Why Can't We Have A Better Media?
I'm a bit late to this party, but this brain-dead ABC News report, wherein they show no ability to understand the concept of marginal tax rates, is truly unbelievable.
According to ABC, one attorney "plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law." According to the attorney: "We are going to try to figure out how to make our income $249,999.00." ABC also quotes a dentist who is trying to figure out how to reduce her income.
This is stunningly wrong.
The ABC article is based on the premise that an individual's entire income is taxed at the same rate. If that were the case, it would be possible for a family earning $249,999 to have a higher after-tax income than a family earning $255,000, because the family earning $249,999 would pay a lower tax rate.
But that isn't actually how income tax works.
In reality, a family earning $255,000 will pay the higher tax rate only on its last $5,001 in income; the first $249,999 will continue to be taxed at the old rate. So intentionally lowering your income from $255,000 to $249,999 is counter-productive; it will result in a lower after-tax income.
The people ABC quoted don't seem to understand that. Worse, ABC doesn't seem to understand it, either.
ABC has now corrected the article, after it ran for a full day, saying this:
Editor's Note: Yesterday ABC News published a version of this story which some readers felt did not provide a comprehensive enough analysis of Obama's tax code for those families making $250k or more. ABCNews.com has heard those concerns and after review has decided to post an updated version of the story below.
It didn't provide ANY analysis the first time. In fact, it did nothing but mislead.
But this is the media landscape we live in. Any objections from the rich are covered with serious deference toward their views. And any objections from the poor aren't covered. This tips the balance of what is expressed, particularly on taxes, to the point that even Democrats start to worry about the effect of limiting deductions for the rich on charitable donations, even though the facts are that the proposal would at most reduce charitable contributions by 1% (to help pay for universal health coverage, which would lessen the, you know, NEED FOR CHARITABLE GIVING), and in the short-term it would increase charitable giving because tax policy really only makes a difference in the very near-term, motivating people to give to charity now while their deductions aren't capped, which would provide AN ADDITIONAL ECONOMIC STIMULUS. I don't expect the subset of John Galt wannabes to understand Economics 101, and I know it's too much to ask for the traditional media to understand it, but it shouldn't be.
...Let's also note that Obama's proposal is to let expire the Bush tax cuts, which would raise the top marginal rate to 39.6% from 35%, which is historically very low. But of course, it will ring in a Marxist-Leninist Valhalla.