{"id":4765,"date":"2011-09-07T08:13:06","date_gmt":"2011-09-07T12:13:06","guid":{"rendered":"http:\/\/blogs.northcountrypublicradio.org\/inbox\/?p=4765"},"modified":"2011-09-07T08:13:06","modified_gmt":"2011-09-07T12:13:06","slug":"a-journalists-income-tax-flub-a-societys-blind-spot","status":"publish","type":"post","link":"https:\/\/blogs.northcountrypublicradio.org\/inbox\/2011\/09\/07\/a-journalists-income-tax-flub-a-societys-blind-spot\/","title":{"rendered":"A journalist’s income tax flub, a society’s blind spot"},"content":{"rendered":"

There is a small-scale tempest underway in the blogosphere right now over an error that popped up in a recent article in USA Today about taxation.<\/p>\n

In that article, now corrected<\/a>, reporter Gregory Connolly argued the following:<\/p>\n

“That raise actually might not be as good as it looks. The extra money is nice, but it could very well bump you into the next tax bracket, possibly leaving you with less money than you had before the raise.”<\/p><\/blockquote>\n

Sounds like common sense, right?\u00a0 And you hear this all the time around the water cooler:\u00a0 Why work harder and earn more if it only bumps you into a higher, more punitive tax bracket?<\/p>\n

Why scrap and invest and take risks, if it only puts a bigger IRS target on your back at tax time?<\/p>\n

The problem, of course, is that this isn’t how American income taxes work at all.<\/p>\n

Our Federal system uses “marginal” tax brackets, which means that only the income above each threshhold is taxed at the higher level.<\/p>\n

Here’s an explanation from the Center for Economic and Policy Research<\/a>:<\/p>\n

Suppose that the tax bracket for income under $200k is 25 percent, and for income over $200k is 33 percent.<\/p>\n

If you get a raise that pushes your income from $195,000 to $205,000 then you only pay the higher 33 percent tax rate on the $5,000 that is above the $200k threshold not your whole income.<\/p>\n

Therefore, there is no (as in none, nada, not any) way that getting more money, and being pushed into a higher tax bracket will leave you with less money after taxes.<\/p><\/blockquote>\n

This particular journalist’s flub in USA Today would be no big deal except for one thing.<\/p>\n

Widespread ignorance about how America’s tax system works — and doesn’t work — leads to a remarkably skewed conversation about the ways we fund our government.\u00a0 Too much of the conversation is political and ideological, not factual.<\/p>\n

Which is worrisome, because bipartisan efforts to “simplify” and “reform” the tax code are likely to shift the tax burden in ways that few reporters — and few voters — actually understand.<\/p>\n

It’s also likely that inaccurate notions about income taxes will shape the debate over tax hikes, especially on higher-end wage earners.<\/p>\n

So here’s my question to you:\u00a0 Whatever you think ideologically about the income tax, how much do you actually know about how it works?\u00a0 And how much do you know about the way it affects your family and your pocket book?<\/p>\n

Comments welcome below.<\/p>\n","protected":false},"excerpt":{"rendered":"

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