“Average” tax cut is a meaningless notion

It is an old and somewhat silly saying, but it applies: When your head is in the oven and your feet are in the fridge, on average you feel okay. Similarly, the Bush Administration’s uses the word “average” to say that 91 million taxpayers will receive, on average, a tax cut of $1,126. As the CBPP pointed out this week, averages utterly elide the issue:

  • The average tax cut in 2003 for households in the middle of the income spectrum (i.e., the middle fifth of households) will be $217, or less than one-fifth the total advertised by the Administration.

  • 83 percent of households will get less than the average amount cited by the Administration.

  • Some 53 percent of U.S. households — or 74 million households — will receive a tax cut of $100 or less.  This includes 50 million households that will receive no tax cut whatsoever.

Don’t get me wrong. I’m generally in favor of enlightened tax cuts, but the Administration does itself no favors by dodging distributional issues.