He wanted me to be shocked  and outraged, but I laughed.  Those numbers, he repeated the numbers over and over again with only slight juxtapositions, had no effect.  I looked to the man at the other podium to clarify it, set down the truth, but he was no help, simply repeating something about “fuzzy math.” Thus went the first of this election’s presidential debates.

The numbers that Al Gore was trying so very hard to use to tap into the class-envy of me and ever other American watching was that around half of George W. Bush’s tax cut would go to the wealthiest 1% of the population. Indeed, it sounds bad and moreover it’s most likely true since Governor Bush did nothing to deny it, rather citing some tangential counter statistics his advisers had prepared and railing against Gore’s “fuzzy math.” Gore probably calculated that may Americans would be angered by this, many Americans would think this is unfair, and many Americans would vote for him because of it. In other words, Gore calculated that many Americans have absolutely no idea how their own tax system works.

The fact that lets the air out of this charge is not one of those obscure or codes or conditions that those handling large sums of money hire many an accountant to find, but rather the simple basis of how tax rates are calculated.  The federal income tax is progressives, which means the percent of your income you pay goes up as your income does, as opposed to a flat tax, where everybody is taxed the same percent. Thus, under a flat tax, the amount paid is equal to income times tax rate, while the amount paid under a progressive tax is equal to initial tax rate times income times the progressive factor of the tax, which is dependent upon income.  To make this more concrete, let’s compare a 10% flat rate and with 9% progressive rate with a progressive change of 1% per every $10,000 a person makes. If a person makes $10,000, they pay $1000 under either system. Next, consider a person who makes $110,000 a year, under the flat tax, they pay $11,000 in taxes, but under the progressive tax they pay over twice as much, $22,200.  Next, let’s consider the case of an individual who rakes in $510,000, paying $51,100 under the fat tax, but an amazing $306,000 under the progressive tax, over half his income.  Finally, consider the lucky individual who makes $910,000.  Under the flat tax, he has to hand over only $91,000, but under the described progressive tax, he loses every last penny of the nearly one million dollars he made.

Of course the USA’s progressive taxes are implemented by increments rather than a direct relationship, with the highest increment being 39.8%, but the effect of progressive taxation on how much each income turns over to the government is still evident. Thus, Al Gore’s charge looses a little impact when one considers that under a progressive system, the richest elements pay a huge proportion of the taxes.  In our imaginary taxation system, one person making $910,000 pays as much taxes as 910 people making $10,000.  In the USA in 1998, individuals making over $200,000 a year accounted for only 1.65% of the tax payers, yet paid 39.85%, an “about” away from half, of the taxes according to IRS data.  So it would seem that the favoritism for the rich Gore implies disappears when a close look is taken at the numbers. Why do the rich deserve a tax break? Simple, they pay the taxes.

In fact, the Bush plan is expected to actually raise the amount of the tax burden that falls upon the $200,000+ group slightly.  Although the top tax rate will be cut from 39.6% to 33%, their incomes will be responsible for 40.9% of the taxes paid compared with the current estimate of 39.1%, a system which is accomplished by giving proportionally larger tax cuts to all the lower brackets.

While we are at it, it makes perfect sense to put another Gore attack into perspective.  Gore says that Bush’s tax cut plan offers nothing for about 20 million Americans. Of course he forgets to mention that these are about 20 million Americans who DON’T pay income taxes, and thus won’t be affected by income tax cuts. Of course, the federal government takes its chunk out in Social Security and Medicare taxes, but those are entitlements, which the taxpayer (in theory more so than in practice) gets back as their Social Security and Medicare benefits after retirement. Of course, these poor, overtaxed individuals that Gore criticizes Bush for neglecting will be happy to also pay more as Medicare is expanded to cover prescription drugs.
Gore’s tax plan, however, is quite a different beast. Strangely enough, Al Gore plans to cut $500 billion in income taxes for the middle class without even cutting a single tax rate. Gore’s tax cuts come in the form of new deductions for certain behaviors. Thus, someone who spends their money in the manner Al Gore thinks they should stands to save a great deal, whereas a person who thinks their money is better invested elsewhere doesn’t benefit from Gore’s plan. This is a new variation of an old trick which has already caused the exponential expansion of federal control over state and local governments. In these cases, the federal government will give a grant to the other government or institution, but only if that government agrees to abide by a set of federal codes. Similarly, the deductions Gore offers are contingent upon behaviors on the part of the individual. In fact, you need to have children to capitalize on most of Gore’s tax cuts, as they involve college and day care. So if you have kids in daycare, are saving for or paying for their college, buy your own health insurance, are a stay home parent, need to care for your sick grandma, and have an energy efficient house, car, and refrigerator, you stand to benefit greatly from Al Gore’s tax plan, and if you don’t fit Mr. Gore’s model American mold, tough luck.

So as you weigh your choices this November, do a little research. It may be tedious, boring, and even downright disgusting, but it’s better that leaving yourself at the mercy of the selective information that the campaigns decide to let out. Remember: The numbers never lie, just the politicians.

(Note:  Although I was able to decipher Bush’s tax plan, for which Math 116 is an appropriate prereq, I only got a 5/6 on Gore’s Just for Kid’s Quiz.  I didn’t know what Tipper’s real first name was.  Bush’s Youth Zone is much better, actually having some educational content about the electoral process formatted as a baseball analogy.)