In its latest critique of Tax Freedom Day, the Center on Budget and Policy Priorities (CBPP) charges that the TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Foundation’s announcement of the nation’s total tax burden is not representative of the burden borne by the “middle-income” taxpayer. By middle-income, the CBPP means those taxpayers in the statistical middle of all taxpayers – those earning between roughly $26,000 and $43,000 in 2004.
In one sense, this argument is a red herring. It presumes that taxpayers in the middle-fifth of the income scale are representative of the remaining 80 percent of Americans, which the Tax Foundation’s analysis does not. In contrast, our economists believe that the best measure of the nation’s overall tax burden is to include all Americans, not just those in the middle one-fifth.
But this does raise a question: Who are the taxpayers in the middle-fifth? By focusing public attention on this group, the CBPP would like us to believe that these taxpayers are the stereotypical American family comprised of a father, mother, and two children. However, this impression could not be further from the truth.
As the chart below shows, the majority of the taxpayers in the so-called middle-class, or middle-fifth, are actually single – either single individuals or single parents with children. Indeed, only about 1 in 5 married couples are found in this income group. The vast majority of married couples are found in the top two income groups.
Thus, the taxpayers in the statistical middle of the income scale look more like the cast from the popular TV program “Friends,” not the traditional married couple with two children. It is unlikely that most Americans would think of the characters Phoebe and Joey as representing middle America. Yet that is the real “median taxpayer” the CBPP is putting forward as the model of the typical American family.
Because there are so many single taxpayers in the lower income groups, it is not surprising that the median income for all taxpayers was roughly $32,000 in 2004, but was $68,000 for the median two-earner family – the Ozzie and Harriet of today’s economy.
By focusing the media’s attention only on the taxes paid by the predominately single individuals in the middle-fifth, CBPP is essentially saying that the tax burden borne by those working couples is not important to the national debate over tax burdens.
In an area as complicated as tax policy, it is a mistake to ascribe the attributes of a few taxpayers to Americans as a whole. Even our “traditional” family of a husband, a wife, and two children is not truly representative. According to the 2002 Panel Study of Income Dynamics, only 9.3 percent of all family units had these exact attributes.
America is simply too diverse to be represented by such a narrow definition of the “middle-class” as the one asserted by the CBPP.
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