Do you understand how this works: In this morning’s New York Times, Catherine Rampell reports the effects of the Perry tax proposal.
Rampell cites a study by the Tax Policy Center. Her report includes some key information, although we think a few of these key points deserve a bit more attention.
(On-line, Rampell’s piece includes a chart. That chart is not included in the hard-copy Times.)
First key point: The Perry plan “would most likely reduce federal tax revenue by $570 billion, or about 15 percent.”
This is a very key point. Federal revenues are already projected to fall way short of future spending—that’s the nature of the “debt/deficit crisis.” If this new projection is accurate, Perry’s plan would make this problem substantially worse.
Since the existing situation is routinely described as a “crisis,” we think this basic point deserves more than a throw-away line. We think this basic problem should be explicitly stated.
Second key point: Perry’s plan “would primarily benefit the wealthiest Americans.”
In fact, Perry’s plan would benefit these people a lot. Rampell’s report includes some basic information about the size of the tax reductions which would go to the highest earners. That said, we think the following point deserves a lot more attention than it has been getting:
“In this alternative system, long-term capital gains, qualified dividends and Social Security benefits would not be taxed.”
Do you know what “long-term capital gains” and “qualified dividends” are? How many Times readers could explain just what that statement means? There's alot of gorilla dust marbled through that murky statement.
Rampell’s piece does include some basic information. That said, we’ll lodge two basic complaints:
Concerning that key bumper sticker: For our money, this is a very poor explanation. We would have rewritten this passage:
RAMPELL (11/1/11): The plan, released last week as part of Mr. Perry’s campaign for the Republican presidential nomination, allows taxpayers to calculate their personal income taxes under the existing tax code, which is progressive. But it also allows taxpayers to instead have their income taxed at a flat 20 percent rate.In our view, journalists should avoid the term “flat” in writing about this plan. “Flat” serves as a bumper sticker here; it’s not a descriptive term. And the contrast between "flat" and "progressive" is just basically wrong.
The existing income tax code is “progressive,” as Rampell says—but so is the Perry proposal. Under Perry’s plan, some families would pay no income tax at all. Some would pay as much as 19.99 percent. If a journalist wanted to be descriptive, she would rewrite that passage:
RAMPELL REWRITTEN: The plan, released last week as part of Mr. Perry’s campaign for the Republican presidential nomination, allows taxpayers to calculate their personal income taxes under the existing tax code. But it also allows taxpayers to instead have their income taxed at a single 20 percent rate, after allowing for fairly large per-person deductions.Proponents like to use the word “flat” is discussing such plans. Journalists don’t have to serve them.
Concerning who gains under Perry’s plan: Do you understand the following passage? Frankly, we do not:
RAMPELL: Of all households in the bottom quintile of the tax distribution, only 18.9 percent would pay less in taxes under the Perry plan.We don’t understand that. As we are constantly being told, most people among the bottom half of the nation’s earners pay no federal income tax. Since we’re talking about federal income tax here, do you understand how a large chunk of “the bottom quintile of the tax distribution” would pay less under Perry’s plan? We could guess at an answer, but we don’t really know.
We’re not saying Rampell is wrong. We’re saying that very few people could explain what she has written here. In the past week, we’ve seen a lot of such work in the New York Times as reporters and the editors try to explain the effects of Perry’s plan, especially the effects of his plan on the nation’s lower earners.
Thank God we have our new sexy-time Cain distraction! Over the course of the next few days, we can all talk about that!