Tuesday, October 19, 2010

The Phantom Tax Cut

Three comments on the excellent Michael Cooper NYT story about the Democrats' stealth tax cut within the stimulus bill.

First, Cooper doesn't mention the most likely reason people think taxes went up: they've been told that Barack Obama and the Democrats are raising taxes, nonstop, by GOP pols and conservative talk show hosts.  Anyone listening to Rush and watching Fox News -- and having no other source of news - would naturally believe that Obama and the Democrats had done nothing but raise taxes from day one. (To his credit, Cooper does mention the other reason, which is that state taxes have in many cases gone up.

Second, it's worth mentioning against that (as reported by Plain Blog brother and ace journalist David S. Bernstein) the National Taxpayers Union scored the stimulus as a major negative -- that is, when Democrats cut taxes, the NTU counted it as a bad vote.  No, I don't think that the NTU action had anything to do with perceptions in the nation at large, but I still think it's a striking fact that didn't get as much play as it deserved.

Third: this story is a good example of why media bias is so difficult to measure.  On the one hand, here's the (liberal?) New York Times running a story unprompted by events, and just two weeks before Election Day, highlighting a policy which presumably would help Democrats if people knew about it.  On the other hand, the fact that such a story could be written -- the fact that most people think Obama has raised taxes when in fact the opposite is true -- is strong evidence against the idea that Americans are influenced by a liberal media.

Follow-up suggestion for Michael Cooper: how about a story on the Medicare donut hole checks sent as part of the ACA?  How many recipients had any idea what they were?

3 comments:

  1. they've been told that Barack Obama and the Democrats are raising taxes, nonstop, by GOP pols and conservative talk show hosts. Anyone listening to Rush and watching Fox News -- and having no other source of news - would naturally believe that Obama and the Democrats had done nothing but raise taxes from day one.

    Interesting to see this within an hour of another post questioning whether there's really a difference in ruthlessness between the two parties. :-)

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  2. Just in case you missed the comment from the National Taxpayers Union on that site, I'll repost it here:
    Yes David, those tax cuts "in the hand" were worth something, but to us less than met the eye. The actual figure, for example, is lower than the $275 billion advertised by ARRA supporters. From the conference report on ARRA, the 3-year revenue total of the tax provisions was $252.879 billion, not $275 billion. About 25 percent of that $253 billion ($63.66 billion) consisted of "refundable" credits. This is counted as straight spending, since it is more than offsetting individual tax liabilities.

    In our opinion, the few remaining tax provisions of value had more to do with small business expensing and depreciation than simply issuing rebate checks. So in the end the vote was a net negative for fiscal policy.

    And, your readers might be interested in knowing that we did not come to this decision simply because Obama was in the White House. We had reservations over the same kind of scheme when Bush proposed it in 2008:

    www.ntu.org/.../dont-fall-for-stimulus-fairy-tales.html

    The Republicans dramatically ramped up their averages in 2009, but we are under no illusions that this is necessarily a long-term trend. As we noted in the release announcing the Rating, regardless of which party has controlled Congress, during the 31 years we've been doing this only twice have both chambers posted across-the-board average scores of above 50 percent. That's a pretty serious indictment of the Repss as well as the Dems.

    Pete Sepp

    V-P Policy & Communications

    National Taxpayers Union
    March 8, 2010 4:38 PM

    ReplyDelete
  3. In case you aren't clear about "refundable" credits, they are credits that result in checks from the IRS. If you owe $30 in taxes and can claim $100 in refundable credits, you won't owe any taxes *and* you'll get a check for $70. This is welfare, not a tax cut.

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