WSJ Distorts Tax Rate for the Rich

Reading Wall Street Journal reporter Gary Fields’ “point that a family making slightly over $250,000 doesnâ┚¬Ã¢”ž¢t necessarily feel all that ‘rich’ when it comes to facing a tax hike from Barack Obama,” Matthew Yglesias (Think Progress, 4/17/09) dubs his story “The Not-So-Compelling Plight of the Somewhat Rich” and notes that “what the story doesn’t do is put this issue in the appropriate context of what an increase in the marginal rate really implies”:

If you raise taxes on “people making over $250,000,” that means an increase only in the 250,001st dollar and onward. It’s not, in other words, as if a guy earning $249,999 and a guy earning $250,001 will be paying radically different amounts of taxes. In other words, though if you’re earning $5 million a year, Obama’s plan really will saddle you with a big tax increase, a person who’s earning $260,000 and feels that he’s facing a basically middle-class economic situation is only going to be facing a very small tax increase. And however much our $260,000 a year guy may feel not so rich, surely he can agree that $260,000 is a lot more than $130,000 or $65,000 so it’s hardly absurd that he might pay a slightly higher rate.

After writing that, “even if you grant the premise of the story there’s no actual problem here,” Yglesias goes on to suggest ideas no career-minded corporate reporter would dare print:

That said, I wouldn’t have a problem with launching a new, slightly higher rate, starting at $500,000 and a higher one starting at $1 million and another at $2 million another at $4 million another at $8 million and another at $16 million. I donâ┚¬Ã¢”ž¢t see any reason to think that the progressivity of the scale should max out at $250,000 when obviously there’s a huge difference between someone earning that much money and someone earning 10 times that amount.

While big media generally are terrified at the thought of such policies, a Gallup poll from this April 6-9 has 60 percent of respondents considering that “upper-income people” are “paying too little” federal taxes. (Fully 67 percent said the same of “Corporations.”)

For more on corporate media having difficulty with the concept of marginal tax rates, see FAIR Action Alert: “CBS Cheats on Tax Coverage” (9/22/08).