Question

Who Benefits from a Tax Cut

• Do you think either of chart fairly communicates the impact of the proposed tax cut? If so, which one and why? If not, why not? Can you think of a way to present the numbers more fairly?
  Rich Pav More Under Tax Cuts High-Income Households Receive Highest Dollar Benefit from Tax Cuts Average annual tax benefit Share of Total Income Taxes Paid to Federal Annual Income Treasury estimate Less than $10.00 $53 $10,000 to $20,000 $387 85% without tax cuts Actual tax payments with tax cuts 63% 82% 68% $20,000 to $30,000 S771 $30,000 to $40,000 896 $916 57% 50% $40,000 to $50,000 $50,000 to $75,000 $75,000 to $100,000 $100,000 to $200,000 $200,000 to $500,000 $500,000 to $1 million More than $1 million 37% $1,132 31% $1,900 $3,766 $6,743 6,701 Top 5% Taxpayer Income Level Top 1% Top 10% Top 25% $6,349 $0 $2,000 $4,000 $6,000
  

Answer 1

The graph on the right with clear and income break-up and the corresponding tax cuts is more clear than the graph on the left. The graph on the left is more generic than the graph on the left. The graph b is more specific and helps us to understand the tax structure without guidance.

Graph a is generic in terms of presentation. It doesn't specify as to what income range constitutes top 1% or top 25%. Hence its tough to interpret graph a.

Range is important when it comes to representing numbers on graph. A pie-chart will be a more suitable and effective for representing the above data. Pie chart is self explanatory and easy to interpret.

Data representation alone is not sufficient, the extent to which a data can be interpreted from pictures is more important.