The website Vox (3/25/16) has what editor-in-chief Ezra Klein describes as an “excellent tax calculator” that, in its headline’s promise, “Tells You How Each Presidential Candidate’s Tax Plan Affects You.”
Actually, it does no such thing; it’s a gimmick that is entirely useless except as a deceptive advertisement for Hillary Clinton.
As a gimmick, it’s pretty simple. You put in your annual income (actually, your “expanded cash income,” which you probably don’t know even if you know what it is), whether you’re single or married and whether you have no kids, one kid, or two or more kids. And then it tells you what Donald Trump’s, Ted Cruz’s, Hillary Clinton’s and Bernie Sanders’ “plans mean for your federal tax liability.”
Let’s try it out with the US median household income ($43,585), married, two kids. You get a graphic that looks like this:
“Pay $5,110 more”—holy smokes! Stop the revolution, I want to get off! Why didn’t someone (besides Vox’s Alvin Chang) tell me that “Sanders wants to implement massive increases across the board, including on the poor”?
Maybe because he doesn’t—and you wouldn’t pay $5,110 more, or anything like it.
Mostly, that big number you get for the Sanders tax hike when you plug in your income is the payroll tax that employers will pay to cover the cost of a single-payer healthcare system. As the Tax Policy Center, which worked with Vox to create the calculator, explains:
We’re including payroll taxes, excise taxes and corporate income taxes as well as individual income taxes…. Most economists think employers pass their share of the tax on to workers in the form of lower wages.
With all due respect to most economists, this is dubious. Unless you work at the rare enterprise that does not have profit as its primary goal, your bosses are already paying you as little as they think they can get away with. If they get a new cost associated with your employment, they may try to raise their prices. They may look for other areas where they can cut costs. They may even decide that they can no longer afford to employ you. But what they won’t do is suddenly realize that they could have been paying you thousands of dollars less all along without you quitting. (They may even be forced to accept a lower profit rate, though that’s something “most economists” seem to exclude a priori.)
But that’s not even the real problem with Vox’s calculator. Sanders’ plan is based on using a new payroll tax to pay for a single-payer healthcare system, which will relieve businesses of the considerable burden of paying for employee healthcare. Since just about everyone agrees that single-payer is cheaper than what we have now (including Ezra Klein, before Sanders started running against Clinton on a single-payer platform), in theory business as a whole should come out ahead. But certainly you need to take into account that business would be getting a big break on expenses at the same time that it’s getting a new tax, right?
No, Vox thinks you don’t need to take that into account. From the calculator’s FAQ: “The Tax Policy Center’s model does not include spending programs and thus can only show the effects of tax changes.”
Imagine a website—maybe one that seems to have a pronounced pro-Sanders tilt—creating a “Benefits Calculator” that promises to tell you how each candidate’s benefits plan affects you. The calculator guesstimates how much your employer will save with a single-payer plan and, using the same dubious economics, implies that that savings is money in your bank account. What about your employer’s big tax hike? It’s a benefits calculator—it can’t show the effect of tax changes!
Ezra Klein would be the first to say that a website that constructed a machine for telling people that Bernie Sanders would give them thousands of dollars was engaging in partisan hackery. Yet when Vox does the same thing in reverse, it’s data-driven journalism. Or something.
Jim Naureckas is the editor of FAIR.org. You can follow him on Twitter: @JNaureckas.
You can contact Vox here (or via Twitter: @VoxDotCom). Please remember that respectful communication is the most effective.
(Once more … with feeling)
A calculating calculus
“bosses are already paying you as little as they think they can get away with.” This is obviously written by someone who has never owned or run a business of any kind. Wages reflect a number of factors. An employer first determines what positions are needed in order for the business to attract and keep customers. They must then assess what the market range is for each position relative to the task they are asked to perform. The reason a technician gets paid more than a secretary is that the position is harder to fill, and the person contributes more value to the business. His or her pay must be enough to keep that person from leaving since it’s very disruptive when valuable people leave, Further, the owner wants to be able to give that employee raises over time to reward good work and keep the person on the team. Paying as little as possible is a losing strategy. It undermines loyalty, makes for low morale, & harms the relationship with the customer. Small business owners and managers are customer focused. They are also focused on the long term. Many forego wages in the early years to get their business off the ground.
Michael Moore’s film “Where to invade next” had an interesting comparison of taxes in a European country vs the US. Yes, US taxes were lower. But by the time you added the cost of all kinds of services like college tuition and health care that are included the actual cost of living was way higher in the US (while still getting less). If only people would make that calculation and then think about what it does for your peace of mind and quality of life not to have fear financial ruin from health issues or crushing debt for decades from college loans.
Hey Pete, did you miss “But what they won’t do is suddenly realize that they could have been paying you thousands of dollars less all along without you quitting.”? Because you said ” His or her pay must be enough to keep that person from leaving” as if that was new information. The point is if single payer causes an employer to slash wages and salaries then their employees should go to someone who will absorb the cost elsewhere.
I might have thought that an intelligent 31 year old person would realize that, in promoting the candidacy of Hillary Clinton, by any means necessary, including the skewing of facts and pandering to the ignorance of the passive viewer/reader, his and subsequent generations would have to live (and die) with the consequences of that effort.
It’s one thing to advocate a candidate, even if it’s to advance your own career; it’s another thing, entirely, to create a device such as this phony “tax calculator” with the obvious intention to fool and frighten the trusting but credulous (and ignorant) in the general population, while trading on the celebrity gained by appearances on cable television.
If I had a child who wanted to work in news, I’d keep her as far away from MSNBC as possible. What that business seems to do to young liberal-minded on-air people is legal in Nevada, but only in certain counties.
Have a nice career, Ezra.
And 5000, is far more than 2.5 percent of 43,000. (Besides the fact that the payroll tax Sanders proposes to pay for single payer is 2.5 percent after income taxes.)
Meaning Ezra Klein is really bad a basic math, no need to even bring up zeroing out premiums.
@Peter Pollak:
Not familiar with the Walmart model of employment I see.
I’m retired. Yet the calculator assumes a payroll tax. Lol.
These numbers are meaningless anyway without putting into context what the taxes collected are going for. It’s an important issue and I’m glad FAIR’s on top of it because it’s a media sleight of hand trick. It might be pointed out however, that neither the article prompting FAIR’s response, nor the FAIR article itself, call into question massive probelms of the underpinning economic system.
I love all the people that came to say the article was wrong and then go on to explain that it’s exactly correct… way to go guys
JC:
How is the Vox article accurate?
Just a tip to other readers: BEWARE posting to this site.
While I have posted on a few occasions, never have I had my comments changed without my knowledge or approval. I don’t mean having something simply removed, I mean having something as obnoxious as the video on “crabbing” inserted long after my words had been posted on-line. It wasn’t there yesterday, at 2:32 pm, yet is now.
Very funny, FAIR.
I won’t post here or support this site again.
“Unless you work at the rare enterprise that does not have profit as its primary goal, your bosses are already paying you as little as they think they can get away with.”
No, it doesn’t care about your pay, it cares about your cost. It *spends* as little as it can on you. If it becomes 0.2% more expensive to hire people, they will compensate people 0.2% less.