The philophy of marginal tax rates
In Tax Cut Plan, Debate Over the Definition of Rich
By DAVID KOCIENIEWSKI
Much of the debate about whether to extend the Bush tax cuts has focused on big economic issues: how the decision might affect the fragile economy, the widening federal deficit and hiring by small businesses.
As the political battle drags on, however, it has also veered into a more basic matter of fairness, whether a person who earns more than $200,000 a year should be taxed at rates similar to those who make $5 million.
This is yet another way of approaching the now familiar story of how you just can't make it on $250,000 per year.
And we won't even discuss the fact that the reporter never uses the words, "marginal tax rates." Under Obama's proposal, someone making $250,000 won't see their taxes rise. If they earn $250,001, their taxes will rise. On the extra dollar.
But Dean Baker, not surprisingly, brings the snark -- and the facts -- as only he can.
It might be the case that you don't need a weatherman to know which way the wind blows, but the NYT is telling us that we need a philosopher to guide our tax policy. An article on the debate over extending the Bush tax cuts told readers:
"As the political battle drags on, however, it has also veered into a more basic matter of fairness, whether a person who earns more than $200,000 a year should be taxed at rates similar to those who make $5 million."
Umm, really? Is the rate at which people are taxed, as opposed to the amount they pay in taxes, really such an important political issue? Do most people even know the rate at which they are taxed? Following the 1986 tax reform, tens of millions of middle income workers paid the same 28 percent tax rate as the very richest people in the country. There was not a big philosophical debate over this issue at that time. (We were lowering rates for the wealthy back then, not raising them.)
The more obvious issue is how much tax people will be paying. The answer for the questionably rich people who are the focus of this article (people with incomes between $250,000 and $500,000) is not very much. The Joint Tax Committee in Congress calculated that the average tax hit for taxpayers with income in this range would be $400 a year. That sort of tax hit would not seem to require very much philosophy.
To be fair, it seems the Times reporters don't read the non-reporters writing at The Times who are less concerned about "philosophy" and more concerned with facts.