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April 11, 2004

Fraud of "Tax Freedom Day"

Every year the Tax Foundation declares some day in April "Tax Freedom Day"-- arguing that up to that point in the year, you have been paying all your income to the government and not keeping a dime for yourself. And much of the media follows along.

It's all a crock.

"We" haven't been paying our income to the government since the beginning of the year. The wealthy paying higher tax rates may be paying that percentage of their income to the government, but regular working families often don't pay a dime of income taxes, and even factoring in social security taxes, they pay off their tax obligations within a month or two, at latest.

This analysis by the Center on Budget and Policy Priorities lacerates the whole Tax Freedom Day rhetoric. The most obvious is the difference in tax rates between working families and the wealthy:

The report that the Tax Foundation has just released claims that the average American paid 22.2 percent of income in federal taxes in 2001. Yet the CBO analysis finds that the middle fifth of households paid 15.2 percent of their income in taxes that year.
Only the wealthiest paid anything like the Tax Foundation numbers for "Tax Freedom Day."

But there are really deceptive games behind their calculations. The biggest whopper is that they count capital gains taxes as taxes paid, but don't include the INCOME from increases in the value of investments in their income calculations.

They also include in these calculations of taxes paid items like premiums paid for Medicare-- yet strangely, when conservatives propose increases user fees or Medicare premiums, they call this a "spending cut", not a tax increase.

So ignore the whole Tax Freedom Day nonsense. It's just more lies from the starboard side of the political spectrum.

Posted by Nathan at April 11, 2004 11:29 AM