurance, renter’s insurance… Oh, and she’s gotta’ eat, too. With few if any tax deductions, this hypothetical person could be living litterally hand to mouth, paycheck to paycheck.

But according to USA Today and the Center for American Progress, this “average” person should be happy that her tax rates are so “low”.

“But there’s the home mortgage interest deduction,” cry the Leftists, “and the first-time home buyer’s tax credit! She should take advantage of those and other programs!”

That would be great—except she can’t put together a down-payment on a house because she can’t save. Since she doesn’t have a down payment, lenders don’t want to lend, especially in this economy. She’s frozen where she is because her taxes eat up every spare dollar she’d otherwise be saving. If her car breaks down or she has some other unexpected expense, that eats up what little savings she has.

Now imagine it’s a man. Guess who usually pays for dinner and the movie tickets on dates? Liberated or not, women generally don’t like to go dutch. If he does manage to court a young lady, guess who is culturally expected to save two month’s salary to buy a diamond ring?

This is a bit of a worst-case scenario, but people are living this reality right now. Plenty of married couples and families are experiencing similar difficulties, unable to save as they pay down their debts and maintain the house and the car. With burdensome taxes (and “insurance premiums”) sapping away 20% or more of their income, it can be very difficult for a family of four to get by.

It’s no wonder the Tea Parties are gaining momentum. Nobody in the establishment media is paying any attention to reality. In fact, they’re busily trying to “prove” a lie!

Cross-posted at The Minority Report.