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Thursday, June 12, 2008

David Kurtz notes that CNN actually presents US voters with some useful information.

Clear as a bell indeed.

For CNN it is outstanding.

Also see Mark Kleiman and Matt Yglesias

Now they never make it clear if the income levels are individual or family income. to the extent that there are hints, they appear to refer to individual income, but they make no sense as categories of individual income (they are way too high). In fact they make little sense as categories of family income.

I have to check with their source, which, of course, is easier to find from talking points memo (a click away). It is not promising as the bit quoted by Kurtz refers to "earners" that is individuals (except for joint capital income if it is called earnings even though the IRS calls it unearned income)and to "households". The reference to households makes no sense. Taxes are based on families not households. Unmarried couples living together (and sharing living expenses) are one household for the Census but two families for the IRS. Anything to do with taxes comes under the heading "single" "married filing jointly" or "married filing separately." Don't matter how committed you are, to the IRS, if you don't have that ring it don't mean a thing (which is right generous of them since the marriage penalty has been reduced but not eliminated).

In fact, the Tax Policy Center is definitely attempting to calculate the impact by household income. HoweverI'm not sure how they map the tax code to households (and I'm not planning to read their whole large *.pdf to find out).

Jerri Willis of CNN and the tax policy center itself in its summary were very sloppy sometimes suggesting that the income levels referred to individual income rather than household income.

OK this is bizarre. The Tax Policy Center claims to determine the effect of policy changes depending on household income, but they choose income levels based on quintile of the individual income distribution. I have no idea why (OK I know why but I don't want to say). Thus the effects are calculated for households whose income is in this that or the other quintile of the individual income distribution. Thus the fraction of households in the lower two quintiles is less than 40%.

Key quote footnote 2 to Table 1 "The cash income percentile classes used in this table are based on the income distribution for the entire population and contain equal number (sic) of people, not tax units. The breaks are (in 2008 dollars) 20% $18,918, 40% $37,595, 60% 66,354, 80% 111,645, 90% $ 160,972 95% $226,918, 99% 603,402 99.9% 2,871,682."

Now CNN doesn't even mention household which receive less than $38,000 a year, as if they don't exist. The poorest of the poor according to CNN make $38,000. In 2005 (last year available) 29.6% of US families (their word) had income under $35,000 per year. I would have guessed that new taxes will apply on 2010 income (the Tax Policy Center seems to assume they would apply on 2009 income that is be slightly retroactive). 2009 income will be higher in dollars than 2005 income at least due to inflation (and probably nothing else for lower income households). For some reason the Tax Policy Center attempts to forecast income distribution for 2009 (so reforms wo. Also the Tax Policy Center is somehow doing households which can include more than one family. According to my feeble effort to extrapolate and interpolate about 23% of households are too poor to matter to CNN.

Households with income in the lowest quintile of the individual income distribution would get an average tax cut of $567 from Obama and of $19 from McCain. Households in the second quintile of the individual income distribution would get an average tax cut of $892 from Obama and of $ 113 from McCain. It is clear that CNN decided that middle income households are the poor in order to ballance their report, since a complete report of the Tax Policy Center's analysis would be too helpful to Obama.

There is also a little bit of TV talking head distorted perspective as Gerri Willis describes "people" making $66,000 to $ 112,000 as "in the middle of the income distribution" before the correction "which is actually pretty rich in this country [or any other ndrjw]." People making that income are the second highest quintile of the individual income distribution. She means to say "households" which would be (very rhoughly) above the 56.5 percentile if they were families in 2005 going well up over the 78.2th percentile ($100,000). OK so correct for 3 years of income growth (mainly inflation) and households not families and I get something like 50th percentile to still well over the 70th*.

She also rounded Obama's proposed cut for such fairly rich people of $1,290 (put right on the screen by CNN) down to $ 1,200 to save two syllables (and if one must round one should round to the nearest hundred to $ 1,300).

Finally before noting that it is not true of the Obama plan, she says "you would expect the Democrats to raise taxes on lots of folks ..." OK Ms Willis when was the last time that taxes on lots of folks were raised under a Democratic President ? I believe that that was Lyndon Johnson's anti-inflation tax surcharge (and before that Roosevelt). You would expect the Democrats to raise taxes on lots of folks if you were deceived by Republican propaganda. Now it is true that Democrats in congress voted for a large broad tax increase when Bush sr was President and for a huge extremely broad tax increase when Ronald Reagan was President, but in the past 40 years the vast majority of people have not seen their taxes raised so long as a Democrat was in the White House. Even when reporting that the Republicans are attempting to trick people this time, Willis suggests that their very successful 40 year old campaign of deceit was not totally dishonest fraud.

Still utterly outstanding for the MSM and definitely worth the teeny tiny bit of attention I can get for it on top of the huge CNN and the medium sized TPM.

*update: corrected from 80th. Of course the 80th percentile of the individual income distribution is lower than the 80th percentile of the household income distribution. I was being silly. At that level, real incomes have grown a lot in the USA (although at a rate far below that of the super duper rich).

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