Tax Policy With Media Celebrities
Barack Obama has proposed a budget that, among other things, would reduce taxes on over 90 percent of the population and increase taxes on around 2 percent of the population. Flipping through the Sunday talk shows, it’s striking to see how uniformly wealthy media celebrities think it makes sense to characterize this is a “tax increase” or “raising taxes” and to leap immediately to a discussion of what the impact of these “higher taxes” will be. I think that the majority of people whose taxes are set to go down might be more interested in learning about the impact of lower taxes.
But I suppose this is how the world really looks from David Gregory’s chair. A rich person is somewhat like Jeffrey Immelt who earns tens of millions of dollars in salary and bonuses during good years, and in bad years he waives some of what he’s owed, accepting mere millions in new salary, and gets hailed for his generosity. One assumes that with this multi-million dollar annual salary, he also has investment income. The lower classes in this universe are like Chris Matthews and David Shuster and need to host cable shows. And a David Gregory or a Brian Williams—hosting a network television show, to be sure, but not owning the network—becomes a typical middle-class American.
50 Responses to “Tax Policy With Media Celebrities”
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March 1st, 2009 at 12:52 pm
As I said in the previous thread, the top 1% — or perhaps even the top 0.1% — is even more delineated and calibrated than the bottom 99%. That’s because there are indicators of wealth that only really kick in at this level: multiple homes, ski chalets, au pairs, etc.
March 1st, 2009 at 12:54 pm
Of course one has to go back only a couple of days to find certain fellows coming from you guess not entirely broke families arguing that liberals should support more regressive taxes.
March 1st, 2009 at 1:00 pm
This is one of those cases where Matt’s intellectual dishonesty really shines through. Republicans and the wealthy are always lying, even when they’re telling the truth. There is no question that Obama is proposing tax changes that are increases on net by a wide margin. Sure 90% of tax payers will get a tiny, tiny cut (if, as will never happen, the economy barely shrinks this year and then grows 3.5% next year) but the increases on the top end far outweigh them. That’s called a tax increase.
March 1st, 2009 at 1:02 pm
I got a $1,500 refund this year. Holla!
March 1st, 2009 at 1:08 pm
That’s called a tax increase.
Despite budgeting for a $282 billion tax cut?
This is one of those cases where Sancho’s intellectual dishonesty really shines through.
Fixed.
March 1st, 2009 at 1:09 pm
It is also interesting to hear them talk about the wisdom of “raising taxes” during a recession.
They never mention that tax increases don’t kick in for two years.
If they were to honestly frame their concern they should probably ask about the effects of merely proposing to raise taxes.
Someone should also point out that taxes only go up for the income in excess of $250k. The increase if 4%, so the additional tax burden on the next $750k is $30,000.
My question is if you are a “small business owner” who has earned income of $1 million, are you really going to fire anyone so you can recapture this $30,000 loss? Would firing someone really make up for the additional taxes?
What lower income people do when they lose income is “work harder and longer”; if the upper income earners feel the same motivation, they might actually hire more people and expand their business to make up for the shortfall.
At a $1 million dollar income level, you make about $500/hr. So $30,000 would require another 60 hours of work over a year, that is an extra 75 minutes per week.
March 1st, 2009 at 1:23 pm
I think that the majority of people whose taxes are set to go down might be more interested in learning about the impact of lower taxes.
The benefits are self-evident, the costs are not. If lowering taxes involved complicated schemes that affect different investment classes, influence business decisions, and changed economic uncertainty your complaints would be fair. Instead the populist aspect of “Making Work Pay” is quite simple with little ambiguity as to its effects. The worst case scenario of a tax cut is we spend too much today and have to borrow more tomorrow. With a complex tax hike our economic recovery is at stake as well as our long term growth rate. It’s facetious to claim that middle class Americans care less about a tax cut on someone else when it could have an even greater effect on their economic well-being.
March 1st, 2009 at 1:29 pm
I don’t think this misinformation tactic is going to work. The 95% with taxable incomes below $250k know who they are – and right now don’t have too much concern or sympathy for the other 5%.
What most people learned in 2008 was that Bu$h and his GOP minions dedicated their 8 years in power to looting the US treasury and transferring wealth to their cronies via tax cuts, no-bid contracts, bogus wars, and basic thievery.
Now that the 95% has seen their house values drop double-digits, local taxes increase, incomes stagnant, access to credit drop – they feel it’s time for the other 5% to give back some of their ill-gotten gains.
March 1st, 2009 at 1:30 pm
tomj,
Because taxes tomorrow don’t change behaviour today? Come on. Every other issue you addressed is perfectly reasonable and worth discussing. Matt somehow thinks this is being elitist because you’re focusing on a tax hike that only “affects” two percent of the population.
March 1st, 2009 at 1:34 pm
In the now-departed days of dead-tree news dominance, reporters made very small salaries. Publishers were trying to sell as many newspapers as possible, which meant lots of poor and average folk. This made it very easy for reporters to be the paladins of the people they continue to believe themselves to be. And to this day, the farther from Washington, New York and LA the publishers and reporters are located, the more likely they are to present news without such an obvious class-based blindness.
March 1st, 2009 at 1:34 pm
The point is that taxes on net will be raised. This, in Matt’s mind, is not a tax increase. Just like the Bush tax cuts, which made the tax code more progressive, was merely a tax cut for the wealthy. You can still convincingly argue that the Obama tax increase is justified and that the Bush tax cuts should not have included cuts for the wealthy, but to pretend that the Obama proposal is not a tax increase or that the Bush cuts did not lower middle class taxes is dishonest. Matt’s been doing the latter for six years and jumped at the first opportunity to do the former. It suggests that he doesn’t think his arguments will actually be accepted by most people, so distortion is required to convince people.
March 1st, 2009 at 1:42 pm
Sancho–
The point is that taxes on net will be raised.
Only not.
the Bush tax cuts, which made the tax code more progressive
Only not.
The color of the sky in Sancho’s world? Whatever is the opposite of blue.
March 1st, 2009 at 1:42 pm
If lowering taxes involved complicated schemes that affect different investment classes, influence business decisions, and changed economic uncertainty your complaints would be fair.
Obviously if lowering taxes on the wealthy doesn’t influence business decisions, then it serves no purpose–if, in other words, things won’t trickle down by changing the purchasing and employment decisions of businesses, then there’s no reason to do it. At this point, interferences with the marketplace are a feature, not a bug.
The worst case scenario of a tax cut is we spend too much today and have to borrow more tomorrow.
The stimulus argument is over, the budget argument has begun. The whole point here is to show how the country could kinda maybe reach something resembling solvency one day, to reassure people that’s okay to keep lending money to the U.S.A. The only reason we can borrow today is because we’re planning to raise taxes tomorrow.
March 1st, 2009 at 1:44 pm
the Bush tax cuts, which made the tax code more progressive
Ha, ha, ha
March 1st, 2009 at 1:48 pm
Because taxes tomorrow don’t change behaviour today?
Sounds correct. Taxes tomorrow are very unlikely to change behavior today. There are so many unknowns in evaluating what the business world will be like two years from now that trying to take account of modest changes in income taxes two years from now is absurd.
March 1st, 2009 at 1:49 pm
Matt’s point about the frame through which these media reporting celebrities talk about taxes is dead on. I was watching a segment of Hardball Friday where Roger Simon from Politico was talking about the Obama tax plan. Here’s the gist of what happened:
1. Simon says Obama is only taxing the top 1%, those making $250k or more
2. Simon says that a couple with a mortgage and 2 kids in college that makes $250k probably don’t consider themselves rich
3. Simon says Obama probably would have preferred to tax only those making $1 million or more but needed to cut pretty deeply into the middle class in order to pay for everything he needs to pay for.
4. mbuchel sits on his couch at home and shakes his head in disbelief
These people do not live in a world that is in any way connected to the one most Americans live in, yet are responsible for interpreting how average Americans view government policy.
March 1st, 2009 at 1:52 pm
LOL. “It isn’t a tax cut because it’s too small to be”. Now THAT’S intellectual honesty we can believe in!
What does that even mean? And how does it fit into the context of this topic, in which we look at how the tax brackets of so many figures in the news media colors their coverage of tax policy?
Correct me if I’m wrong, but he isn’t going to raise taxes–he’s just going to let the tax cuts for the wealthiest expire, which they will do because the people who enacted them wrote them to. Now, I would hate to accuse someone of intellectual dishonesty for intentionally missing the distinction. . . . .
March 1st, 2009 at 1:52 pm
Matt’s arguments on this theme are simultaneously persuading and depressing me. So here’s what I want to know. What would it take to create a mass news outlet that genuinely reflected the perspectives of the *people*, rather than corporations and wealthy media celebrities?
This is a question I’d like to hear Matt discuss. Why hasn’t it happened? What actually are the barriers to accomplishing it?
I don’t think the barrier is access to distribution in and of itself. Certainly that won’t be the barrier once we’re all watching TV online. I think the more important problem has something to do with the allure of celebrity itself. The masses apparently *want* to watch wealthy, attractive media celebrities discuss politics. Excluding, obviously, Matt’s loyal readers.
Does this mean we’re more or less locked into the present model, and just have to pray that God keeps sending us Rachel Maddows?
March 1st, 2009 at 1:55 pm
“The point is that taxes on net will be raised.”
Uh, ok. If that’s how you want to frame it. The point is that only a very small percentage of the population, the percentage that have very high incomes and are comfortable in life, are going to pay more. So 95% of Americans are going to see this “net tax raise” as a tax cut for them, paid for by those who have done so well under Bush. I think you’ll find that to be a much more popular stance then you realize.
March 1st, 2009 at 1:58 pm
We are only echoing Reagan’s 1986 tax hike, the biggest ever tax hike on corporations and on closing loopholes for corporations and the wealthy, and which also established the earned income tax credit to relieve the federal income tax burden for the lowest-income working Americans.
Why do Republicans hate Ronald Reagan so much?
March 1st, 2009 at 2:05 pm
.
Not if everything they see and hear tells them otherwise, endlessly. You can manufacture facts.
Which I believe was Matt Y’s point.
This is, after all, the country that invented Marketing as an intellectual discipline and university degree, and where you can legally sell Velveeta™ as cheese.
March 1st, 2009 at 2:06 pm
tomj asked
No. Firing someone will not make up for the additional taxes. While you or I might hire people to do yard work, or tutor our kids or something as kind of an extravagance, business generally do not. People are employed by businesses to do work which adds to the business’s revenue. So either the employee is being paid more in wages than his work adds to the business’s revenue, in which case the business is likely to lay him off, no matter what the tax rate, or he is adding more in revenue than he is being paid in wages and benefits. In the later case, firing him can only decrease revenue. Decreasing revenue cannot make up for a shortfall in revenue.
Now it is true that in times of recession businesses lay people off, but that is because of the drop in demand. In that circumstance, the number of people who can be employed such that their contribution to revenue is greater than their wages and benefits declines. There is no magic power to make up for a decrease in revenue by further decreasing revenue.
March 1st, 2009 at 2:07 pm
I think you’re looking at it.
March 1st, 2009 at 2:10 pm
The problem with the proposed tax cuts for 95% of Americans is that they won’t seem like much because local and state taxes are going through the roof everywhere due to the poor economy, and states are refusing to follow suit on raising taxes for the wealthiest. The federal tax cuts for 95% will be too small to compensate, and the wealthy will continue to make out like bandits in the state and local tax schemes.
March 1st, 2009 at 2:12 pm
On the ABC show this morning, Stephanopolis asked Orszag about increasing taxes on everyone through “cap and trade” like everyone was going to get a tax increase. Orszag made the point that the entire budget combination resulted in 95% of americans getting tax cuts, so you had to consider the whole thing. Steph just couldn’t let it go, he said, but you agree that if you separate this one issue from everything else, then I can claim you will be raising taxes. These people are so stupid and petty it is unbelievable.
Look at what Ed O’Keefe of the Washington Post said about the tax issue:
“journalists are obligated to pound tax points that don’t matter to 95% of Americans because Republicans “raised concerns about it”. I hope Republicans don’t raise concerns about Obama’s birth certificate or how good of a bowler he is, because then we are in big trouble!
March 1st, 2009 at 2:14 pm
Flounder, be fair: look how aggressively the media pursued concerns that Democrats raised when a Republican was president.
March 1st, 2009 at 2:27 pm
“Of course one has to go back only a couple of days to find certain fellows coming from you guess not entirely broke families arguing that liberals should support more regressive taxes.” –linus
In case this was a reference to my arguments, I’m afraid you misunderstood me. Indeed, I’m not from a broke family (we’re doing our best, however). And I guess you’re right that I was arguing liberals should support more regressive or flat taxes in certain situations. But my intent was not because dicking the poor is an awesome policy. It was a lesser of all evils situation. When possible, I think taxes should be progressive, but sometimes, certain policies can’t work on a progressive or even flat scale. Take the gas tax, for example. I would love it if it was feasible to have a progressive gas tax. Such a thing is, of course, a logical impossibility at our current stage in technology (maybe one day). Thus we are forced into a dilemma: do we A) have a tax that is flat and thus hurts the poor hardest; or B) have no tax at all? This naturally depends on the scale of the problem. If it’s not that big of a deal, I say scrap the tax. But global warming, pollution, the inefficiency of cars, support for terrorism and oppressive governments, suppor for undivesified economies in unstable third-world countries, and increasing geopolitical conflict in which hundreds of thousands (possibly millions) have died is simply worse, far worse, than even repressively taxing the poor in one of the world’s richest countries. This is a liberal argument. Hence, liberals should be, on occasion, more comfortable supporting policies that negatively impact domestic poverty more than they impact the rest of society.
March 1st, 2009 at 2:27 pm
David Gregory couldn’t sputter out enough criticisms this morning. And his panel, except for the efforts of Harold Ford, was a pile on. They didn’t address cap and trade, the renegotiation of Medicare coverage, the addition to the budget number of the Iraq war and the ATM. Nothing. You would think Obama just walked in and asked to raise the budget by a factor of three in order to raise taxes on struggling families earning over $250k a year. It was just shocking to watch. No analysis of the package, just reiteration of the number. These people are less helpful than my coworkers at the water cooler.
March 1st, 2009 at 2:34 pm
Andrew’s got it right–Gregory’s show was so unbalanced and uninformative that I turned it off in disgust. Just the choice of folks–can’t they find someone other than Harold Ford and Dee Dee Myers to support the Obama budget?
March 1st, 2009 at 2:59 pm
Careful, Matt. You’re sounding like Greenwald with stuff like this: “The lower classes in this universe are like Chris Matthews and David Shuster and need to host cable shows. And a David Gregory or a Brian Williams—hosting a network television show, to be sure, but not owning the network—becomes a typical middle-class American.”
It’s easy to make a good point but still sound goofy.
March 1st, 2009 at 3:07 pm
These people do not live in a world that is in any way connected to the one most Americans live in, yet are responsible for interpreting how average Americans view government policy.
Saul Steinberg’s “View of the World from 9th Avenue” can be re-cast as “View of the World from $9 Million A Year”.
March 1st, 2009 at 3:14 pm
tax hikes and cuts journalism is class warfare; most people i know don’t honestly believe that wealthy class or wealthy media celebrity that monopolize discourse know dick about how most of us regard these things
March 1st, 2009 at 3:40 pm
Well, the Bush years were good ones for folks like Gregory. The wars, in particular Iraq, raised demand for their services, which is in secular decline. The tax cuts disproportionately benefitted them. And the substantive policy issues of the day could be easily boiled down to easy-(for-them)-to-understand phrases like “cut and run” and “freedom’s on the march.”
Now that substantive, fact-based policy discussions have returned, people like Gregory are in a bit of bind. They just can’t quit the mother’s milk of 2000-2008. People like Gregory are happy to (underpay) taxes for war and other calamities, which is their form of economic stimulus. For things such as universal health coverage, not so much.
March 1st, 2009 at 3:43 pm
“The masses apparently *want* to watch wealthy, attractive media celebrities discuss politics.”
Is there a class of wholesome elites who would prefer to get their news from really poor ugly people? What is it you want? A whole network dedicated to Joe the Plumber types? Salt of the Earth TV? Sounds really, really tediuous.
And what does it mean to aim news at “the people”? Which people? Poor inner-city latinos? Working class whites in rural Tennessee? Suburbanites? even WITHIN any of these classes, you would have very different interests among men and women, young and old. Etc.
So which of these is your preferred audience?
As for me, all things being equal, I, um… would prefer good looking news anchors too.
March 1st, 2009 at 3:46 pm
For the first time in a long time, wealthy people are going to be paying more in taxes. This may not be applicable to the vast majority of the audience, but it’s certainly unusual enough to qualify as newsworthy.
March 1st, 2009 at 4:10 pm
So WHAT if tax revenues are raised? Changing the total tax revenues from 35% to 40% of GDP with a steep progressive bend at the top 5% of earners is portrayed as some kind of communist plot by the right. That’s not class warfare, it’s modern small-d democratic policy. Gumption and bootstraps doesn’t build comprehensive reliable infrastructure or provide modern medicine, things people really want. If they want them, shouldn’t they be able to organize themselves in a way to give themselves these giant things?
Government put a man on the moon in 1969. Private enterprise put a man in orbit in 2004. Microsoft could build a better database program in 1995 than the FBI can build today. Some projects are best done collectively by people through government, some are not. There is an argument to be had on the size and scope and selection of what belongs in the public sector but for Republicans to argue that nothing other than military spending belongs in the public sector was as wrong in 1789 as it is today. “Promote the general Welfare” is a broad social mandate found IN THE CONSTITUTION. If conservatives don’t like it, offer an amendment to take that shit out. If not, STFU. People are tired of the endless conservative bullshit. Just say something that relates to the conversation for once in a f#cking decade. Volcano monitoring my ass.
March 1st, 2009 at 4:47 pm
Above should read ’sub-orbit’.
David Gregory pisses me off like German Titov loved vodka.
March 1st, 2009 at 5:05 pm
@mbuchel
“Simon says that a couple with a mortgage and 2 kids in college that makes $250k probably don’t consider themselves rich”
This is exactly the problem. 250k income, with a mortgage, and being able to AFFORD putting two kids through college is vastly more affluent than the majority of the population!
A more typical situation would be 100k income (50k each spouse), with a mortgage, depending on struggling/student loans/state aid to put two kids through college. One kid is considered a pretty extreme burden these days…
March 1st, 2009 at 5:27 pm
Despite what’s said above, cap and trade effects a net tax increase. Only a portion of the revenues raised by cap and trade are offset by the tax cut. So, for most people, there’s a tax increase. And to suggest that because most people are going to pay the carbon tax only indirectly so they’re not really paying it is exactly the sort of dishonest rhetoric I’d expect from liberals.
March 1st, 2009 at 5:55 pm
Thomas – It’s dishonest of Republicans to deny the facts about global warming to keep alive the lie that tax cuts create tax revenue. Cap-and-trade is two things, 1) an attempt to fix the cost of carbon pollution on producers instead of carbon producers getting a free ride and 2) an attempt to push the economy from an unstainable fossil fuel model to a green economy. Simply denying that global warming exists is a great solution for 1) and 2) politically but it doesn’t actually address, you know, reality.
March 1st, 2009 at 8:04 pm
joejoejoe, well, that really doesn’t address, you know, the subject at hand, which is whether the budget as proposed raises taxes on over 90 percent of the population, as Matt says. You’re trying to change the subject, which is a smart thing to do, because Matt (and Obama) are both lying.
March 1st, 2009 at 8:08 pm
joejoejoe, exactly right. I have in-laws much like the 250K scenario, with a daughter going to East Coast expensive school who wouldn’t entertain the thought of going in-state or much less to a community college to get the first 2 years of standard classes out of the way. The crazy thing is that she is interested in environmental science, and going to Colorado would have probably been a wash on the quality of the program. The Lexus SUV is never more than two years old. Having them pay an extra couple grand or even 10 grand and have to skip the yearly upgrade to the kitchen/entertainment room/etc., just doesn’t make me shed any tears.
March 1st, 2009 at 8:14 pm
flounder, I don’t doubt that your inlaws will buy fewer cars and spend less renovating their home after the tax hikes. Tell me again, how is that supposed to help with our goal of creating jobs? Aren’t there people employed to make their cars and to renovate their home? Don’t worry about your inlaws, worry about the guy you’re throwing out of work.
March 1st, 2009 at 10:52 pm
Again, correct me if I’m wrong, but the point of a cap-and-trade is to try and, over time, cut down on carbon creation. So if companies do the smart thing, and lower their own emissions, there will be no “tax” to pass on to consumers.
March 2nd, 2009 at 12:10 am
notorious, you’re wrong. No, the proposal is to fully auction that amount of carbon that is permitted to be used, and so long as carbon is used, there will be a “tax” to pass on to consumers. And the budget–the document Matt’s talking about–assumes that the auction will produce a net increase in revenues above what is provided in tax cuts in the budget. So, again, discussing the budget, what’s proposed is a net tax increase for most folks.
March 2nd, 2009 at 4:25 am
Thomas – Even if you include carbon taxes I doubt anywhere close to a majority of Americans would see their taxes increase which is what Matt was addressing – will a majority of individuals see their taxes increase or is it more like fellow travellers in David Gregory’s tax bracket? You keep wanting to change the debate to whether taxes in the aggregate increase. I’ll stipulate that total tax revenues of all kinds will go up and I’d guess so would Matt Yglesias.
March 2nd, 2009 at 3:55 pm
Tax burdens are quite simple to apportion.
In the United States at the end of 2001, 10% of the population owned 71% of the wealth, and the top 1% controlled 38%. On the other hand, the bottom 40% owned less than 1% of the nation’s wealth.
I propose a new kind of progressive taxation. 10% of the population should provide 71% of the tax revenue, and the bottom 40% should contribute less than 1% of the tax revenue.
March 11th, 2009 at 4:49 am
Well said, finally a good report on this stuff
March 17th, 2009 at 2:49 pm
I’m sold
March 18th, 2009 at 9:37 pm
Superb post, thanks