Tuesday, March 03, 2009

Understanding Marginal Taxation Rate FAIL
From 2Millionth Web Log

Sigh--yet another example of the issue being less left versus right and more adult versus child's level of understanding:

I've seen a lot of dumb news reports in my life, but I'm not sure anything can quite match this one from ABC News. The premise of the report is this: Barack Obama plans to raise taxes on people who make more than $250,000, so the reporter has gone and found people who earn a little more than that sum who plan to decrease their income so that they come in underneath the magic line.

Now, the obvious objection here is that the tax code doesn't work that way. A tax increase affects the marginal dollar that a person gains. That's means only every dollar over $250,000 is taxed at a higher rate. Obama is not proposing a tax system whereby somebody who goes from $249,999 to $250,000 suddenly becomes poorer. Nobody has ever enacted a tax hike like that in the history of the United States.

Obama himself tried to explain this to Joe/Sam(not)the Plumber last fall, who you could see didn't quite get it. And it wouldn't surprise me if a lot of folks didn't really grasp the concept (which might explain why there's more support than there should be for a flat tax.)

What's kind of sad is that it's not all that difficult to explain (as Obama did to Joe/Sam.) What's interesting is that I don't think I've seen a single story, report, or explanation of this pretty easy-to-explain concept from our media.

And that speaks volumes.

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