Not your ordinary averages (1/24)

By Bryan Keefer

Despite mounting criticism, President Bush and his political allies continue to exaggerate the benefits of the administration's proposed tax cut package and the number of people it would benefit, in large part by using misleading definitions of the term "average."

The administration has been promoting a skewed picture of the benefit a typical family could expect to receive since the plan was first introduced. Most prominent has been their contentions that, as Bush put it in an appearance on Wednesday, "A family of four with an income of $40,000 will receive a 96-percent tax cut. . . . Ninety-two million Americans will keep an average of $1,083 more of their own money when this tax plan goes through."

While those statistics have become a staple of Bush's stump speech and Fleischer's press briefings, they are deceptive, as I demonstrated in a previous column. The numbers are technically true, but because higher-income taxpayers would see the majority of the benefits of the Bush cuts, such sweeping "averages" distort what middle-income taxpayers would receive, as the left-leaning but well-respected Center on Budget and Policy Priorities (CBPP) has pointed out. The center-left Urban-Brookings Tax Policy Center calculates that a family in the middle of the income distribution, making between $21,350 and $37,835, would have their taxes cut by an average of $256. [8K PDF] Bush's example of a family making $40,000 that would receive a "96 percent tax cut" (from $1,178 per year to $45, according to another Bush speech) has been carefully chosen: the family benefits disproportionately relative to others from an increase in the child tax credit and the elimination of the so-called "marriage penalty".

Bush's latest talking points are deceptive in the same way, using averages that distort the benefits to taxpayers in question. The President has claimed on several occasions (most recently on Wednesday) that "Twenty-three million small business owners will receive an average tax cut of $2,042 under this plan." Yet, as Paul Krugman pointed out in an an column on Tuesday, this claim exaggerates the plan's benefits to middle-income small businesses. As CBPP has noted, 79 percent of tax filers reporting small business income will receive less than Bush's "average" figure, and 52 percent would receive less than $500.

Likewise, Bush has claimed that "The average savings for somebody 65 years and older, if we get rid of the double taxation on dividends, will be $936 per year per tax return in America." This is another misleading use of the arithmetic mean, arrived at by dividing the total amount of the dividend tax cut by the number of seniors filing tax returns (rather than the more descriptive median figure). As CBPP notes, "Nearly 43 percent of the benefits of the dividend exemption that would accrue to elderly individuals would flow to the 2.5 percent of elderly people with incomes exceeding $200,000."

Vice President Dick Cheney has been equally deceptive on the proposed elimination of the tax on dividends. In a speech before the US Chamber of Commerce, Cheney claimed that "54 million Americans own stocks that pay dividends." Yet as Scott Hodge of the right-leaning Tax Foundation points out, only 34.1 million filers claimed dividend income on their tax returns last year. Even the White House's own talking points note that "Roughly 35 million American households receive dividend income that is taxable". Cheney is apparently including multiple members of those households in his statistic, a tactic which exaggerates the benefits of the cut.

Finally, in an interview on NBC's Meet the Press on January 12, Senate Majority Leader Bill Frist stretched Bush's averages even further. Frist claimed that the tax cut would "result in 92 million people receiving a $1,000 check this year". This is a myth. There is no proposal to advance the benefits of the cut to taxpayers in the form of checks, as was done with the 2001 tax cut. Moreover, since most taxpayers would receive less than $1,000, Frist's claim is doubly misleading.

These tactics are deeply troubling. As with the frequent suggestions that opponents of their plan are engaging in "class warfare", it is clear that the administration is using deception and aggressive rhetoric to short-circuit debate over its tax package.

Update 2/3/03: The above estimates of the benefits of the tax cut to middle-income taxpayers have been changed to reflect the Urban-Brookings Tax Policy Center's revised estimates. An earlier version of this article relied on the Center's preliminary estimates, which were released January 7, 2003.

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1/24/2003 02:12:21 PM EST |

A Journal of spin (1/22)

By Brendan Nyhan

[Note to readers: This post has been edited to correct two major errors -- the original version is archived at http://www.spinsanity.org/journal-original.html with full corrections appended. We apologize for the mistakes.]

The Wall Street Journal editorial page is at it again, trying to obscure crucial facts relevant to the President's Supreme Court brief in the University of Michigan case.

In describing the Michigan case, the Journal pushed this red herring (WSJ subscription required):

Michigan uses a point system to rate applicants. How many points you receive depends on what color you are (20 bonus points for being black or Hispanic or Native American). It's that simple, and offensive.

Actually, it's not "that simple." The system rates applicants on a 150 point scale, so how many points you receive does not depend solely on "what color you are" but a whole host of factors. As the Detroit Free Press puts it, "[a]cademic factors account for 110 points, including up to 80 points for grade-point average, and up to 12 points for standardized test scores (ACT/SAT). Nonacademic factors account for up to 40 points. Those include being a member of an underrepresented minority (20 points for African-Americans, Hispanics and American Indians)."

As the Daily Howler's Bob Somerby has shown, many commentators have made similarly deceptive statements, arguing that being a member of certain racial and ethnic groups is worth twenty points in the Michigan application process, while a perfect SAT score is worth only twelve. While this statement is technically accurate, it is constructed to create a false dichotomy while omitting a number of other factors that the point system considers.

A good editorial informs in the course of making a forceful argument. Unfortunately, the Journal is often all too willing to dispense with such niceties.

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1/22/2003 07:51:07 AM EST |

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