By Moshe Adler
The Moshe Pit is Moshe Adler’s blog on economics, media and whatever else piques his interest. Get more here.
The idea was good: Get a reporter to find out what New York’s rich will do with the extra money they are going to have now that the new Democratic governor, Andrew Cuomo, has won his struggle against extending the “millionaires’ tax,” a surcharge that was instituted in 2009 on high-income families. The problem is, the story hinges on the numbers, and the numbers as reported by The New York Times are (this is turning into a disturbing pattern) all wrong.
A family that has an adjusted income of $350,000 will see its tax reduced by $500, but The New York Times reports that the reduction will be $3,500. A family that has an adjusted gross income of $550,000 will see its tax reduced by $3,060, but The New York Times reports that the reduction will be $11,660. A family with an adjusted gross income of $1 million will pay $12,600, or 1.3 percent of its income, less in taxes, but The New York Times reports that the reduction will be $21,200. In other words, the actual surcharges were so small that there is little doubt they would not have caused any families to leave the state.
Why did the paper make these mistakes? Along with most citizens in this country, The New York Times doesn’t know how taxes work, and the paper apparently believes that the rich pay a lot more in taxes than they actually do. When one reminds people that during the Eisenhower years the highest marginal tax rate was 91 percent, they recoil, thinking that if we were to return to those tax rates, the rich would have to pay 91 cents of every dollar they are paid. In fact, marginal tax rates apply only to particular income brackets and the expiring 1 percent surcharge in New York applied only to the adjusted gross income between $300,000 and $500,000. The 2.12 percent surcharge that applied to adjusted gross income above $500,000 also did not apply to any other income.
One of the people who The Times interviewed about the tax cuts was Jamie Cohen, who opined that “$250,000 here is different than $250,000 anywhere else,” and he is, of course, right. But what Jamie did not seem to know is that a married couple with less than $300,000 in adjusted income will not see a reduction in their taxes at all, since the tax reduction applies only to the very rich. David Chitel, the founder of a media entertainment startup who put his household income at $300,000 plus, told The Times that he will either “save the tax windfall or put it toward college funds for his two young children.” If only.
As written in earlier pieces here, it’s deeply worrisome that The New York Times does not know the numbers.
As a result, the paper repeatedly misleads its readers, implying that state workers earn more than the average pay of private sector employees in the state while in fact they earn a lot less, and presenting the budget deficit as huge, whereas it is merely about 1 percent of personal income, and could therefore be easily closed by a small increase in taxes instead of a huge decrease in government services. And this is the paper of record?
Moshe Adler teaches economics at Columbia University and at the Harry Van Arsdale Center for Labor Studies at Empire State College. He is the author of “Economics for the Rest of Us: Debunking the Science That Makes Life Dismal,” just out in paperback from The New Press.
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