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Thursday, May 30, 2013

Statistical Apples and Oranges Yield Strange Fruit

The first link, below, is to May 29, 2013, report of by Congressional Budget Office addressing the Distribution of Major Tax Expenditures across 5 levels of tax payers. It is 31 pages, fairly complex reading, and certainly proves that the current Individual Tax System is not simple:

http://tinyurl.com/ojzg2e3

The second link, below, is to May 30, 2013, Accounting Today article on the report. It makes extensive quotes by congressional folk. It is shorter and seemingly 'cherry-picks' the report to make points supporting existing biases.

http://tinyurl.com/ofwxe29

The two graphs on the cover page of the CBO report show clear distinction between presenting in total dollars and presenting in percentages of income. I didn't discover any reference to the second graph in the Accounting Today article. It does point out that preferential tax rates on capital gains and dividends benefit high income folk, while the earned income credit benefits lower income folk.

Those two 'tax expenditures' are apples and oranges. Deductions and exclusions from a graduated tax rate system is necessarily going to impact more dollars for those who pay the most taxes.

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