A Stitch in Haste

I always try to pass these along when they cross my aggregator:

Average Effective Tax Rates, 2008

Effective Tax Shares, 2008
There are many moving parts to the federal tax apparatus between now and 2011 — many of which can be invoked (i.e., distorted) by the campaigns. For example:

The tax cuts passed since 2001 have reduced the overall progressivity of the federal tax system with the notable exception of the stimulus package passed in early 2008. The tax rebates in the stimulus legislation are in effect for 2008 only, however, and so the progressivity of the tax system will decline markedly in 2009 and 2010 as effective tax rates rise substantially for lower and moderate-income households. At the same time, effective rates will fall for high-income households as the repeal of the limitations on itemized deductions and personal exemptions and the complete repeal of the estate tax become fully phased in. Finally, almost all provisions of the 2001–06 tax cuts are set to expire at the end of 2010. Barring legislative action, effective tax rates will therefore rise across the income spectrum in 2011. The largest increases will be in the upper income classes and so the tax system will become more progressive in 2011 unless the tax cuts are made permanent.

The point is that there will be enough isolated elements that will have such-and-such effect on somebody's tax rate or somebody else's revenue projections that there will be no shortage of talking points for both Republicans and Democrats this election season.

And don't forget — as PAYGO-constrained Democrats such as Charlie Rangel wish they could — about the Alternative Minimum tax:

Another driving force behind the changing distribution of the federal tax burden between 2008 and 2010 is the continued expansion of the alternative minimum tax (AMT). Under current law, the AMT will affect an estimated 26.9 million taxpayers in 2008 and 33.4 million in 2010, while AMT revenue is projected to grow from $87.7 billion to $124 billion over that period.

Ironically, the super-rich tend not to pay any AMT, since their ordinary federal income tax is already so high. (Remember, the AMT is not a surcharge, but merely a tax floor — one that most of the super-rich are already well above.) This, like the Social Security and Medicare crises, is not new news.

In any case, there are three enduring takeaways from this latest analysis:

1. Federal tax rates have long been, are now, and will continue to be obscenely progressive.
2. Federal tax shares contradict the class warfare propaganda that "the rich don't pay their fair share."
3. The working poor are burdened not by federal income taxes but by Social Security taxes.

It is simply impossible to reconcile Barack Obama's increasingly hostile leftist rhetoric, and his (disingenuously labeled) "little bit more" policy proposals — with those three irrefutable axioms. While McCain practically boasts about his lack of understanding of economics altogether.

Should be quite a campaign.