Comments for USA Today Is Too Dumb for Words When It Comes to Taxes at http://www.cepr.net , comment 1 to 28 out of 20 comments http://www.cepr.net Fri, 24 May 2013 08:00:47 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11396 Beth Roberts, I think what happened to your overtime pay is the result of the way withholding is calculated. It happens to the people where I work at bonus time. The federal (and possibly state) income tax withheld from a paycheck in any given pay period is calculated based on the assumption that you get that amount every pay period for the entire year. A one-time pay boost could easily put you into another bracket, so you get over-withheld; it gets squared up when you file your tax return for the year. The effect was more noticeable in the 1970s, when marginal rates were quite a bit higher than they are currently. - slb Wed, 07 Sep 2011 23:06:54 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11382 Wouldn't AMT be an exception to "none, nada, not any"? I'm pretty sure that happened to me one year. - Jack Funchion Wed, 07 Sep 2011 07:18:32 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11380 At least they have fixed it, maybe thanks to Dean? It now reads: "Sizing up a raise A hefty raise might not be as big as it looks. Extra money could bump you into the next tax bracket, which means you’ll pay a higher tax rate on earnings above a certain threshold. Relax: Your earnings below that threshold are still taxed at the previous, lower tax rate." And EmmaZahn,no it didn't happen to you. What you describe is only a matter of withholding. You can make your check bigger or smaller anytime you want by changing your withholding. If you saw your check get smaller with a raise, your withholding increased more than your tax liability and you will see a bigger refund at tax time. You did not net less pay with your raise. - AndrewS Wed, 07 Sep 2011 02:33:35 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11379 In the mid-70's I worked an extra 8 hours one week, and made $5 more in my paycheck. Is it the payroll office that doesn't get marginal tax rates? - Beth Roberts Wed, 07 Sep 2011 01:07:04 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11377 This kind of promotion of CRAP (Conservative Republican Approved Propaganda)has been a staple promotion of Limbaugh for years. He has fed that tripe to his ditto-heads as a constant diet and has never been given a comeuppance for it yet, as far as I know. - Jerry Buerge Tue, 06 Sep 2011 16:24:25 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11375 USAToday has now published a 'clarification' which addresses the marginal tax confusion. However the clarification itself contains some odd advice. Ms Laing says that instead of paying $1425 in taxes on the additional $6000 income, Kyle may be "...better off asking for another week of vacation, a cappuccino machine in the break room, and a VIP parking space". Really? With the incremental net income of $4575 Kyle could afford to take another week of vacation (without pay), buy a top end cappuccino machine, and roller skates to get from his peon parking spot to his office, and still have money left over. Ms. Laing may have the math right in her book, but her advice does not reflect sound economic thinking. - anonanon Tue, 06 Sep 2011 12:42:35 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11374 My favorite bit of ignorance, seen constantly, is when a reporter writes that a powerplant generates "5000 kilowatts per year." This is a meaningless statement. Presumably they meant "5000 kilowatt-hours per year". - Rob Lewis Tue, 06 Sep 2011 12:18:11 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11369 As it happens, Laing's publisher is giving away the e-book addition of [i]Math for Grownups[/i] this week. http://mathforgrownups.com/ - TreeTop Tue, 06 Sep 2011 08:02:43 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11368 According to their article, this tip about raises comes from "math educator Laura Laing, author of [i]Math for Grownups[/i]." I wonder if Laing really made that mistake or if the USA Today reporter misunderstood the book. - TreeTop Tue, 06 Sep 2011 07:57:40 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11353 Matt, I wasn't endorsing anything on that site other than the numbers. And the numbers say that for someone who's earning less than $40k and actually getting the various government programs they qualify for a pay raise may well leave them with less after-tax money. There's no comment here about whether people _want_ to be in that position or not; I agree that no one really wants to deal with the crap involved in actually qualifying for the various programs. But there _are_ people in that position, and the fact that giving them a raise leaves them with less money is completely ridiculous. Or put another way, you're arguing that high marginal tax rates are not necessarily a disincentive for people to work because they may not realize they're that high or because there may be other benefits to working, like higher self-esteem. I completely agree; what I'm saying is that marginal rates specifically higher than 100% are a travesty; doubly so when we're talking about people who're poor to start with. They're a travesty because they mean people who try to do better get screwed, not because they cause people to not try to do better. - Boris Mon, 05 Sep 2011 17:55:14 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11350 Aw, don't pick on USA Today. I see stuff like this ALL the time. Why just yesterday on Face The Nation, Bob Schieffer asked Jon Huntsman of his tax policy idea, "does that mean that Social Security recipients are now going to have to pay taxes on their income?" Apparently Schieffer, who is older than God and presumably receives Social Security, is unaware that he pays taxes on that income. - Southern Beale Mon, 05 Sep 2011 11:09:29 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11349 To be [i]entirely fair[/i] to USA Today, I used to think this too... but I was 12 years old at the time. I got it a year later. - anthrosciguy Mon, 05 Sep 2011 09:53:22 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11345 @Boris: That's an interesting site, but remember that it's perfectly rational for a low-income earner to prefer the "pay cut" that comes with qualifying out of public aid. Food stamps and Section 8 housing, for instance, come with big strings attached that make them less valuable than their "cash equivalent." And then there's simple human pride. Set aside Reagan's paranoid nightmares about "strapping young bucks" conspiring with "welfare queens" to have enough babies to buy Cadillacs and T-bone steaks. Anyone who's ever actually been near that kind of poverty knows that it sucks, and that the welfare system is designed to humiliate you at every turn. If you start from the assumption that everyone making less than $40,000/year is (a) motivated solely by a desire to collect as much welfare as possible while earning as little money as possible and (b) can predict to the penny with 100% accuracy the tax and benefit implications of everything they do, then yeah, public aid would need to be changed to eliminate the loopholes. But in real life, the "left-liberals" that site wants to blame everything on are correct in thinking that most people really don't want to be on public assistance. - Matt Mon, 05 Sep 2011 09:23:25 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11341 My favorite is people who were dismayed when I told them my house was payed off. Oh, that's terrible. You don't get the mortgage deduction on your taxes! Yep, I'd like to pay interest to the bank just so I can get a refund of 30% of it back at the end of the year. Makes perfect sense to me. WTF is the matter with people. Yes, it would be much better to have a $1,500 mortgage payment than a paid off house just for that yearly tax deduction. - esther Mon, 05 Sep 2011 08:15:42 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11338 Back in the early '50's I was in Jr.Hi. and my dad was manager, and part owner, of a small electric motor manufacturer. He told me that the employee representative had complained about a scheduled wage increase because it would bump people into a higher tax bracket. I was about 12 - 13 years old, but even I understood how stupid that was. Here we are 60 years later, and people still don't understand marginal rates???!!! - Ethan Mon, 05 Sep 2011 07:45:11 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11337 I've never been good at math--calculators were invented for people like me, and my husband balances the checkbook so I don't screw it up--but I'm amazed at the lack of basic arithmetic literacy in the world. I once actually had to explain to someone that if prices doubled and then fell 50%, they had fallen to the beginning point. And the person was well above the age of 10. - PeonInChief Mon, 05 Sep 2011 07:19:57 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11334 I had a friendly argument for about 20 minutes with my seatmate on an Amtrak to Texas about how the successful were being bled dry by taxes before we both realized that he didn't understand marginal tax rates. I find that ignorance [i]extremely[/i] common amongst people making that argument - it's as if they've been programmed with a minimal set of truisms and distortions about how taxes work that allow them to come to simple, but incorrect conclusions. After they've locked into those conclusions, they are impervious to the evidence from [i]their own tax bills[/i] that some of what they've been told doesn't have any relation to reality. - J Mon, 05 Sep 2011 07:04:54 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11332 No, apparently the editors and writers at USA Today are just stupid for words. - rickstersherpa Mon, 05 Sep 2011 06:51:05 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11331 would have zero problem of having less work only if her ADA or AMA erects less of a barrier to entry for foreign dentists. My dentist friends from oversea struggles for years just to finally got to practice here despite they were qualified and clients love them. They were less arrogant and less entitlement feeling (talking about GOP's continual complaints about entitlements) toward their clients. Yes, tell LA Times' Dentist, she just have to tell her ADA or AMA welcome foreign labor instead of spending money lobbying against them. - James Mon, 05 Sep 2011 06:47:10 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/usa-today-is-too-dumb-for-words-when-ot-comes-to-taxes#comment-11330 A couple years back when Obama was trying to pass his first budget proposal. The LA Times ran an entire article featuring people who were desperately trying to cut back their income because they were sure if they went over the magical new tax bracket number they would lose more money than they earned. I think it featured a woman who was a dentist who wouldn't take any new patients because she was terrified her income would jump into the next bracket. There were quotes from her about how horrible it was that she would have less money if she worked more, blah blah. - Lolly Mon, 05 Sep 2011 05:34:50 +0100