NEW HAMPSHIRE — Yesterday, the Senate held symbolic votes on a pair of high-profile tax bills with important implications for the November election. Senators narrowly rejected a Republican-backed extension of all the Bush-era tax cuts in favor of a Democratic proposal that would preserve lower rates for taxable income below $200,000 per individual, or $250,000 per family, while allowing reductions in tax rates on income above those thresholds to expire.
Unfortunately, even though the debate over extending the Bush-era tax cuts has been a key point of contention between the parties since Obama took office, many reporters still haven’t learned how to accurately describe the competing proposals to their readers.
For instance, an Associated Press story on the Senate vote by Alan Fram that ran in the Nashua Telegraph and Concord Monitor today incorrectly suggested that no tax cuts would be extended for the wealthy under the Democratic bill. In his lede, Fram wrote, “Democrats pushed a yearlong extension of tax cuts for all but the highest-earning Americans through the Senate on Wednesday.” He later described the GOP proposal as “a rival Republican package that would have included the best-off in the tax reductions,” again suggesting that the wealthy would be excluded, and claimed that “the $250 billion Democratic measure would extend tax cuts in 2013 for millions of Americans…[b]ut it would deny those reductions to individuals making over $200,000 yearly and couples earning at least $250,000.”
Why is this wrong? Because under the Democratic proposal, all Americans would still pay lower rates on their first $200,000 (or $250,000) in taxable income. And up to that level, individuals who earn more would actually see a greater financial benefit. As analysts from the Center for Budget and Policy Priorities noted when reviewing a similar proposal back in 2010, “high-income people actually receive much larger benefits in dollar terms from the so-called ‘middle-class tax cuts’ than middle-class people do.”
The same mistake was made in a Boston Globe campaign notebook story today which claimed the GOP bill “would have extended the cuts for all taxpayers” while the Democratic proposal would “allow tax cuts on the wealthiest Americans to expire but would keep in place cuts for those making less than $250,000 annually.”
This framing was echoed at the national level, though the details were sometimes made clearer. Both The Washington Post’s Lori Montgomery and New York Times reporter Jonathan Weisman described the vote in their ledes as extending middle-class tax cuts while allowing them to expire for the wealthy. Montgomery only briefly acknowledges the details later in a reference to a previous tax-cut extension as preserving “breaks on income over $250,000 a year.” By contrast, Weisman specified clearly that the Democratic bill “would allow tax rates to rise on incomes, capital gains and dividends for earnings of more than $250,000.”
What’s so frustrating is that reporters’ misunderstanding of this point has been recognized for so long. Back in 2009, Emily Friedman of ABC News wrote a wildly misleading article suggesting that individuals would have incentives to reduce their income to below $250,000 to save money on taxes if Obama’s proposal were enacted. (After the piece was widely mocked, ABC published a corrected version with many of the same flaws.)
One problem, as Amira points out, is that Obama himself has reinforced the misleading framing in describing his proposal. During a speech at the National Urban League Convention in Louisiana yesterday, for instance, Obama said, “Just a few hours ago, the Senate moved forward a bill that we had promoted to keep middle-class tax cuts for 98 percent of Americans next year.”
Members of the president’s own party appear to have been taken in by the spin as well. Earlier this month, Treasury Secretary Tim Geithner had to, as New York’s Jonathan Chait put it, “break out the hand puppets and head up to Capitol Hill for a quick lesson.” According to Politico, “Geithner tried to assuage concerns by telling Democrats that the president’s plan would ensure that all taxpayers would pay the lower tax rates on their first $250,000 of income—and they would be hit with higher tax rates only for earned income over that threshold.” Conversely, Republicans who support extending all the Bush tax cuts have no incentive to correct Obama or the Democrats when they exaggerate the extent to which taxes would be increased on wealthy Americans.