Monday, April 9, 2012

Beware the Adjective

My tax return showed up in my bank account this weekend, which is always nice (even if it was my money to begin with).  It brought to mind a few months back when people were big on the "50% of American households don't pay any federal income tax" statistic.

Now, that was an interesting statistic, and one that no doubt caused a lot of emotion.  I mean, heck, this is my percent breakdown of taxes paid for 2011 (excluding sales-linked taxes...that retrospective would have taken all week):

Edit: My labels got a little hinky, so assume federal tax = federal income tax and state tax = state income tax.  So yes, life would have been a great deal cheaper if I could have avoided federal income tax.

Anyway, I was thinking about this when I stumbled across this chart:

Along with this post explaining that many of the households not paying taxes were actually older workers.  Interesting, but economic data is so easily manipulated it doesn't normally catch my attention (example: no where on this graph does it indicate how large each population slice is...I'm sure there are far fewer people represented at the end of the graph than at the middle).

Anyway, what this jogged my memory about was how this statistic got quoted by many at the time.  Rick Warren was one of the more notable examples, but many people made the mistake of stating "half of all Americans pay no taxes".  The "Federal Income" part of that phrase makes a huge difference.

I'm certainly not saying that everyone who misquotes a stat does so intentionally.  Many times it's innocent, and thus it's something to keep in mind when you hear a crazy statistic from anything but the source.  Politicians and other public speakers do just flat out miss words sometimes.  There are some pretty horrifying stats out there that become much more reasonable when the correct modifiers are put back in their place.  


  1. It is equivalent to people who call New Hampshire the "no tax" state. What that statement really means is that there is no tax on earned income and no tax on sales of items (non-meals). We have a tax on unearned income (interest and dividends tax), the meals tax is higher than most states, there is a Business Enterprise Tax, the property tax is outrageous and I could go on. Words do have meanings and people miss that critical point all too often.

    1. I'd love to see this breakdown for your taxes...too bad there's not an easy way to calculate sales tax. Actually I think it'd be interesting to see it for a variety of people across states, etc.

  2. I've seen those numbers somewhere, and NH is low, but not lowest. I'll see what "overall tax burden by state" gets me on Bing.

    People might mind less if it's local, but I don't think they would mind Enormously Less. And I suspect if you just mention "gas taxes" or in NH "Rooms & Meals tax," people would get the idea. Plus FICA and hidden additions to your rent, BTW. The 50%/Federal is dramatic enough as it is. It doesn't need to be added to.

    1. I was surprised how much I learned just making that graph. It definitely struck me how sneaky taxes are....I routinely get the most annoyed by my excise tax bill every year, but that's because it shows up in one lump sum.

      I took a look around the google and found out that my nearly 50% in federal taxes comes despite being in the 11th most taxed state.