Ponder this as you read on : You, me and Bill Gates are in an elevator. Bill Gates pushes the Up button and says “Great news … Thanks to Erik Paulsen, all of us are getting a tax cut … in fact, I can say with certainty that the average person in this elevator will be getting a multi-million dollar tax cut. Yes, all praise Erik Paulsen”
Yeah, it’s all about the choice of words … “average”, “typical”, “mean household income”, “median household income”, “super-rich”, “middle-class”.
Words that politicians use … and sometimes mislead.
Could you imagine Erik Paulsen professing that his greatest accomplishment was to enact a tax cut for the super-rich ?
Of course, not, but how about claiming that his tax cut will help families and hard-working taxpayers ?
Words that have distinct meaning to a statistician but confusing to anyone who is not a #MathGuy.
The MathGuy knows the difference between “mean” and “median” but a politician may not want to confuse anyone, so he will use “average” and hope nobody questions what he means.
Yep, things to ponder … now, on to some recent news headlines and that the much-hyped PaulsenTaxCut that has been getting a lot of bad press.
July 18 Bloomberg reports
Tax Cut Hasn’t Done Anything for Workers
Wages were supposed to rise. Instead, they’ve fallen.
the tax reform hasn’t yet resulted in appreciably higher wages for American workers. Real average hourly compensation actually fell in the first quarter after the tax reform was passed
Since the tax cuts passed, companies have been using buybacks to return record amounts of cash to shareholders — more than $700 billion in the first two quarters. That naturally raises the possibility that companies don’t have good projects to invest in. If companies pass their tax windfall on to shareholders, those investors can choose to react by increasing consumption — meaning more of society’s resources go to the wealthy.
Huge, immediate gains for wealthy shareholders combined with tepid increases in business investment and decreases in real wages don’t paint a flattering picture of the tax cut’s impact so far.
Another news item that Congressman Paulsen didn’t tweet was that The Heritage Foundation has released a report of how much the typical taxpayer in any congressional district benefits from the Paulsen Tax Cuts.
Since Congress passed tax reform, American families have seen bigger paychecks and more opportunity. The map below shows how average households in your state and district will benefit. These benefits could be greater if made permanent or disappear if repealed.
Average Tax Cut, 2018
MN07 $ 937
MN08 $ 933
Increase in Take-Home Pay over 10 Years
And how does that compare to Erik Paulsen’s Mar 13, 2018 OpEd
Paulsen: Tax reform already is seeing economic benefits
The plan is a win for American families and hard-working taxpayers across the nation. Among its many benefits, the plan lowers individual tax rates so people can keep more of their hard-earned money.
The average family of four making $73,000 will see a tax cut of $2,059 — money they can use to save and invest for their future.
Whoa … Congressman Paulsen projected a “$2,059” tax cut … that’s higher than others have projected (including what was stated in a recent US Chamber of Commerce commercial pleading for Erik Paulsen to be re-elected.)
Well, that’s because Congressman Paulsen is a #MathGuy.
Defining income can be distorted by a few very high household incomes.
In Minnesota, the mean household income is $75,432.
The median income is much less at $58,476.
Hence, when Bill Gates joins you in the elevator.
For Congressman Paulsen tax reform is working … because his donors are on the elevator going up.
For the country, with a national debt that will grow by over $1 Trillion (after breaking the $21 Trillion mark on March 15, 2018), the elevator is going down.
Sadly, Congressman Paulsen decided to focus on “tax cuts“ instead of “tax fairness“ for his “tax reform” legislation.
Yep, “some” households are benefiting from the #PaulsenTaxCuts, but many are wondering when they will see the improvement in wages and what happened to this guy who promised voters to give “Washington a math lesson”.