Monday, April 19, 2010

Lies, Damn Lies, and Statistics

Note for Facebookies: These Notes are auto-copied from my really lame, largely ignored blog. Please feel free to crumble up this webpage and throw it in a trash can.

I first heard this phrase used in reference to baseball, when someone was saying there were three kinds of lies - lies, damn lies, and statistics. The implication being that a statistic is nothing more than data which can be interpreted in a myriad of ways. The data itself is fact, but the conclusion drawn from an analysis of the data is simply mere opinion.

This makes sense to me. Statistics are often used to support arguments or contrasting points of views. But every so often numbers show their true nature, and can be very revealing and informative.

There has been a lot of outrage / angst / grousing about the direction of our Government lately, and the way they conduct business. If you poll 100 people about the way things are going, you would probably get 102 opinions. I'm leaving that alone - but one thing stood out for me today as I was conducting my morning readings.

Conservatives and "Tea Party-ers" have been protesting, meeting, gathering and one of the common threads I've picked up is that taxes are now too high, the government is taxing everyone to death, blah blah blah. Ok, I got it, you think taxes are too high. So I decided to do a tiny bit of research on my Google Machine.

Did you know that since 1979 through 2006 the effective federal income tax rate on ALL households has been between 19.8% and 23%, with the VAST majority of those years between 20.4% and 22.6%? 2007 numbers are supposed to come out soon, but they are expected to be in the low end of that range based on actual tax rates. If you break the data down into quintiles (20% ranges) then 80% of U.S. citizens pay an even lower percentage than previously mentioned.

I didn't know that. I would've thought by all the jumping up and down it had been all over the map. Note this is "effective" tax rate data - actual tax rates are all over the map but the rules covering what is taxable and what isn't, and what you can deduct have been just as all over the place.

I'm not going to entertain whether or not 21% is too much, not enough, or just the right amount of tax. I'm sure 100 people would give 102 opinions. I will say I've LONG been a fan of doing with a progressive income tax and replacing it with a national sales tax. If you applied a 20% sales tax (in lieu of an income tax) to the 2009 Domestic Gross Product you would not have a Federal Budget deficit this year (at least, the last I checked, it was real close). It's a "fair" tax, meaning everyone pays the same rate. In reality, the rate could be lower and you'd still do far better than now.

So where's my Well-Formed Thought? This time around, I'm passing. I see the data, I draw my own conclusions, and so should you. Don't listen to what you see on TV or hear on the radio (often presented in such a way as to elicit outrage or angst), or even read on the Internet and take it as fact - it's probably a lie, a damn, or a statistic.

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