Bush Tax Cuts and Tax Freedom Day
Kathy forwarded me this excellent analysis by Jay Bryant (with help from the Washington Times) of the recent Newsweek story on the Bush tax cuts and Tax Freedom Day. Highly recommended reading.
So let me summarize. Newsweek identified three families, one of which made $32,400 in 2003, the second $73,411 and the third $194,000. Each of the three was quoted, bitching about how they hadn’t gotten anything out of the Bush tax cuts. But the Times analysis shows that the single-income-mom low income family actually benefited $1,000, or 45% from the cuts, while the middle income folks saved $2,800 (44%) and the high income earners, who told Newsweek all the tax cut benefits must have gone to the “major corporations who are downsizing and outsourcing,” received at least $6,899 in Bush tax reductions. [...]
In 2004, Tax Freedom Day is today, April 11, Easter Sunday. If you’re the average American, every dollar you’ve earned so far this year goes to pay your taxes. Starting Monday, you can keep what you earn. And you know what? Tax Freedom Day, 2004, is the earliest it has been since 1967.
The Heritage foundation provides a handy tax calculator with which you can find out how much you saved when you paid taxes last year (and it will be updated in a few days to calculate how much you saved this year). With no kids, last year we saved $726.
It would be interesting to see how much Tax Freedom Day had been moved for each of the families. This would be a different comparison than the standard one where - gee whiz - the ones with the biggest income get the biggest dollar cuts. Seen from the point of view of Tax Freedom Day, it is those with the least income who are best off to start out with, and you would probably make more people see the fairness in moving the Tax Freedom Day more for those who have it late than for those who have it early.
Fictitious example:
Family A earns 30000, and pays 16.7% tax
Family B earns 100000, and pays 50% tax
Then comes an overall tax cut of 5%
Seen from the dollar vantage point,
Family A gains 1500 dollars, while
Family B gains 5000 dollars.
Seen from the TFD bantage point,
Family A has its TFD moved from 1st of March to 12th of February, while
Family B has its TFD moved from 1st of July to 12th of May.