BOSTON -- It seems like a simple question -- How much money will a family save if the state
income tax rate is cut back to 5 percent?
But there are different answers depending on who you ask and whether the family is average,
typical or median -- not to mention the various exemptions and deductions each family is
eligible to receive.
Gov. Paul Cellucci, the leading proponent of Question 4 on November's ballot, says the plan will save the average family of four between $400 and $500. The opposition argues that the median family of four will save $211.
So who's right? And where does the typical family fall among the average and the median? While the savings is just one of the arguments for and against the tax cut, it did surface as a central point of disagreement last week during the first debate on Question 4 between Cellucci and key Democratic opponents.
Newton businessman Steve Grossman pointed to the savings difference several times and Treasurer Shannon O'Brien also raised the issue during her debate with the governor Thursday.
But as strange as it sounds, both sides are right, said Michael Widmer, executive director of the Massachusetts Taxpayers Association.
The tax cut's supporters and opponents, he said, aren't comparing apples to apples. Instead, Cellucci is using an "average family," which makes about $82,000. The opposition, led by the Tax Equity Alliance of Massachusetts (TEAM), refers to the "median family,'' which makes closer to $50,000.
And if voters don't listen carefully, they might not know one group is talking about median and the other average. But the difference is significant, Widmer said.
Median is the exact middle of the road. If you have 100 people, the median amount is whatever the 50th person makes. The average is the entire amount of money earned, divided by the number of people. Widmer said that number tends to be larger because residents with high salaries tend to drive up the average.
"Cellucci uses the macro number and that's an accurate number as far as it goes, but that doesn't mean the typical family will save that much and that's where TEAM has been making the correct argument," Widmer said. "For somebody earning $40,000 to $50,000 with some normal exemptions, a tax savings of $211 is a reasonable estimate.''
The profile of Cellucci's average family is a teacher making $45,000 and a plumber earning $42,000, bringing the tax savings to about $500, said Bobby Matthews, spokesman for the Tax Rollback Committee.
"We're trying to come up with the backbone of Massachusetts families -- families who can afford homes, but who aren't wealthy,'' Matthews said.
TEAM Executive Director James St. George doesn't dispute the fact that a family of four making $82,000 would save $500. But he does think it's unrealistic to assume an average family makes that much.
"I don't doubt there are a lot of families that make $82,000, but nobody would claim that's the average income,'' St. George said.
Not only that, but the $82,000 figure is a far cry from the "average" family Cellucci referred to during the Grossman debate, St. George said.
When pressed during the debate to disclose how much the average family makes, Cellucci said between $60,000 and $70,000.
Meanwhile, Matthews said TEAM "pulled their average family numbers out of a hat," to divert attention away from the primary issues of the tax cut, which is to keep a promise made by the Legislature.
The bottom line, Widmer said, is families shouldn't try to figure out if they're average, median or typical. Instead, the safest way to know how much money they'll save is to do the math themselves. And that means taking the overall salary, and subtracting all the exemptions and deductions ranging from personal exemption, dependent exemption, payroll deduction and dependent deductions or a child care deduction to reach the taxable income.