Factcheck.org recently tried to debunk John McCain’s estimate of tax compliance, but ended up on the wrong side of the facts.
- McCain’s estimate of the cost of individual 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. compliance is correct, or at least much closer than Factcheck’s.
McCain said $140 billion of American families’ income were taken in tax compliance costs. The Tax Foundation’s Dec. 2005 report on individual tax compliance (not including businesses) put the cost at $110 billion. The 2007 figure will probably come pretty close to the $140 billion that McCain said it was.
- “Income” is a much broader concept than “cash outlays.”
McCain didn’t say “spending” or “cash outlay.” He said “income.” Factcheck construes income to mean only cash, then cites statistics about cash outlays to make McCain’s estimate look ridiculous. To economists, time is money, or at least money forgone. But Factcheck conveyed to the public that it’s not, that if a person sits at a kitchen table filling out tax forms for 50 hours, that’s no cost to him, no dent in his income. McCain was right.
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