Lies, Damned Lies and Statistics

In another lame effort to blast Bob Ehrlich, the children running the Maryland Democratic Party reveal that they are either willfully distorting the truth or blindingly ignorant about economics. I guess when you’re swimming in corporate money it pays to be both deceptive and ignorant.

Isaac Salazar writes on the party’s blog:

Of course it’s a myth that half of working Americans don’t pay federal taxes – the vast majority of workers pay at least some federal tax, most notably payroll taxes – but it’s true that, due largely to tax cuts contained in President Obama’s stimulus package, a significant portion of middle and lower income Americans do not owe federal income tax for 2009 and hence have a low federal tax burden.

The best of lies use a kernel of truth to spin a larger deception and that is exactly what Salazar has done. Yes it is true that the 40% of Americans who don’t pay federal income taxes are subject to the payroll tax. However, what the Salazar didn’t tell you is that the “tax cuts” in the stimulus are refundable, meaning that the people who pay no taxes get a check from Uncle Sam—paid for by the folks who actually do pay federal income taxes. That isn’t a “tax cut” it’s a redistribution of wealth.

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Furthermore, as the Wall Street Journal notes, when you combine the totality of ALL of Obama’s “tax cuts” the refundable amount transferred to low income workers exceeds their payroll tax levies. Again, this is a wealth transfer, not a middle class tax cut.

WSJ also noted another catch Salazar isn’t too keen on disclosing—for obvious reasons. Obama’s tax cuts are phased out as income rises, meaning that low income Americans who work hard and earn more are hit with a big marginal tax rate increase as their income rises.

But such deception is to be expected from a party that imposed the largest tax increase in state history, including a 20% sales tax increase, which disproportionately affects the poor.

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