Andrew Bigss and Kent Smetters: 

The media typically report how each candidate’s plan would change the tax code relative to current law: the size of the typical tax cut or increase that accrues to low, middle or high earners. So it is widely reported that John McCain would mostly cut taxes for the rich while Barack Obama would mostly cut taxes for the middle class. But how much a given income group gains or loses from a specific tax reform tells us nothing about either the fairness or efficiency of the tax code after such changes have been implemented.

According to the Tax Policy Center, a joint venture between the Urban Institute and Brookings Institution, around 78% of the McCain tax cut would accrue to the top fifth of income earners, with almost 30% going to the highest 1%. This seems inequitable on its face, a point the Obama campaign and the press focus on.

But can we conclude that the rich would pay too little taxes under the McCain plan? Not really, because most media reports do not reveal the resulting share of the tax burden borne by the highest earners.

As it happens, the top fifth of earners currently pay 67% of all federal taxes — including not just income taxes, but payroll taxes, corporate taxes and death taxes. The top 1% of earners pay 26% of all federal taxes.

If the McCain proposal were passed, the top fifth would actually pay a greater share of total federal taxes and the top 1%’s share would decline by only 0.3%. In other words, high earners carry the vast majority of the federal tax burden and, despite what the media portrays as a shift from Scandinavian egalitarianism to Latin American inequity, would continue to do so under Mr. McCain’s plan.

The fact that high earners pay the vast majority of all federal taxes will come as a surprise to most Americans, who believe the middle class bears the tax burden while the rich get off scot free. A 2007 Gallup poll found that 66% of Americans believe upper-income people pay too little federal income taxes. Media reports play into these beliefs by focusing on how the candidates’ plans would change the tax code, not on what the tax code would look like after those changes took place.