To get a fresh look at the tax and deficit debates of 2010, let us recall for a moment 1979, the year when Saddam Hussein became dictator in Iraq, the Russians foolishly invaded Afghanistan, and our ally the Shah of Iran was overthrown in favor of the Ayatollah Khomeini.

The most popular movie was about the divorcing Kramers, while on the radio, disco was everywhere as the Village People made music about what was going on down at the YMCA and Gloria Gaynor vowed she would survive -- all this before anyone had ever heard of Madonna.

Jimmy Carter deregulated oil prices that April, and a barrel shot up from less than $16 to almost $40, while that June we waited in long lines at gas stations. Inflation was close to 1 percent per month, the Dow closed the year at 838, and the first 401(k) account had yet to be opened.

So what has happened to tax burdens since then?

Anyone who pays the slightest attention to the news knows that today the meta-story is that we suffer from high taxes, confiscatory taxes, rising taxes, wasted taxes, and unfair taxes. Pick up the paper, turn on the TV, or listen to the radio and the message comes through loud and clear: Our economy is in trouble because we suffer from excessive taxation.

The problem is the facts don't fit the story.

A new Congressional Budget Office report on incomes and taxes from 1979 to 2007 tells a story of falling tax burdens. So do other recently issued official reports.

The CBO reports are a rich vein of facts, but the biggest golden nugget of fact I calculated from the report's statistical tables is that in 1979 federal taxes for the median-income household totaled $6,100, but in 2007 taxes slipped to $6,000.

That $100 decline, measured in 2007 dollars, understates what a bargain taxes have become. Back in 1979 federal taxes equaled 18.7 percent of comprehensive household income. By 2007 incomes had grown 28 percent in real terms, so the tax burden not only dropped in absolute dollars, it also fell as a share of median comprehensive income to 14.4 percent.

So over 28 years median income has risen in real terms by $9,100 while federal taxes have fallen by $100. Sounds like taxes have become a relative bargain. They have, assuming we ignore federal debt.

The CBO calculations are based on comprehensive income, a broader measure than what shows up on income tax returns.

There is a second problem with the 24/7 coverage emphasizing scary deficits and scary taxes: People are more concerned about jobs than taxes. People without jobs do not pay taxes so much as consume them.

Look at the data from yet another poll commissioned by Fox News, but not trumpeted on its shows. The Fox News poll shows that people worry more about jobs than the deficit by a ratio of 3 to 1, although Fox fans would hardly know that.

Now let's jump to 1985, when moviegoers went Back to the Future, "Like a Virgin" put Madonna on top, New Coke fizzled after three months, and one September morning Mother Earth rolled over deep beneath her soil covers, killing 10,000 in Mexico City.

Since then gas-guzzling SUVs and personal computers have become ubiquitous, color film has been replaced by pixels, and women's shoulder pads have been swept into the dustbin of fashion. The Dow closed out 1985 at 1,547.

So in the years since 1985, what do you think Americans have increased their spending on the least?

The answer, the 2010 Statistical Abstract shows, is taxes.

That's right: taxes.

Table 668 examines incomes, taxes, and how people spend their money, divided into categories.

Jobs Beat Deficit Reduction in Poll

Most Important         All      Dem.      Rep.       Indep.
Issue?

The economy            47%      55%        37%        48%
and jobs

The deficit and
and government         15%      8%         22%        16%
spending

Ratio             3.1 to 1   6.9 to 1    1.7 to 1   3 to 1


Source: Fox News poll by Opinion Dynamics, May 4-5, 2010.

I created an index from the data to measure changes in spending and taxes against the increase in median after-tax income between 1985 and 2007, the years covered by the table. If spending in a category grew at the same rate as after-tax income, the index number would be 100. If spending rose faster, the index is in three digits, while if spending fell relative to income, the index is in two digits.

Many things rose in spending less than income. Electricity rose 79 and telephone services 90, which is more than one might imagine, given the spread of cheap Internet calling services.

Food costs relatively less, rising 79. This may be misleading, however, as spending on foods that are heavily subsidized with tax dollars increased a lot less, bringing down the average. Spending on fresh milk, for example, rose just 54.

Spending on alcohol only rose 56, on clothing 50, and on new cars and trucks just 49.

The smallest index numbers are for taxes. State and local taxes were a tremendous bargain, rising 40; federal taxes just 34.

With all these expenditures increasing less than after-tax incomes, and with taxes rising least of all, why is anyone upset about taxes? Indeed, why are so many people feeling squeezed even if they have a reliable job?

The answer lies in two areas that play a big role in the tax burden debate, but seldom are portrayed that way: healthcare and housing.

The index for health insurance is 155, meaning that for each dollar of after-tax growth in the median income between 1985 and 2007, people increased their health insurance spending by $1.55.

As for housing, the index for total spending on owned dwellings rose 112 and for property taxes 147, both well above the increase in median income.

Then there are these housing index numbers:

              Rental value of owned home              108
              Market value of homes                   139
              Mortgage principal paid                 210

The first two lines above show that housing overall was overpriced in 2007, as rental value gives one a good indication of what a house is worth as an investment. The evidence that the rental value figure was a better gauge than market values has since become painfully clear, with plummeting housing prices in many markets and a gigantic inventory of unsold homes.

That third line shows that people took on much bigger mortgages, which required larger payments to principal, even with all of those disastrous interest-only and pick-a-payment mortgages under which unpaid interest was just tacked on to principal.

Federal Reserve data show that for each dollar of added equity in homes since 1980, people took on two dollars of debt. They did so while the head of each family got older by 2 years to 48.8 years. More debt as you age is a prescription for misery, not contentment. As Tennessee Ernie Ford mourned, Americans are getting "another day older and deeper in debt."

Yet what we hear from Capitol Hill and the media is taxes are too high, taxes are crushing us, more taxes will make us worse off, and Obama's deficits are out of control.

How can this be? How can the facts be so far from the rhetoric?

One answer is that we are not much different than the people who thought the Earth was flat or who believed in mermaids and dragons. Centuries from now people will look at our era and laugh at some of the beliefs we ardently hold.

The sad truth about the human condition is that in public debates, empirical facts tend to lose out to narratives, especially when those facts require work to understand and the narrative appeals to what we wish were true. Doubt that? OK, get a song running in your head. Easy, wasn't it? Now, try to recall two sentences written by a music critic.

Far too few people live in a world of empirical facts, including both journalists and those who play journalists on television talk shows. Facts get too little attention. They also do not stick in our heads like that song replaying endlessly in your mind right now. Sorry about that, but one more example to drive the point home.

Quick, what is the No. 1 increased use of land in New York and New England since World War II? I have asked that question of scores of audiences in the past 15 years. The most common answers are suburban sprawl, airports, roads, and shopping malls. The correct answer is forests. Land cleared to grow food in the 1800s and since abandoned is slowly returning to its natural state. This natural process involves such vast acreage that second, third, and fourth places combined on the list of increased land use do not come close to equaling reforestation.

While the politicians and most of the chattering classes talk of tax burdens present and future, what the polls show people care about is paid work. The Pew Research Center's Social and Demographic Trends Project recently reported that 55 percent of adults in the labor force say they have either been out of work, had their pay cut, had their hours cut, or been forced into part-time work since the end of 2007. Have you heard about these important findings before?

So why all the rhetoric about taxes, rather than jobs, better pay, and how universal healthcare as a public service would cost less and help more? Answering that requires asking yourself one question about how the tax debate is being framed and which facts get trumpeted or ignored: Who benefits?

This article first appeared in the July 19th issue of Tax Notes a Tax Analysts publication.