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Linda McMahon's Flawed Tax "Plan"

Linda McMahon is promoting a tax "plan" that is naive in its simplicity, misleading in its basic assumptions, and flawed in its math.

Linda McMahon is asking the public to vote for her based in part on her "plan" to cut middle class taxes and save the average family in Connecticut $6,000 per year.  Yet her math is flawed, her definition of "middle class" represents nearly twice the income of the median Connecticut household, and her "plan" doesn't save the average Connecticut family one cent.  Here's the extent of McMahon's naive and misleading "plan", in a nutshell:  Cut the current 25% federal tax bracket to 15%.

Any sixth-grader can come up with the simple idea of cutting tax rates.  The tougher questions - the effect on the federal deficit of lost revenue; the cost to the taxpayer, and particularly the middle class taxpayer, in terms of lost services; the probability that a junior senator in a party averse to compromise could actually implement such a drastic tax cut at the federal level, etc. - are ignored, ostensibly because they require some thought. 

Furthermore, McMahon bases her projected savings on a family of four making $125,000 per year and calls it a "middle class" tax cut.  Yet the median household income in Connecticut is just $67,740, according to the latest Census numbers, and a household income of $125,000 is somewhere around the top 13% nationally. This is middle class?  Most importantly, the 25% tax bracket - the very tax bracket McMahon proposes to cut - is projected to be between $70,700 and $142,700 for married couples filing jointly. As the lower bound of this tax bracket is already higher than the median household income in Connecticut, the average family would in fact save exactly nothing under McMahon's "plan". 

Lastly, the "plan" demonstrates that McMahon's positions are either poorly thought out or - worse - deliberately misleading.  To illustrate this, let's accept her out-of-touch assumption that $125,000 is middle class and test the accuracy of the supposed $6,000 in savings for such a hypothetical family of four.  Assuming the parents are married and filing taxes jointly, they would benefit from two basic deductions on their federal return:  Connecticut state income taxes (about $5,975 for this hypothetical family) and the standard federal deduction (projected to be $11,900 in 2012 for married filing jointly).   Ignoring all other deductions, that leaves our family with federal taxable income of $107,125.  The portion of their income currently subject to the 25% tax rate would be the amount above $70,700; do the math at 15% instead, and the total savings add up $3,642, not $6,000.  Any further deductions (such as mortgage interest, real estate and automobile taxes, IRA contributions, etc.) would reduce their projected savings even further.

To summarize, the cornerstone of Linda McMahon's campaign is a naively simplistic tax "plan" that won't save the average Connecticut family one penny; she is basing her heavily promoted "plan" on highly misleading assumptions; and either McMahon doesn't understand the most basic aspects of the tax code, or else she is incapable of performing basic math. 

This is who we want to represent us in Washington?

feo mesics July 23, 2012 at 08:29 pm
What does the "wizard" Roy Abramovitz have to say about this?
Kendall L Owott July 23, 2012 at 09:37 pm
Geoff, this was well-written. I will read the math again carefully, but I want to make another point. The ability to get a tax bill passed is a group effort in Washington. There are layers of seniority and ego to wade through and lobbyists to be vetted for truth, justice and the American way. Linda McMahon has no experience at this game and it will take years to build up credibility. Assignments to truly agricultural committees dealing with soybean meal subsidies will be offered, not political hot potato agriculture like US tax policy.
Many independent voters are disgusted with Congress and the White House and have been for the last 2 generations, especially. Chris Shays will bring Congressional experience to the table and will be more effective than Linda McMahon. He, too, has beliefs that many Republicans oppose. People who have met Ms. McMahon and Mr. Shays will have their own impression of who will be a more effective Senator.
sebastian dangerfield July 23, 2012 at 10:09 pm
One other question, geoff, if you dont mind
Why is it ok for Obama to make the threshold 250k to be called middle class, while you are clearly irritated by Linda McMahon citing 125k? Any comment on that feo? You want to help geoff, linda and barack determine which is the laughable definition of 'middle class?"
sebastian dangerfield July 23, 2012 at 10:09 pm
definition of ‘middle class’
About The Tribune-Review The Tribune-Review can be reached via e-mail or at 412-321-6460. By The Associated Press Published: Wednesday, July 18, 2012, 5:34 p.m. Updated: Wednesday, July 18, 2012 WASHINGTON — In a recent speech, President Obama referred to the “middle class” 14 times, defining it as a family that makes up to $250,000 a year.
sebastian dangerfield July 23, 2012 at 10:15 pm
Feo--Ill answer it
The author is wrong-as well as obnoxious. But let me ask him a few questions, after reading linda's plan Geoff Is 25-15 the only moving bracket in her plan? Who is the disingenuous one? 2) is there any change in the college education deduction? Or are you trying to subvert that argument, by claiming standard deduction, which would make no sense, if you make 125k ( to start with-- you pay 6125 in ct state tax (deductible) and each dependent represents a 3500 deduction ( hence 3x3500 and 6,125--so your 6th grade math, accusation is weird when you are applying illogical tax calcs.) but then they serve a purpose as you cant include her other middle class deductions..
sebastian dangerfield July 23, 2012 at 10:21 pm
kendall,
just to make sure I understand your point--you are effectively saying that when given the choice, we should always elect someone who has served more time in Washington...and therefore, I can comfortably conclude, without knowing your political party, that McCain had your vote over Obama, and Obama will have your vote over Romney? Am I correct? Or are you finding weak arguments that basically dont hold water even in your own voting record? An honest response would be much appreciated.
Kendall L Owott July 23, 2012 at 10:21 pm
I have reread the math and come to the conclusion that I don't want to try to referee a tax dispute between Geoff and Luca Duff Cruz. If God hadn't already made Roy Abramowitz, it would have been necessary to invent him and Roy is more than capable to speak for himself.
Ergo, everybody call out, "Roy, Roy, Roy" and either Roy will appear and solve the problem or we will have a 2 week debate with many in Fairfield participating. Roy, Roy, Roy.
Kendall L Owott July 23, 2012 at 10:24 pm
Luca, I need more caffeine. I shall return.
Geoff Munger July 23, 2012 at 11:55 pm
Luca - I'm happy to answer your questions. First, let me point out that the overarching point of my post, which seems to have been lost in the details, is that it is misleading and disingenuous to inundate the airwaves with ads claiming that a tax plan will save the "average Connecticut family" $6,000 per year, while basing that claim on an income that is not representative of the average Connecticut family. Input $67,740 - the median Connecticut household income, and thus a much better proxy for the "average" family - into Linda's own calculator on her website, and you'll come up with projected savings of $875 for "married filing jointly", or $625 for "head of household". Furthermore, it's safe to say that whatever assumptions are factored into that calculation are the most favorable possible, and thus those numbers are likely on the high side already. So while I'm sorry that you disapprove of my tone, I disapprove of the disingenuous manipulation of numbers that is commonplace in political ads by ALL parties, and nothing will change if we don't point it out when we see it. (Of course, it's not likely to change even then...) Now, as for your questions:
Geoff Munger July 23, 2012 at 11:56 pm
1) Yes, the 25% to 15% bracket is the only bracket that is moving in her plan. Current federal income tax brackets are 10%, 15%, 25%, 28%, 33% and 35%. Linda's plan is to cut just the 25% bracket down to 15%, leaving tax brackets at 10%, 15%, 28%, 33% and 35%.
Geoff Munger July 23, 2012 at 11:56 pm
2) Yes, her plan says that "We should increase the tax deduction on student loans and qualified higher education expenses and allow all families to be eligible." This aspect of her plan is a general 'wish list' item, however, and does not appear to represent numbers that are factored into the calculated savings.
Geoff Munger July 23, 2012 at 11:56 pm
3) I flatly reject the use of $125K as an appropriate 'middle class' proxy. I would also flatly reject $250K if used to describe the income of the average middle class family, though I note that in the speech you refer to, Obama defined that number as the upper boundary of the middle class. It seems high to me even as an upper boundary, but you see the difference between an upper boundary and an 'average'. 4) You're correct that my representation of the deductions was inaccurate, as I included both the CT income tax deduction and the standard deduction, instead of one or the other. Good catch, and if Roy's financial acumen is as advertised, I expect he'll find others. However, the point remains that federal taxable income would be significantly lower than $125K for such a hypothetical family under any circumstances.
Geoff Munger July 23, 2012 at 11:56 pm
4) Finally, you're also correct that Linda does advocate the elimination of the capital gains tax for those whose top tax bracket would be 15% under her plan, and that may be how she bridges the gap to $6,000 for her $125,000 family. But to bring this reply full-circle to my original point, no matter what her assumptions may be relating to capital gains, Linda's own calculator results in savings for the average Connecticut family that are far lower than that stated in her ads, if indeed anything at all.
Geoff Munger July 23, 2012 at 11:57 pm
This is all a very long way of saying that to flood tv and radio with claims that the average voter might save $6,000 per year by voting for Linda McMahon, when her own website's calculator puts that number at less than $1,000 (and, to reiterate, is likely based on the most favorable assumptions possible), is not honest campaigning. Period.
Kendall L Owott July 24, 2012 at 12:10 am
Luca, I am not generalizing about everybody always voting for the person who has served more time in Washington. I am stating my opinion that I believe Chris Shays would be more effective in getting bills passed than Ms. McMahon because he has done so already.
You are correct that I voted for McCain and one of the reasons was because I thought he was a better US Senator than Obama AND had more experience. There were other reasons, too. I don’t like Romney or Obama, but I will vote for Romney. In this case, one of the reasons for my leaning toward Romney is because he was able to get things passed in a divided state, Massachusetts. Obama has not been able to get much cooperation from the other side of the aisle. So, I guess where we are is that I look for important differences between candidates and vote accordingly, depending upon how well candidates match up against the issues I feel are important. Sometimes candidates’ positions are the same in many ways. That may mean that one candidate gets picked for a reason that may not look important, but in the voting booth, ties are not allowed. Luca, Congratulations on your cross-examination skills.
sebastian dangerfield July 24, 2012 at 01:20 am
Geoff
I think you are right.... I initiatially read interpreted the new brackets as 25 going to 15 and 15 going to 10...resulting in 25, 15 and 10 but arrived at differently. If I re-read her website, it does appear that the only one changing is the 25-15. In as much as the definition of middle class is not the same as average household income... the idea middle class and average is synonomous is , I think, flawed---you make a good point that the reference point might be closer to 68k if you are talking about the average family- so, I stand corrected--you are right--her ad then is disingenuous and therefore one would not be wrong to question either her integrity or her intelligence.
sebastian dangerfield July 24, 2012 at 01:27 am
Kendall
Im not looking to cross exam. Im looking , often, to explore the real thoughts, values and ideas that make people better for office--and then I determine if they actually believe what they say, or are simply trying to spread a disingenuous message --- If you thiink Shays is better--thats fine..but I am hoping that voters dont decide to vote for people , because they have been in washington longer and know their way around. Im of the opinion, that something needs to change--and finding guys who understand how the game is played ---rather than finding guys (or women) who want to change the game is not a constructive path. But,thanks for clarifying your remarks...
Geoff Munger July 24, 2012 at 01:48 am
Luca - for my part, I appreciate your input in this thread. First of all, I welcome corrections when I am inaccurate, but more importantly, your comments about my tone do not fall on deaf ears. The main point I wanted to make could have been accomplished without coming across as obnoxious, and as I would prefer to spark constructive conversation through any post I might make, I will take that feedback to heart in the future.
sebastian dangerfield July 24, 2012 at 09:30 pm
actually tom, its not an SAT word to most people...only to people like you.
sort of funny that you consider that a 'big ' word. haha...
Tom Wilson July 25, 2012 at 02:24 pm
Did I mention that Linda McMahon is a nasty hag?
Harry August 3, 2012 at 01:15 pm
Aside from politics, McMahon's tv spots are absurd. Knocking her two opponents by describing them as career politicians suggests that their experience is worthless. She should be running for selectman or State Senator versus U.S. office to "earn her wings" before flying off to represent the CT electorate. If sheer chutzpah is the engine driving her campaign, she deserves victory at the polls, that is, if "we the people" are gullible enough to vote for a marauder possessing zero government experience. Both Murphy and Shays are far more deserving of serious consideration ... and ultimately our vote at the polls. She personifies and underscores the interrogative -- "what price hath glory!" Enjoy your wealth Mrs. McMahon and reserve your political pitching for much more elementary elected post.

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Thomas Paine June 18, 2013 at 01:50 pm
Why is it the panel for this event does not include a single advocate for gun-owners' rights? WithRead More all due respect to Chief McNamara, why does the panel not include a person who can speak to gun safety from a gun-owning civilian's perspective? ML, you claim that the assembled folks "do not offer judgements about gun ownership" but they are not including a single voice that can offer a perspective on gun ownership. I have been to "education" sessions sponsored by Meg's March for Change and they are one-sided indoctrinations into gun control advocacy. >>>> I was in Hartford for the public hearings in January when both Meg and March co-founder Nancy gave their personal testimonies and they all but threatened the legislators on the panel with election day retribution for all those who did not tow the gun-control line of thinking (i.e. March and CAGV). To suggest that Meg "does not offer judgements" is fallacious and disingenuous.