A Suggested Tax Calculator Tool
By Arnold Kling
In a comment on this post, Daniel Kuehn explains what is going on with the new government tax receipt tool. It simply allocates Social Security taxes to OASDI and Medicare taxes to Medicare. What is left to allocate are income taxes, to other programs.
For most people, the income tax has to look like quite a bargain. According to the calculator, a family of four with $80,000 in income pays $3683 in taxes, and in return they get all this great stuff. What’s not to like? It’s great for people who are not in the top 10 percent of the income distribution.
What this suggests to me is a different tool. How about a tool that would show how much the government could afford if everybody paid the same amount of income taxes as you do? Suppose we have 150 million households. Based on the hypothetical household that pays $3683 in taxes, that gives roughly $550 billion for the government to spend on everything other than Social Security and Medicare. That’s even stingier than Rand Paul’s budget. A lot stingier.
The tool I have in mind would spit out, “On everything other than Social Security and Medicare, the government spends ___ times what it could afford to if yours was the typical household paying income taxes.” In the example, the blank would be filled in with a number close to four.
I think that would be an educational tool.