Many journalists swarmed like hornets after the first
presidential debate, their stingers aimed at a Bob Dole soundbite
statistic. Maybe the numbers seemed implausible to them. Maybe they
deemed Dole's private source for the statistic less reliable than
comparable government sources. Or, just maybe, they were simply
expressing their kneejerk bias against conservative economic
principles.
Whatever the reason, the day after the first debate, several
media outlets challenged Dole's Tax Foundation inspired statement
that the average American household today pays more in taxes than it
does for food, clothing, and housing combined.
In a frontpage story, for example, the Los Angeles Times hinted
at a Dole blunder. The article related that while Dole relied on a
conservative think tank for his data, "the Bureau of Labor
Statistics' consumer expenditure survey found that the average
household spent more than twice as much on food, clothing and
shelter as on taxes in 1994." Eric Engberg of CBS News was more
forthright in his analysis. Asserting that "some [of Dole's] facts
got mangled," Engberg stated the GOP nominee's claim was an
"exaggeration" that could be disproved by the Bureau of Labor
Statistics (BLS) study.
Ironically, while these and other news organizations used the
opportunity to show how Dole, in the words of the Times, was
"tweaking" the truth to his advantage, it appears the media were
doing the same thing. By accepting the BLS data as unimpeachable,
the reporters made an error of such magnitude that, if committed by
either of the presidential candidates, it would have made frontpage
news nationwide.
The problem is the BLS survey greatly understates taxes paid.
While the national survey is considered an accurate portrayal of
consumer expenditures, in the tax category the report only covers
individual income taxes (federal, state, and local), real and
personal property taxes, and an amorphous category called "other
taxes."
Among the most recognizable omissions from the survey: Social
Security taxes paid. While the BLS survey doesn't have a category
for such payments, the Tax Foundation estimates that the average
household will pay about $1,100 for the employee's share of payroll
taxes alone this year. Similarly, the BLS survey doesn't
specifically report sales and excise taxes paid. In the only entry
in the survey in which these taxes might fit ("other taxes"),
households earning between $50,000 and $69,000 are said to pay $77
annually. By comparison, based on Bureau of Economic Analysis (BEA)
data, the Tax Foundation estimates that households in that income
group average over $2,000 in federal, state, and local sales and
excise taxes paid.
Also, the BLS survey results altogether ignore the effect of
indirect levies, such as business taxes, on American society. Unlike
the survey, the Tax Foundation incorporates all taxes at all levels
of government in its annual analysis, including those levies hidden
from taxpayers. For example, business taxes (including corporate
income taxes) must be borne by the general population somehow,
whether through lower wages for workers, lower shareholder dividends
(which harms anyone with a pension fund), or higher consumer prices.
So, while the typical American won't ever see a tax bill for these
taxes, they're certainly paid by everyone.
In total, the BLS survey relied on by so many reporters to knock
Bob Dole's argument for lower taxes understates total taxes paid by
more than four times, according to the Tax Foundation's analysis
based on BEA data.
The flaw here isn't the BLS survey. It lies in the way the
survey's results were used by reporters. The search for truth by the
media is undeniably critical, especially during an election year.
Unfortunately, the public is hurt when reporters, to prove a point,
choose to accept certain economic premises without verifying their
legitimacy.
Stephen Gold is associate director and communications director of
the Tax Foundation.