Another Case of Well-Meaning People Not Understanding Math and Fairness

For years we have heard accusations of unfairness when the wealthy receiving greater dollar amounts in tax breaks when an across-the-board easing of taxes occurs.  It’s somehow discriminatory when people paying six figures in taxes receive several thousand dollars in tax breaks just because it’s more than the rebates received by those who pay only a few hundred dollars in the first place.

A recent business article shows that these irrational conclusions are alive and well.  The author was trying to make the point that upward mobility out of poorer neighborhoods is harder in part due to an unfair tax structure.  Changes are deemed necessary because of the following:

 “Some of this will require money, so funding priorities must also change.  As of 2014, U.S. households with an income of $200,000 or more received an annual subsidy (largely through the tax deduction on mortgage interest) of more than $6,000.  Households with an income below $20,000 received less than $1,500.  And only a quarter of the households that qualify for housing vouchers actually receive them.”1

It’s agreed that it’s an unfortunate waste of available opportunities if 3/4 of eligible households do not receive what the law can provide them.

But to claim an inequality regarding the data is misleading.  The wealthy receive 3% or less of their income when filing for the mortgage deduction.  Lower income families receive 7%.  Should the tax structure be skewed further in the favor of lower incomes so that they would receive the same $6,000?  This would be at least 30% of their income and undoubtedly more than the total they paid in the first place.

Let’s focus on making sure vouchers and other forms of assistance actually help people escape undesirable living conditions.  Just don’t use math disingenuously to paint a picture of unfairness where it doesn’t exist.

 

1 – “Helping Americans Move Out of Poverty, Bloomberg Businessweek ,May 23-29, 2016 issue.

 

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