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TAX FOUNDATION FEATURES Novemer 1996 Volume 40, Number 1 0 Economic Expansion Leads to Higher o n Median One- and Two-Earner American Families

With increased prosperity comes — in- Charts 1 and 2 .) The continuing increase in creased taxes. The Tax Foundation's annual tax burden has occurred despite the fact tha t analysis of the typical American family's tax Congress has not enacted any major tax legisla - burden shows overall tax levels increasing fo r tion targeting individuals since 1993 . Rather , the third year in a row, from 38 .1 percent of most of the increased burden has stemme d income in 1995 to 38.4 percent in 1996 . (See from our system . Senior Economist Arthur P . Hall's Special Chart 1 : Taxes as Percentage of Income for the Median Report, "Economic Expansion Leads to Highe r One- and Two-Income Families, 1955-199 6 Taxes on Median One- and Two-Earner Ameri- can Families," notes that the 1996 tax-burde n oho • One Incom e Ao ,e level rivals the highest ever . For a dual-incom e 40 .0%_ a Two Income family, the only years in which total taxes as percent of income were higher than 38 .4 per- cent were in the years 1980-1982 . In those years, respectively, the shares were 38 .6 per- cent, 40.6 percent, and 39.6 percent. In terms of inflation-adjusted dollars, the $21,883 total tax burden that a median-incom e dual-earner family will bear this year will b e the highest ever. Much of the increase in re - cent years, says Dr . Hall, reflects the progres- sive nature of the present tax system. In addi- tion, as a comparison of Charts 2 and 3 demon - strates, two other tax trends are responsible for the jump in taxes since 1955 : The upwar d trend in state and local taxation and the in- crease in the federal used to fun d social insurance schemes . State and local taxes combined have, as a share of income, gro w about five percentage points from 1955 to 1996. Federal payroll taxes (individual share 1975 1985 1990 1996e Median Family continued on page 6 Source Tax Foundation

Fundamental Principles of Rep. Phil Crane (R-Illinois)

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59th Annual Conference and r Explores "Does Social Security Reform Have Future? "

The issue of tax reform does no t movement to reform the nation's en- for Research on the Economics of Taxa- appear politically difficult for the major- titlement system, sponsoring H .R. tion will tackle the tough issues — ex- ity of public policymakers . With publi c 3758, a bill that would amend Social ploring what our federal legislators are distrust of the current system running Security to provide for personal retire- up against to solve the Social Security high, and with no clear link in the pub- ment savings accounts . crisis . Commentary will be provide d lic mind between taxes and societal Brent Bahler, communications di - by Mark Weinberger, Attorney-at-Law , benefits, policymakers have in recen t rector of Citizens for a Sound Washington Counsel, P .C., and forme r years been able to focus more on wha t Economy, will follow Mr. Smith, t o Chief of Staff to the President's 199 4 kinds of changes to implement rathe r present the results of a national survey Bipartisan Commission on Entitlemen t than whether tax reform should occur . on the issue . and Tax Reform . Don't, however, expect a similar Three afternoon sessions then fol- consensus in the coming debate over low: Social Security reform . Politicians can't Session One : "An Examination o f even agree on how to define Social Se- the Need for Reform and the Macro 1996 Annual Dinner curity. Is it a federal pension system , Economic Benefits of Reform ." Michael or merely another tax with no actual Tanner, Director of Health and Welfare Award Recipients connection to the transfer payments to Studies at the Cato Institute, will be th e U.S. Rep. Philip Crane (R-I11.) will senior citizens? featured presenter, focusing his re - receive the Tax Foundation's 1996 Pub- One thing that most — and yet, no t marks on the serious financial prob- lic Sector Distin- all — policymakers agree on : As a trust lems that the system faces in the com- guished Service fund, Social Security faces critical finan - ing years, then addressing the eco- Award at the 59th cial problems in the next few decades . nomic advances that could be mad e Annual Dinner in The Social Security Administration's an- through reform . Dr. Arthur P. Hall, City nual report indicates that the baby Senior Economist at the Tax Founda- November 21 . boom generation will drive the syste m tion, will rely on his own research to Rep . Crane, who into bankruptcy if changes are not formally com - serves as Vice made. At the same time, there is a ment on Mr . Chairman of th e growing comprehension that the sys- Tanner's address . House Ways & tem offers participants a terrible retur n Session Two : Means Commit- on their contributions. "An Overview of Rep.Phil Crane tee, was amon g With this fiscal threat in mind, an d the Chilean Re - the first members the recognition of a growing form Experi- of Congress t o intergenerational schism in American ence." Dr. propose indexation of the personal ex- society, the Tax Foundation's 1996 an- Ricardo Zabala of emption and the standard deduction o n nual conference in will Citibank, N.A., in federal income taxes, and was instru- examine the question, "Does Social Se- Santiago, Chile, Dr. Ricardo Zabala mental in having this included in th e curity Reform will relate his Economic Recovery Tax Act of 1981 . Have a Future?" country's experi- Dr. Norman Ture, founder and The answer is b y ence with privatization of the syste m President of the no means obvious . of social insurance . An expert on pen- Institute for Re- The confer- sion fund management, Dr . Zabal a search on the Eco- ence is scheduled served as Executive Vice President for nomics of Taxa- for the afternoo n Research and Corporate Planning for tion (IRET), will of Thursday, No- Administradora de Fondos de be honored with vember 21, in th e Pensiones, Chile's largest pension fun d the 1996 Tax Waldorf-Astoria management company, prior to joinin g Policy Service Hotel. Citibank . Dr. John Goodman, Presi- Award at the An- As keynote Rep. Nick Smith dent of the National Center for Polic y nual Dinner . As speaker, U.S. Analysis and a prolific analyst on the Under Secretary Dr. Norman Ture Represenative issue of privatization, will formally of Treasury in th e Nick Smith (R-Michigan) will kick off comment on the address . Reagan Adminis - the conference at 12 :15 p.m., providing Session Three : "An In-Depth Dis- tration in 1981, Dr . Ture helped craft an overview of where Congress stands cussion of the Choices That Must B e and implement the Economic Recovery on the issue of Social Security reform . Made in Crafting Reform Legislation. " Tax Act of 1981, one of the largest ta x Rep . Smith has been a leader in the Presenter Stephen Entin of the Institute cuts in the history of the country . 3

Recap 1996 Media Coverage Shows Si of Tax Foundation Public Education Effort s

The Tax Foundation was every- Eight-Hour Day — the amount of tim e A few weeks later, however, the where this election year — in daily an d it takes during an eight-hour work clay Dole campaign created some controver- weekly newspapers, national and inter- to earn enough to pay your tax bill . sy when it used Tax Foundation tax national news magazines, publica- Dozens of daily newspapers, from USA burden comparisons between 1993 an d tions, newswire reports, and on televi- Today to , from 1996 to try to show the impact of Presi- sion and radio stations nationwide . the Arizona Republic to the Arkansas dent Clinton's tax increase . Journalists "If consistent media coverage is a Democrat Gazette, made Tax Freedom at CNN and The New York Times , sign of strength for public polic y Day the topic of their lead editorials . A among other major news outlets, calle d groups, then the Tax Foundation mus t USA Today "USA Snapshot" graph fea- the Foundation to verify the numbers , be one of the strongest groups pound tured the Tax Bite in the Eight-Hou r and discovered that while Senato r for pound in the country," observe d Day, and a London Economist maga- Dole's use of the numbers was techical- Foundation Executive Director an d Chief Economist J .D . Foster. Tax Foundation research was cen- The Washington Post (Front Page), May 8, 199 6 tral to hundreds and hundreds of new s stories in 1996, some of which em - broiled the nonpartisan group in heate d political disputes between candidates . Both Republican and Democratic candi- dates turned to Foundation work to support their campaign premises . The year began with a flurry of publicity about tax reform, fueled b y the initial volleys of election season . The Tax Foundation's analyses forme d the basis of numerous articles and graphs. When the New York Times ex- plored "How the Would Work , For You and For Them" (Jan . 21), the Tax Foundation's scenario for four hy- pothetical families was used as the pri- mary source for the story's graphics . Similarly, the Los Angeles Daily News featured the Foundation's comparison of four households in a full-page graph- I At news conference outside the IRS, Senate Majority Leade r Freedom Day" — the day the average American has made ic spread . When the Chicago Tribun e Robert J . Dole talks about repeal of the gasoline tax on "Tax enough to pay the year's taxes, the Tax Foundation says . contrasted the various tax reform plan s on the table, it turned to the Tax Foun- dation research for the basis of its own zine article focused on Tax Freedom ly correct, the campaign's conclusion s article. And, in a lead editorial colum n Day as "one of the more colourful cal- were not those the Foundation would titled "The Flat Tax : `Nutty' It's Not" o n culations" of the overall U .S. tax burden. have arrived at . (Economic growth had the Wall Street.journal editorial pages , In numerous political campaigns in more to do with the tax increases than Foundation Executive Director and 1996, including the presidential cam- the `93 tax hike, the Foundation con- Chief Economist J .D. Foster's own opin- paign, tax and budget debates revolved cluded.) ion was featured alongside the likes o f around Tax Foundation analyses . Early More controversy arose in the me- Milton Friedman's, James Buchanan's , in the election season, the Dole cam- dia when, in the first presidential de - and 's . paign started using the Foundation' s bate, the Republican candidate use d As always, the Foundation's annua l and median-incom e Tax Foundation data showing that th e Tax Freedom Day announcement fea- family data to support its call for chang - average American now pays more i n tured prominently in tax-filing storie s es in the tax system . For example, the taxes than for food, clothing, and hous- around the country in mid-April . Tom campaign staged a "celebration" on Tax ing combined . Some members of th e Herman's weekly front-page Wall Street Freedom Day outside the Internal Reve - media, including the Los Angeles Times Journal Tax Report offered readers a nue Service in the nation's capital (see and CBS News, challenged these figure s teaser a few days before the announce- photo, above) . with other government data . ment, unveiling the Tax Bite in the Media Coverage continued on page 8 4

As a former history professor, I 1994 dollars) nearly $82,000 exemp- Fundamental have always looked to the endurin g tion amount. ideas of our Founding Fathers for guid- Of course, the 1913 tax code di d Principles of ance in making public policy . One of not last long . The outbreak of World my favorites is the declaration "the War I led Congress to lower the ex- Tax Reform power to tax is the power to destroy " emption amounts, increase the lowest made by Daniel Webster and Joh n rate to six percent and the highest rat e Marshall in the case McCulloch v. to 77 percent . During World War II , the top went to 94 percen t By Rep. Phil Crane (R-Illinois) Maryland. Such a strong statement by two prominent men who shaped our and withholding was implemented . government should have been bette r More recently, President Reagan low- heeded by our nation's subsequent ered the top rate to 28 percent, until leaders . Instead, Congress and the President Clinton increased it again t o President have seemed intent on test- nearly 40 percent in 1993. ing the accuracy of the remark . Not only has Congress and th e The U.S. Internal Revenue Code President kept Americans guessing on (the Code) is the modern-day manifes- tax rates, but computing your taxes ha s tation of the power to destroy . Our become much more complicated . Half tax system does harm to the principl e of the individual filers now have ac- of sound money management . The countants or lawyers prepare their re- Code further injures the capitalist sys- turns. This is in spite of congressional tem on which our nation's economy i s efforts to "simplify" the Code . The based. cost of complying with federal s is impossible to calculate, but estimate s range from $75 billion $300 billion. Mobil Oil Corporation executives re- The U.S Internal Revenue Code (th e cently explained to our House Ways & Means Committee that they paid $1 0 Code) is the modern-day manifestation million just to prepare their 6,300-page 1993 tax return. of the power to destroy. Our tax sys- Although Congress has attempted tem does harm to the principle of sound to make taxes "fair" by making the Code progressive, it is in fact the money management. The Code further progressivity that has added to the complexity and inequity of the Code . injures the capitalist system on which While I agree that one's ability to pay our nation's economy is based. ought to be considered with regard t o one's tax burden, progressivity, as practiced by Washington social engi- neers, is more appropriately describe d as a vendetta to "soak the rich ." What appears to be compassion is actually The Code has significantly degen- base envy. Those intent on making th e erated since its inception . In 1913 , rich "pay their fair share," despite their only the most wealthy Americans paid regular tinkering with tax rates and de- income taxes. In fact, if the 1913 in- ductions, also cannot define the poin t come tax were in place today, it would at which the rich and businesses are be comparatively quite generous . As paying their fair share of the tax bur- Raymond Keating of the Small Busines s den. According to the Internal Rev- Survival Foundation has demonstrated, enue Service, in 1994, the top 25 per- in 1994 dollars, a married coupl e cent of taxpayers paid 79 .5 percent o f would pay a one percent tax on their federal income taxes . This 25 percent income over $60,000. Actually, those includes those with annual incomes of earning up to nearly $300,000 would $43,000 or more . In my suburban Chi- pay only a one percent tax . The seven cago district, $43,000 a year is middle rate system (one percent to seven per- class, but apparently Washington be- cent) would tax only incomes ove r lieves they are the rich who must b e FRONT & $7.5 million at the top tax rate . On the soaked. CENTER business side, in 1909 the corporate This constant tinkering with fed- tax rate was one percent, with a (in eral taxes, instead of improving th e 5

Not only has Congress and th e President kept Americans guessing on tax rates, but computing your taxes has become much more complicated. Half of the individual filers now have accountants o r lawyers prepare their returns.

Code, has actually injured America' s Unfortunately, the political will for the most painful and visible manne r prosperity . such a monumental change in tax possible so that Americans are cogni- Americans who save their mone y policy has been absent since th e zant of the real cost of their govern- are penalized by two, three, four o r Reagan Administration . It took a Re- ment. five layers of taxes . Interest earned in publican majority in the House to resur- Business taxes, which are cost s a savings account is taxed. Dividends rect the will to contemplate serious passed on to consumers, must be sig- earned from stocks are taxed . When consideration of comprehensive tax nificantly reduced . I fear that th e the stock is sold for a gain, the capita l reform. implementation of a gains tax takes a share . However, th e Overhauling the tax code is not fo r will lead, as it has in other countries, t o most immoral tax is that on one's estate . the fainthearted . But modest change s an intrusive value-added tax . Thus, if If a taxpayer attempts to pass along a to the Code will not address its funda- businesses must be taxed, I prefer a family business or, even worse, has th e mental deficiencies . The Nationa l low flat tax on profits after expenses . audacity to die, the government penal- Commission on Economic Growth and Finally, the debate on tax reform izes the family . As the Tax Foundation Tax Reform recommended that a ne w has moved beyond whether we shoul d previously mentioned, American fami- tax code should meet the principles o f to when and how we should imple- lies are not paying more in federal , stability, fairness, neutrality, simplicity, ment a new tax code . While we must state, and local taxes than they spend visibility, and should provided incen- thoroughly study any prospective re - on food, clothing, and shelter combined. tives to work, save, and invest. I be- placement, we must not let debate s American businesses are under lieve the flat tax best meets that de- between proponents of the various re - attack from innumerable taxes and tax scription . placement systems become so divisive regulations . Armies of accountant s Since any new tax system we cre- so as to prevent us from reaching ou r and attorneys do nothing but defend ate may be undone by a future Con- goal of eliminating the current system American businesses from the onslaught . gress, we must start with working t o and enacting comprehensive tax re- The corporate is virtually stabilize the tax system. To do this I form. While I believe that the flat tax incomprehensible with its varying de- propose a provision requiring that any has political and policy advantages over preciation schedules and the double- increases in rates must have the vote of all the other plans, it is impossible to jeopardy . at least two-thirds of Congress . A low know the replacement on which Con- As a nation founded in direct op - flat single-rate tax, with a poverty line gress might eventually agree . How- position to despotic taxes, we must level exemption, indexed to inflation, ever, if it embodies the principles o f scrap our oppressive Code. Beginning fairly applies the tax to all Americans . fairness, simplicity, neutrality, visibility, in the late 1970s and on into the early An elimination of all other deductions and stability, then we will have heede d 1980s, I was among those first callin g will keep rates low and keep social en- the lesson of Webster and Marshall . for comprehensive tax reform . In gineering out of the Code, maintainin g 1982, I introduced one of the first flat neutrality. Such simplicity will allow tax proposals . The Crane Tax taxpayers to keep the money that wen t The Tax Foundation invites a national called for a 10 percent flat tax . I ex- to their accountants. leader to provide a "Front and Center " plained that if God asks for no more Furthermore, I believe that we column each month in Tax Features. The than 10 percent, then Caesar shoul d should eliminate the practice of with- views expressed in these columns are no t ask for no more . holding. Taxes should be collected in necessarily those of the Tax Foundation .

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Median Family To a large extent, as Charts 3 and in the marketplace .) Continued from page 1 4 show, this growth in tax burdens has The families represented in Chart 2 crowded out other important parts of adhere to the Census Bureau's broa d only) as a share of total family income the family budget, such as saving. definition of family - two or more re - have grown about 6 .2 percentage (Other items, such as food, are propor- points from 1955 to 1996 . tionally smaller due to efficiency gains Median Family continued on page 8

Chart 2: Representative Budget of Two- Chart 3: Representative Budget of Two- Income Family, 1956 Income Family, 1996 e

Savin g 6.3%

State/Loca l Taxes 7.8%

Transportation Transportatio n 8.3% 6 Recreation .4% Recreation Clothing Clothin g 3.8% 4.7 % 7.2% 3.7% Source : Tax Foundation . Source : Tax Foundation

Chart 4: Taxes and the American Family (Single and Dual Income Earners), 1955-199 6

1955 1975 1985 1996e Single Dual Single Dual Single Dual Single Dual Median Family Income $4,069 $5,250 $11,568 $16,058 $21,190 $33,411 $28,447 $53,09 1 Federal Income Tax 366 513 1,177 1,918 1,790 3,853 2,098 5,139 Payroll Taxes : Employee Portion 79 84 656 825 1,449 2,261 2,111 3,899 Employer Portion 79 84 656 825 1,449 2,261 2,111 3,899 Other Federal Taxes 315 407 582 808 791 1,247 1,234 2,303 Total Federal Taxes 839 1,088 3,072 4,376 5,479 9,623 7,554 15,24 1 Total State/Local Taxes 304 392 1,380 1,915 2,522 3,977 3,559 6,643 Total Taxes 1,143 1,480 4,452 6,291 8,001 13,600 11,113 21,88 3 After-Tax Incom e 3,005 3,854 7,773 10,592 14,638 22,072 19,444 35,10 7

Total Taxes as a Percent of Incom e 27 .6% 27.7% 36.4% 37 .3% 35.4% 38.1% 36 .4% 38 .4%

Inflation-Adjusted Total Taxes (1996$) 5,148 6,665 11,563 16,340 11,206 19,047 11,113 21,883

Note : The burden of federal and state corporate income taxes are included . After-tax income does not deduct employer's share of payrol l taxes because the burden of the payroll tax is assumed to reduce income before the "gross" seen on paychecks . "Total taxes as a percent o f income" is calculated by adding the employer's share of the payroll tax to the median family income . Source : Tax Foundation . 7

Medicare Smiles and they thought they would win . They may recall to mind the story about th e Political Wiles lady and the tiger :

Historians looking back on the A smiling young lady from Niger, Liked to ride on the back of a tiger 1996 presidential election may deduc e J.D. Foste r . the following truism to guide politi- Executive Directo r She went for a ride cians evermore : Never demagogue a & Chief Economist And came back inside, problem you have to solve after you With the smile on the face of the tiger . win. The subject, of course, is Medicare . As wrote in Medicare's impending collapse ha s How do Republicans keep thei r The Washington Post, "The Democrats been predicted for years. But the elder- smiles while passing legislation? Total were merciless in their exploitation of ly are a potent political force not to b e opposition is not an option becaus e Medicare", and, further, "Nor was there trifled with, which is why, of course , the Democrats are the minority party . any secrecy about the dishonesty of the Mediscare tactics were so effective In the Senate, for example, at least 1 5 the Democratic campaign on Medicare." for President Clinton, particularly i n Republicans will have to support refor m Even as the President's own hea d states like Florida and Arizona . Now, to overcome the inevitable filibusters, of the Health Care Financing Adminis- having held off a solution for so long , and that assumes the President can ge t tration was describing the dire finan- delay is no longer an option . all 45 Democrats to agree to heavy re- cial straights of the Federal Hospital In- Republicans should work with the straint in Medicare growth spending . surance Trust Fund, President Clinto n Democrats in crafting long-term refor m The President will have to support and some congressional campaigns of Medicare . To be in government is t o a bill to get congressional Democrats t o were hammering away at the simple govern. However, given their experi- go along. Even Vice President Gore , theme that Republicans were a threat ence in the last campaign, it will hard- who is certainly laying his plans to suc- to the Medicare program and that only ly be surprising if the Republicans le t ceed the President, is inevitably tied t o the Democrats could be trusted wit h the President and his congressional al- the outcome and all its attendant politi- its preservation . lies do all the hard work, take all th e cal fallout. The Vice President will ob- Politically, it worked. The Presi- tough votes, and suffer all the political viously be pushing for the swiftest pos- dent was returned to the White Hous e heat for the changes that must b e sible resolution to give him more tim e and Democrats whittled down the Re- made . Disdainful of bipartisan commis- to effect damage control . publican margin in the House . The sions and intolerant of tax increases, the So, everybody is in the game , campaign of inactivity was victorious . Republicans seem inclined to a hard, pas- whether they like it or not because, in Now, it's time to face facts . sive, and perhaps avenging attitude. the end, Medicare reform must happen . For example, at the end of 1996 This attitude, however, may be ex- As Winston Churchill once wrote , the Trust Fund will have about $12 1 actly what the President needs to turn "Things do not get better by being left billion in net "assets ." (Of course, the tables in his favor. Republicans are alone. Unless they are adjusted, they there are no assets in the Trust Fund , waiting to see what kinds of spendin g explode with a shattering detonation . " but let's not complicate matters too restraint the President will propose . In planning their strategy, Republi- much .) At the beginning of 2001, the But what if he proposes a modest slow- cans should review their own recen t Board of Trustees estimate the Trus t down in spending combined with a history, because the politics of Medi- Fund will be about $53 billion in th e modest increase in the payroll tax . Re- care reform parallel the political land- hole. By 2006, the hole will be about a publicans will oppose the tax increase , scape following the 1994 election . At half trillion dollars . to be sure . But then who's in the way that time, Republicans thought they The problem, of course, is tha t of reform? And, rather than the elderly held a good hand, particularly on th e Medicare spending is increasing about turning on the President for proposin g budget . While they largely succeeded i n 8 per cent per year . To stabilize the a spending slowdown, they will tur n resetting , they clearly failed Trust Fund in the black will require on the Republicans for proposing a big- politically, taking most of the blame and slowing the growth rate to about 4 pe r ger slowdown. The President will be little of the credit for what followed . cent per year if no initial cuts ar e proposing a little pain for everyone Once again the Republicans thin k made, or to about 3 per cent per yea r while the Republicans will be insistin g they have the President in a tough if $10 billion can be cut immediately . on greater pain for a politically power- spot. And once again he may turn th e Translation: This is a big problem in the ful special interest . In the context of a tables if the Republicans fail to devise a federal budget, but it is not intractable . fiscal crisis where the President call s strategy to carry them to the final bell . Where Medicare has become in - on us all to work together, the Republi- It will indeed be interesting to see who tractable in the past is in the politics . cans may find themselves losing a game wears the smile when the tiger returns . 8 1996 Media Coverage Shows Tax Foundation Impact on Outreach Media Coverage continued from page 3 TAX FEATURES © • A ranking of cities based on so-calle d The Foundation went public to vindicat e Tax Features© (ISSN 0883 "vacation taxes" made the news in The New - Senator Dole's use of the statistic, with rebut- 1335) is published monthly York Times, the Cincinnati Enquirer, the by the Tax Foundation, a tals appearing in an op-ed in n The Washingto n Tampa Tribune, and several dozen other ma- independent 501(c)(3) Times and in articles in a number of othe r organization chartered i n jor dailies . newspapers . the District of Columbia . • Nationally syndicated columnists — suc h Annual subscriptions to th e In the midst of the political campaign, Tax as James Glassman (Washington Post News newsletter are $15 . Foundation reviews of both the Dole and Clin- Service), Doug Bandow (Copley News Ser- ton tax proposals formed the basis of man y Co-Chairman, Policy Council vice), Scott Burns (Universal Press Syndicate) , Dominic A . Tarantino news analyses across the country . s Investor and Kathy Kristof (Los Angeles Times Syndi- Business Daily, for example, featured the re - Co-Chairman, Policy Council cate) — relied on basic Tax Foundation re - James C . Miller II I search in several front-page articles. search for numerous columns during the year, Also, with Republican calls for "ending th e Chairman, Progra m as did syndicated graphic artists at such outlet s I.R.S . as we know it," the Tax Foundation too Committee k as Gannett and the Associated Press . E . Noél Harwert h a less rhetorical approach to the problem of Vice Chairman, Program tax reform. In an August 19 editorial column Committee in The New York Times, Executive Directo r Joseph Luby J.D. Foster observed that "attacking the I .R.S. Typical Family's Tax Executive Director misses the point . Whose fault is it that the and Chief Economis t agency is asked to administer a code that is in- Burden Hovers at 38 .4% J .D. Foste r comprehensible . . . . (W)hose responsibility is it Median Family continued from page 6 Administrator and Director, to supervise the agency?" While noting the IRS Foundation Developmen t C . Gaye Bennet t can do a better job, Dr . Foster concluded , lated people living in the same residence . Ap- " . ..it's up to the President and Congress to se e proximately 90 percent of the families repre- Tax Counsel that it does . " sented in Dr Lynda K . Walke r . Hall's report are married couples Tax Foundation research made news i n with an average of about 1 .3 children per fam- Director, Corporate non-campaign-related areas, also . Just a few of ily. Development Renée Nowland the more prominently featured Tax Foundation To calculate the total tax burden, Dr. Hall citations: computed federal income taxes and payrol l Editor an d • Two Social Security studies, examining taxes directly off the family income Associate Director/ . The bur- Communications Directo r the federal retirement system from an investmen t den of all other taxes (the array of federal ex- Stephen Gol d perspective, captured the attention of a numbe r cise taxes and duties, the federal es- of columnists, including Newsweek's Jane Bry- tate and , the federal corporate incom e Tax Foundatio n (202) 783-2760 Tel ant Quinn, syndicated columnist Doug Ban- tax; and the array of state and local income (202) 942-7675 Fax dow, and USA Today editorial writers. taxes, sales taxes, taxes, property taxes , http:www .taxfoundation .org • An update of the Foundation's analysis of along with the array of miscellaneous state and taxfnd@intr .net the costs of complying with the tax system — local levies and fees) were calculated indirectly unveiled in Senior Economist Arthur Hall's tes- using formulas derived from national averages . timony to Congress — made it into The Wash- The Tax Foundation imputes to individuals ington Post, among other major newspapers . the burden of all taxes paid by business .

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