DEATH AND TAXES AND NOVELS: We the rubes love our novelized tales!

WEDNESDAY, FEBRUARY 1, 2012

Part 3—And the New York Times can’t explain taxes: We the people rarely know what the falafel we’re talking about.

In fairness, we’re lovable in our incomprehension. We keep leaving comments for the high lady Collins, telling her how much we enjoy her repetitive comments about the treatment of Mitt Romney’s dog. Sunday mornings, we get entertainment: Richard Nixon wasn’t gay! Princess Margaret had a hot figure! And why the tarmac does President Barry tussle with all those blonds? See THE DAILY HOWLER, 1/31/12.

We get entertained with silly novels which pretend to limn the candidates’ character. (Al Gore said he inspired Love Story! He hired a woman to teach him to be a man!) But when it comes to the real affairs of the world, we the people are about as informed as a bag of squirrels squirming and wrestling inside Gail Collins’ head.

Yesterday, we cited a study which helped describe our cluelessness on the subject of taxes. But uh-oh! Two Fridays ago, in the New York Times, David Leonhardt offered another example of our vast incomprehension.

We the people have little idea how much we pay in federal taxes! And according to Leonhardt, this groaning ignorance is a major public policy problem. For the record, Mitt Romney hadn’t released his taxes at the time Leonhardt wrote:
LEONHARDT (1/20/12): When people heard that Mitt Romney’s federal income tax rate was about 15 percent, the immediate reaction of many was to assume that their own rate was higher. The top marginal rate is 35 percent, after all, and the marginal rate on a couple with $70,000 in taxable income is 25 percent.

The truth is that most households probably pay a lower rate than Mr. Romney. It is impossible to know for sure, given that he has yet to release his tax return. What is clear, though, is that a large majority of American households—about two out of three—pays less than 15 percent of income to the federal government, through either income taxes or payroll taxes.

This disconnect between what we pay and what we think we pay is nothing less than one of the country’s biggest economic problems.
Why is our ignorance on this score "one of the country’s biggest economic problems?” We the rubes keep getting convinced that we’re paying beaucoup federal taxes—a much higher level of federal taxes than we’re actually paying, Leonhardt says. According to Leonhardt, this mistaken belief makes it hard to consider the role taxation might play in reducing our annual deficits.

We the people rarely know what the fig newton we’re talking about. Sean and Rush are at pains to deceive us; they've devoted themselves to this task for decades. Then too, we have the work of the journalists at Leonhardt’s newspaper to thank.

Just consider this editorial in this morning’s Times.

Andrew Rosenthal’s latest concerns the proposed Buffett Rule, which the editorial endorses. In his first paragraph, Rosenthal says the proposal “would require million-dollar earners to pay at least 30 percent of their income in taxes,” a claim which is almost surely wrong. Indeed: In his second paragraph, Rosenthal describes the proposal a different way, saying it “would impose a new rate of up to 30 percent that would phase in gradually on incomes between $1 million and $2 million.” Those descriptions seem to be contradictory, though Rosenthal doesn’t seem to have noticed.

In the hard-copy Times, the sub-headline says the rule would “require millionaires to pay a minimum 30 percent tax rate.” This adds to the blizzard of confusing claims.

In paragraph 5, the confusion seems to get worse. “The Congressional Research Service estimates that the Buffett Rule [would] require[e] millionaires to pay at least the same rate as most middle-income taxpayers,” Rosenthal says. Question: Doesn’t that claim reinforce the false notion about which Leonhardt so deeply despaired? Doesn’t it suggest that the bulk of us rubes pay 30 percent, perhaps more?

Let’s be fair! Reading Rosenthal’s editorial, a New York Times reader does acquire some vague imitations of knowledge. He learns that some millionaires would have to pay more under terms of the Buffett Rule; he learns that the figure “30 percent” would somehow be involved in this matter. For ourselves, we were struck by the general incompetence Rosenthal displays in this piece—Rosenthal, who wiles away his daytime hours with silly, stupid-Aspen blog posts in which he ruminates about the character of pols he doesn’t like.

Rosenthal was a legacy hire, and he’s no stranger to novelized tales. In 1992, while still a reporter, he was the source for the idea that President Bush had been bollixed by a supermarket scanner. To this day, no one really seems to know what was true in that famous case—but it did make for a wonderful story! This silly-shit, stupid-asp novelized tale is repeated, to this very day, even as Rosenthal fumbles and flails as he tries to describe the most basic tax proposals. (Also: George Bush glanced at his watch! And he asked for "a splash" of coffee!)

Question: Is Rosenthal’s character called into question by his incompetent work? Should he waste his daytime hours on his silly novelized tales if he can't describe key proposals when it comes time to act? Way back in 2000, we asked a similar question about Saint John McCain, who was being praised for his astounding high character even as reporters noted his groaning mistakes about every known policy question.

As a matter of character, should a presidential candidate know the basic facts about basic policy matters? How about a person who sits atop the Times editorial board? Expecting such skill from Rosenthal is a bit of a fool’s errand, of course. His predecessor at this post was that very same Lady Collins—the same high lady who wastes her time typing about Romney’s dog and struggling to explain why she does so. By the way: Does Lady Collins ever know what the fangando she’s talking about? Last week, she appeared on the Diane Rehm show to discuss her new book about William Henry Harrison, who served in the White House for roughly one month. (Leave it to Collins to write a book about our shortest presidency! She must be the ultimate slckaer.) At one point, Collins tried to explain, for the three hundredth time, why she keeps typing that dumb as shit tale about Romney’s dog, like a modern-day Lady Macbeth.

Collins explained her favorite novel. In line with the culture of her failed class, her basic facts seemed to be wrong:
REHM (1/23/12): Well, somebody has sent a Tweet asking whether Harrison strapped his dog to the top of his stagecoach. I thought you'd be amused by that, and you might just mention that story.

COLLINS: Well, this story, which has nothing to do with William Henry Harrison at all, was Mitt Romney, when he was raising his family, at one point was taking the whole family, and it included four children—five children—to Canada for the summer and had this Irish setter. And put the Irish setter in a crate on the top of the station wagon and took him off with them to Canada driving down the highways with this poor dog on top of the car. There have been controversies as to whether the dog liked it or not. Mitt Romney claims the dog really enjoyed this.

But he got diarrhea while he was traveling so he couldn't have been that happy. And one of the kids confirmed this story to the Boston Globe that once this was obviously happening, the kids are looking out the back window going, “Whew, whew, whew.” He pulls off—although he only had designated rest stops that he would stop at— He pulled off at a non-designated rest stop, but kept everybody in the car. Jumped out, got a hose, hosed down the dog and the car, jumped back in the car and took back off down the highway, lest anyone get out and use an undesignated rest stop.

I can't believe if the dog was comfortable before he was not comfortable, I'm sure, after he'd been hosed down. But anyway I just love this story. The story of Seamus, the Irish setter, on the roof of the car and Mitt Romney. And I try to bring it up whenever possible.

REHM: And that is the voice of Gail Collins. Her new book is titled "William Henry Harrison.”
"There have been controversies as to whether the dog liked it or not?" Is Lady Collins five years old? To her credit, Rehm always acts like her guests are sane, even at moments like this. (In October 2000, she extended that courtesy to us.)

Collins’ remarks about “William Henry” were almost as batty as those about Seamus. Just for fun, we’ll plan to discuss those remarks this weekend. But as Collins recounted the pointless story she has typed more than thirty times, she baldly misstated the facts of the case as they appeared in that Boston Globe profile. Romney “kept everyone in the car?” He “jumped back in the car and took back off down the highway, lest anyone get out and use an undesignated rest stop?” Sorry. The Globe report seems to say the opposite—and yet, Collins has typed this tale about three dozen times, sometimes explaining that she does so because it illustrates Candidate Romney’s obsessive need for control. (Not that a reader would have any way of knowing that from the way she shorthands the story.)

She doesn’t tell us about his proposals. She doesn’t discuss his conduct at Bain. Instead, Collins keeps typing this stupid shit story—and when she’s finally asked to explain, she misstates the basic facts, which were pointless to begin with.

Collins is virtually out of her mind—but you live in a culture which can’t see that fact. Then too, here’s her floundering successor, late in today’s editorial:
NEW YORK TIMES EDITORIAL (2/1/12): The Obama administration says it is supportive of Mr. Whitehouse’s bill but still wants to see other changes in the tax code, such as using limits on itemized deductions for the highest earners to generate more tax revenue.

Both approaches would be good starts toward making the rich pay a fairer share and reduce the mounting cuts to government programs that benefit the less fortunate. But they are only the beginning. Sound tax policy calls for raising the capital gains tax, which, at 15 percent, is the lowest since the Great Depression.

That rate is scheduled to go up to as much as 25 percent next year, but it will eventually need to rise to the level of ordinary income. Doing so would bring in $45 billion a year more than the Buffett Rule by 2014, according to Citizens for Tax Justice. Having a separate rate not only perpetuates income inequality, it also creates vast tax avoidance schemes. It is also important that the Bush tax cuts expire for all tax brackets at the end of this year.
Good grief! In that single highlighted sentence, Rosenthal makes a gigantic proposal. Has the New York Times ever proposed letting all the Bush tax rates expire? Here at THE HOWLER, we’ve begged and pleaded for a discussion of that sweeping idea, which no major figure in either party supports. Has the Times ever made this proposal before? We can’t find such an editorial in a quick search, though such a proposal is a bit hard to search for. We do think that we would have noticed if the Times had ever done such a thing—but this morning, Rosenthal makes this sweeping proposal in a single throw-away sentence in his penultimate paragraph. (“Penultimate” means “next to last.”)

Has the Times ever made that proposal before? Do reader understand what it means? We don’t know, but in our brief search, we stumbled on this editorial from last September. Read it and weep for your failing national culture! Here's the way a hapless board described the Buffett Rule then:
NEW YORK TIMES EDITORIAL (9/22/11): President Obama has said that tax reform should follow the principle that no household making $1 million or more should pay a smaller share of its income in taxes than a middle-class family. Republicans say this is an act of “class warfare.” But it is clearly unjust to have a tax system that, today, allows 22,000 households earning more than $1 million to pay less than 15 percent of their income in federal income and payroll taxes—less than half of what a middle-class family pays.
“Less than half of what a middle-class family pays!” This is precisely the bungled notion about which Leonhardt despaired.

Rosenthal’s new editorial is the work of a lazy mind. The New York Times is quite expert at handing us stupid novelized tales, but its staff is overmatched when it comes to describing real affairs of the world. Indeed:

One day before Leonhardt wrote his piece, the New York Times tried to report the tax proposals of the GOP candidates.

Why are we the people so clueless, so deeply tangled in novelized piffle? Cooper and Kocieniewski tackled the case—and the Timesmen failed.

Tomorrow: What does incompetence look like?

3 comments:

  1. It's instructive how thoroughly Mr. Somerby himself bungles this one himself.

    1) Because a majority of Americans earn so little today, it's hardly any wonder that they pay relatively low effective *total* tax rates -- though Leonhardt manages to bungle even this claim by confuting the 7% payroll tax paid on every dime earned (14% if you count the employer's contribution), with Federal taxes, which are subject to standard deductions and exemption. The payroll tax alone, which isn't assessed on capital gains or "carried interest" income, but which the minimum wage staff at Staples and Walmart do pay on every dime they earn, is itself more than Romney paid, as a percentage of total income.

    2) As has already been pointed out to Mr. Somerby, who can be as deaf as David in Cal is in his regard when he gets on his hobby horse, you need to look at the marginal tax rates Americans are paying. Imagine an unmarried $45K earner. His marginal rate is currently 25% (plus an additional 14% in payroll taxes, of course). He doesn't pay 25% on his total Federal income, because that rate is phased in and some income is excluded altogether due to the standard deduction and standard exemptions. But early dollar he earns over $45K is taxed at at least 25% (not including payroll taxes).

    Compare that marginal rate to Mr. Romney's. Every dollar *he* earns over, say, $25 million, is *still* taxed at 15% or less. Every dollar he earns over $250 million is taxed at 15% or less. Every dollar he earns over $2.5 billion is taxed at 15% or less.

    The ONLY reason the "average" taxpayer has an effective rate similar to Mr. Romney's is that he earns so little -- we don't get to this peculiar result because the tax code is kind to Walmart employees.

    The fact that the "average taxpayer", who earns next to nothing, is paying a rate about equal to Mr. Romney should itself be a scandal. For the sake of fairness, either he's got to pay a lot less, or Romney has to pay a lot more.

    But Bob is in love with the literal. Some claims about Romney's effective tax rate weren't as clear as they might have been. You can bet Warren Buffett understands that unless his secretary is getting paid $150K, her effective total Federal rate (excluding paroll takes) won't be much different than Romney's. But, unlike Bob, Buffett understands marginal tax rates, and why an equality of effective rates between someone earning $45K and somebody else earning $45 million is nothing to celebrate.

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  2. One reason people don't know their Federal tax burden is that big slices of both "your" income and "your" taxes are invisible to you.

    -- On the income side, the computation includes retirement plan contributions from the employer, food stamps, school lunches, employer-paid health insurance premiums, Medicare, and a host of other items. A lot of this "income" is money spent on your behalf and payments you don't think of as money.

    -- Total tax burden includes the employer contribution for payroll taxes (contrary to what Anonymous asserted immediately above). It also includes excise taxes (e.g. gasoline tax), corporate taxes (the burden of which is imputed to individuals), and a few others. Taxes which are paid on your behalf, such as employer-part of payroll taxes and corporate taxes, show up as both income and tax.

    Leonhardt basically has it right, except he exaggerates a little when he says that "about 2 out of 3" households pay less than 15% of income in total Federal taxes.

    A correct statement is that the 3rd quintile (40%-60%) of income distribution pays on average 14.3%. The bottom edge of this quintile pays less than that, and the top edge pays more, probably over 15%, so the magic 15% dividing line probably occurs somewhere below 60%.

    FWIW: the first four quintiles pay between 8.8% and 9.5% in payroll taxes. It is rather flat, until you get to the rich folks.

    Incidentally, NO quintile pays zero percent or less on average. It is true the the lower quintiles have a net negative INCOME tax rate. But looking at all income and all taxes, as computed above, shows that even the lowest quintile pays a total 4% tax rate.

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  3. "-- Total tax burden includes the employer contribution for payroll taxes (contrary to what Anonymous asserted immediately above). It also includes excise taxes (e.g. gasoline tax), corporate taxes (the burden of which is imputed to individuals), and a few others. Taxes which are paid on your behalf, such as employer-part of payroll taxes and corporate taxes, show up as both income and tax."

    This is 100% wrong, if the writer means the figures being used in the general discussion of effective federal tax rates. In this context, "effective Federal tax means" gross income divided by Federal tax paid. Period. It does not include SS taxes which, strictly speaking, aren't taxes at all and don't appear on your tax form unless you're self-employed and paying them yourself. If SS deductions *were* included, EVERY taxpayer earning under $108,000 would be starting at a minimum of rate of 14%, even if he paid no Federal tax at all.

    And the figure does NOT include excise and other taxes. Romney's rate was determined by dividing his income by the tax paid.

    Of course, if we wanted to tabulate all taxes paid, we could, including SS deductions and excise taxes. But that's not the meaning of "effective Federal tax rate".

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