This is a response to a previous Facebook comment exchange regarding the accuracy of this tax plan calculator presented by Vox.com and the Tax Policy Center. (http://www.vox.com/policy-and-politics/2016/3/25/11293258/tax-plan-calculator-2016)
I purposely avoided getting into questions of the direct accuracy of the calculator itself, instead previously arguing only the interpretive context. But since you mention it, there are some extremely serious concerns on that front as it affects the end-user’s interpretation of the data. The first thing that comes to mind is the Tax Policy Center’s decision to use “expanded cash income” as a fundamental aspect of their calculations. The Tax Policy Center’s definition of “expanded cash income” is as follows (taken from http://www.taxpolicycenter.org/UploadedPDF/412871-measuring-income.pdf):
“TPC’s income measure, which we call “expanded cash income” (ECI), is a broad measure of pre-tax income. We use it both to rank tax units in distribution tables and to calculate effective tax rates. ECI equals federal adjusted gross income (AGI) plus various income sources that are either excluded or deducted from AGI, including 1) excluded health, retirement, and other employee fringe benefits, 2) tax-exempt interest, 3) non-taxable [<- that's interesting] pension and retirement income, 4) above-the-line adjustments, 5) cash and cash-like transfer payments, and 6) the employer share [<- that's even more interesting] of payroll taxes and imputed corporate income tax liability."
The TPC chose to use an extremely broad measure, combining four taxes to get the final result the calcualtor reports to us: 1) your income tax, 2) payroll taxes that fund Social Security and Medicare, *including* your employer's share, 3) excise taxes on cigarettes, alcohol, airplane tickets and other products, 4) corporate income taxes. They describe these in their calculator Q and A (http://www.vox.com/policy-and-politics/2016/3/25/11306130/tax-calculator-q-and-a).
They justify including corporate income taxes and employer-share payroll tax with the premise of that tax burden being passed onto the worker in the form of lower wages. The actual direct impact upon wages of those two is a whole other discussion (the latter of which is on much firmer ground than the former), but even were I to yield the point entirely, that would only be reflected in future, potential wage determinations. It does not magically combine and transform itself into a sudden addition on your annual tax return, which is what the calculator output suggests.
They even directly admit that in the Q and A: "RW: Workers would not immediately bear the cost of payroll taxes paid by employers, because wages do not adjust instantaneously. Over time, however, wages and other benefits would increase less or perhaps go down." Let me repeat the takeaway there: Would increase less, or…perhaps…go down. Interesting, that.
Here's another dubious item buried in the Q and A: "For example, ECI includes tax-exempt interest on municipal bonds, all income earned by Americans working outside the US, health insurance premiums paid by employers, and employer contributions to workers' retirement plans." Let me repeat the takeaway there: health insurance premiums paid by employers. Why is that significant? Because Sanders' proposed single-payer healthcare plan eliminates health insurance premiums currently paid by employers. Instead, it shifts the employer's contribution to the single-payer system to the payroll tax. But the calculator includes employers' existing health insurance premium overhead AND the new higher payroll tax of Sanders' plan, and then it bundles that into the purported "what you'll owe" calculation.
Their tax calculator Q and A is pretty fascinating. Because here's one more dubious issue with its calculations, presented in their own words: "Q: This model doesn't show savings from universal health care and lower interest rates on education loans. What gives? — RW: The Tax Policy Center's model does not include spending programs and thus can only show the effects of tax changes. The model does not indicate the effects of changes in government spending that reduce what households have to pay for health insurance or other consumption." Takeaway: does not indicate effects of changes in government spending that reduce what households have to pay. That was the main point in my original post. Whatever you’re currently paying for health insurance is a personal budget amount which is largely mitigated under the Sanders healthcare/tax plan.
Now, you can make ideological arguments about big government versus small government or socialist versus libertarian ideals. But that's entirely beside the point, as it relates to the calculator's accuracy. Sanders' tax plan is based on raising taxes in order to fund government spending programs intended to distribute most of those higher taxes back downwards for the economic benefit of the taxpayers, collectively. In that case, you can not accurately estimate the economic effect on the taxpayer by looking at only taxes and not government spending any more than you can by only looking at the economic benefits of those government programs without considering the effect of their related taxes. Again, you can make arguments about the relative efficacy of government programs, but it's not relevant to the question at hand, because whether the point goes to my position or to yours, you can't just ignore it in these calculations.
Which brings me to a very important concluding discussion. Everything up to this point has been about the inherent inaccuracies in the calculation model of this tax calculator. Now I'm going to talk about why they're there.
[I consider my argument complete at this point with regard to hard facts related to the calculator accuracy; the following is more speculative political opinion.]
The conflict of our argument, naturally enough, falls into traditionally partisan ideological divides. But the constructed bias built into this calculator, and its resultant inaccuracies, actually has nothing to do with Republicans versus Democrats. The impetus behind this calculator is about the nomination fight between Bernie Sanders and Hillary Clinton.
Obviously, you may have noticed that the calculator output for Hillary Clinton is very close to no increase, and the output for Bernie Sanders is a massive increase. You may also have noticed that this calculator is brought to you by Vox and the Tax Policy Center.
Now, the Tax Policy Center is relatively non-partisan, as far as I'm aware, but it's worth mentioning that it was founded in 2002 by tax specialists who served in the Ronald Reagan, George H.W. Bush, and Bill Clinton administrations. Interesting, but hardly even suggestive. It is funded by (well, all of these: http://taxpolicycenter.org/aboutus/funders.cfm but I'll focus on the ones singled out on TPC's wikipedia page under the Funding section) "individuals, corporations, trade groups, and foundations including the Ford Foundation, the Bill and Melinda Gates Foundation, and the Rockefeller Foundation," according to https://en.wikipedia.org/wiki/Tax_Policy_Center.
So let's break it down. Firstly, there's the bit about corporations and trade groups. I trust we're all aware that Sanders’ political positions are generally not going to be described as pro-corporate, pro-trade. Now, again, this (and what I'm about to say) is all just barely suggestive. Circumstantial and non-definitive in the extreme. I'm only painting a picture of the possible influences at work with regard to the TPC.
Next up we have the Ford Foundation. Big money on the left. I'm not going to give it too much weight, because these connections are admittedly tenuous given the natural interconnectedness of political operatives, but let's at least acknowledge them before we dismiss them. We'll start with the Center for American Progress, a liberal think tank in DC that has risen in prominence during the years of the Obama administration, with "a rapidly revolving door between it and the administration" (https://en.wikipedia.org/wiki/Center_for_American_Progress). Pretty standard stuff for DC political think tanks (though interesting when you remember Hillary was Secretary of State in that administration).
But here's were the fun begins. CAP was founded by John Podesta. You might recognize that name. He is the Chairman of the 2016 Hillary Clinton presidential campaign. CAP is pretty secretive about its donors, but included in known 2015 donors are the Ford Foundation and the Bill and Melinda Gates Foundation. Even without the Podesta connection, CAP is pretty firmly in Clinton's camp (https://theintercept.com/2015/11/05/leaked-emails-from-pro-clinton-group-reveal-censorship-of-staff-on-israel-aipac-pandering-warped-militarism/).
Or, if you like, we can just take a shortcut through the Clinton Foundation, whose contributors include the Ford Foundation ($1-5 million), the Bill and Melinda Gates Foundation ($25 million+), and the Rockefeller Foundation ($10-25 million). Again, I will stress, this is purely circumstantial. Almost all of this can be countered with, "of course major liberal organizations are going to associate, in funding, joint projects, staffing."
But, do you see the picture I'm painting of the interconnected establishment? The Tax Policy Center is pretty heavy with Clinton associations. Like I said, before we dismiss it all, let's acknowledge it.
I’ve taken care to repeatedly qualify the circumstantial nature of any conclusions of mine with regard to inherent bias due to TPC ties to the existing political establishment. I mention it because I noticed it, but I’ll give them the benefit of the doubt and say that I think policy bias in TPC analysis is existent, but likely more passive and incidental than anything actively manipulative, despite the skewed nature of this particular effort.
The kicker to all that, though, is the Vox angle. This is an instance where I think bias is on display in an active manipulation of disseminated media, motivated by a pro-Clinton/anti-Sanders political agenda. “This simple calculator tells you how each Presidential candidate’s tax plan affects you.” Given the inflated and inaccurate report of Sanders’ tax plan’s effect, I believe it would be extremely naive to not have some serious questions about the motivations behind a methodology which so obviously reveals a heavy thumb on the scale.
Media bias against Sanders, in favor of Clinton, has been a hallmark of this election season. I’m hardly the first to make note of this. See (http://decisiondata.org/news/political-media-blackouts-president-2016/) or (http://blog.infegy.com/the-media-bias-against-bernie-sanders-examined-in-4-charts) or (http://www.attn.com/stories/6869/robert-reich-facebook-post-on-bernie-sanders-media-bias) or (http://billmoyers.com/story/the-escalating-media-assault-on-bernie-sanders/) or (http://www.huffingtonpost.com/philip-morton/bernie-sanders-laughing-a_b_7969754.html) or (http://www.huffingtonpost.com/seth-abramson/hillary-clintons-support-_b_9579544.html).
I believe this Vox/TPC tax plan calculator to be more of the same, and unfortunately, it’s about par for the course for Vox.com.
The editor-in-chief of Vox is Ezra Klein. In 2007, Ezra Klein was a proponent of the simplicity and benefit of a single-payer healthcare system. Being a healthcare reform expert is basically what put him on the map. Yet, judging by 2016 Ezra Klein, you'd never know it. (https://www.jacobinmag.com/2016/01/vox-bernie-sanders-single-payer-ezra-klein-matt-yglesias/). Read that article in full. The flip-flop of Ezra Klein and fellow Vox contributor Matt Yglesias is suggestive of other considerations beyond the relative merits of Sanders’ single-payer plan.
Whether you agree with Sanders tax/healthcare plans or not, I can't help but notice a trend of antipathy towards them in Vox articles, which are, in turn, rebutted by articles which are seemingly more thorough. Consider (http://www.vox.com/2016/1/22/10814798/bernie-sanders-tax-rates) answered by (http://datatitian.com/why-voxs-numbers-for-bernie-sanderss-tax-plans-are-so-wrong/).
And then consider this Vox article: (http://www.vox.com/2016/1/28/10858644/bernie-sanders-kenneth-thorpe-single-payer) which makes much of an analysis by Kenneth Thorpe, a professor and Chair of the Department of Health Policy & Management in the Rollins School of Public Health of Emory University. Unfortunately, Thorpe's analysis (http://www.scribd.com/doc/296831690/Kenneth-Thorpe-s-analysis-of-Bernie-Sanders-s-single-payer-proposal#scribd), which has been widely quoted or referenced, including by Hillary Clinton herself, has been countered by multiple sources, including Gerald Friedman, an economics professor at the University of Massachusetts at Amherst (http://dollarsandsense.org/blog/2016/02/friedman-responds-to-thorpe.html), as well as by David Himmelstein and Steffie Woolhandler, professors of health policy and management at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School (http://www.huffingtonpost.com/david-himmelstein/kenneth-thorpe-bernie-sanders-single-payer_b_9113192.html), who critique his analysis while pointing out that it contradicts Thorpe's own previous publications on the subject, such as (http://www.pnhp.org/sites/default/files/Thorpe%20booklet.pdf) and (http://www.mffh.org/mm/files/ShowMe3a.pdf).
Not that such a thing should affect a respected professor's analyses, but Kenneth Thorpe's resume also includes a 1993-1995 stint as Deputy Assistant Secretary at the Department of Health and Human Services, where "he had a central role in coordinating President Clinton's health care reform proposals." (https://en.wikipedia.org/wiki/Kenneth_E._Thorpe).
It’s almost as if some of these harsh critics of single-payer health care and the tax plan that pays for it only became so once it was the policy position of the opposition to the establishment’s preferred candidate.
Maybe I'm just a cynical and suspicious person.