New York Times Tries to Make Readers Believe that Obamacare Means Big Tax Increases

Newspapers are supposed to be in the business of informing readers. It's hard to see what information was provided when an article on the tax increases associated with the Affordable Care Act (ACA) told readers:

"Among the most affluent fifth of households, those affected will see tax increases averaging $6,000 next year, economists estimate."

It's difficult to know what this is supposed to mean. The most affluent fifth of households would be around 26 million households. If the tax increases amounted to an average of $6,000 per household that would come to $156 billion a year. However the next paragraph tells us that the projected tax take is $318 billion over ten years. This implies a tax hit on these families that is less than one-fifth as large. (The same tax would produce considerably more revenue ten years out than next year.)

Presumably the piece means that the tax will affect a narrow subset of the top quintile and that this narrow subset (mostly people with income over $200,000 a year), will see an average increase in taxes of $6,000 a year. The Tax Policy Center puts the number of tax filing units (roughly households) affected as 2.8 million. It should have been possible to more clearly describe the impact of the tax increases associated with the ACA.

[Correction: An earlier version said "26,000 million households," which several readers called to my attention. Robert Salzberg provided the Tax Policy Center number.]

ACA's tiny tax
written by Robert Salzberg, December 09, 2012 2:45

From same NYT article:

"Starting in January, the health care law will require workers to pay an additional tax equal to 0.9 percent of any wages over $200,000 for single taxpayers and $250,000 for married couples filing jointly."

In order to pay $6000 more in taxes at a 0.9% rate, you'd have to earn an additional $666,666 above the minimum income requirements.

Every single one of these wage earners also only pays the now 4.2% but likely soon to be 6.2% Social Security payroll tax on the first $110,100 of their income but nothing over that. If a single person paid 6.2% in payroll taxes for their entire income of $200,000 then their taxes would go up by around $7,800.

So paying $6000 more for every 2/3 of a million more in wages without any additional Social Security payroll taxes like most Americans pay on every wage cent they ever earn sounds like a pretty tiny tax to me.

ACA tax vs Bush Tax Cut Expiration
written by Robert Salzberg, December 09, 2012 3:02

The ACA's tax of 0.9% on single taxpayers wages over $200,000 and married couples wages over $250,000 is one fifth the size of letting the 35% bracket rise back to the Clinton Era 39.6% top rate.

...
written by urban legend, December 09, 2012 3:17

Sheesh, someone with a minimum of effort to follow current issues would doubt this before writing or letting it pass into print. The New York Times no less! I hope someone there is suitably embarrassed, or do they not even give a crap anymore?

Re: ACA's tiny tax
written by Jennifer, December 09, 2012 3:44

From the first paragraph I could tell this was a silly article--he uses the word "affluent" but as you point out to pay that much in the tax you would have to be starting from a large base. Disappointing from Robert Pear, is usually at least competent. You get the impression he just copied numbers and quotes without ant thought.

Tax Affects Top 2%, Not Top Fifth
written by Robert Salzberg, December 09, 2012 5:55

The linked Tax Policy Center chart details that there are only 2.8 million 'tax units' that make enough to pay the ACA taxes. 2.8 million is 1.8% of the total tax units.

A tax unit is single, married filing jointly, head of household or married filing separately.

So like President Obama has been saying, it's just the top 2% of families that will be affected by this tax.

http://www.taxpolicycenter.org/numbers/displayatab.cfm?Docid=3634&DocTypeID=7

ACA will be a burden on many in the lowest quintile (i.e, working poor). Not humane.
written by Rachel, December 09, 2012 8:25

This tax puts all the emphasis on insurance, little on effective delivery of care. People are forced to pay, but with no assurance that they can get anything for their money, except perhaps a space on a waiting list. Are the people in NYC and DC really so protected from medical oligopolies that they are unaware of the poor care, long lines, and overpricing--the injustice-- that many already endure, and that this bill is likely to promote, especially among lower income people?

-1

Typo
written by Anand, December 09, 2012 9:59

Presumably you mean "26 million households" instead of "26,000 million households".

New York Times Tries to Make Readers Believe that Obamacare Means Big Tax Increases

About Beat the Press