USA Weekend Fails 'Math For Grownups'

[CORRECTED: see below.]

Laura Laing is the author of a book called "Math For Grownups." Gregory Connolly is an ostensibly grown-up journalist, tasked by USA Weekend to summarize some "tips" from Laing's book. In his summary, Connolly gets one thing very wrong:

That raise actually might not be as good as it looks. The extra money is nice, but it could very well bump you into the next tax bracket, possibly leaving you with less money than you had before the raise. Better benefits, such as medical, can save you money while keeping you in the same tax bracket.

Gads. We need a remedial lesson in what "marginal tax rates" are. Here are the good people at the Center for Economic and Policy Research, their hair similarly aflame over this:

The tax system brackets give marginal rates. This means that if the raise bumps you into a higher bracket then you pay more taxes only on the income in the higher bracket. Suppose that the tax bracket for income under $200k is 25 percent, and for income over $200k is 33 percent. If you get a raise that pushes your income from $195,000 to $205,000 then you only pay the higher 33 percent tax rate on the $5,000 that is above the $200k threshold not your whole income. Therefore, there is no (as in none, nada, not any) way that getting more money, and being pushed into a higher tax bracket will leave you with less money after taxes.

Don't the writers and editors at USA Today [sic] know this?

Evidently not. Give Laing credit, however -- she shows up in the USA Weekend's comment streams immediately after a commenter makes the same observation, and says:

This issue is covered correctly in Math for Grownups. But I'm so glad that you pointed out this very common misunderstanding. The example from the book considers whether or not non-taxable perks and more paid time off might be a better deal than the raise itself. Folks may assume that a raise is the best option--however, there are many ways to negotiate with employers so that more money is kept in your pocket!

And that's correct. Nevertheless, the failure to understand the nature of marginal tax rates is something that occurs far too often in lay journalism, to the extent that you do, from time to time, encounter stories about people artificially restraining their own income out of terror that they'll end up on the losing end of a tax rate deal. This, in turn, helps to fuel a lot of misplaced sympathy for top income earners. And it all basically comes from lazy journalism! (Or, at the very least, journalism that assumes that an objectively incorrect point of view is just as valid as the objectively correct one.) It should not be difficult to explain marginal rates to ordinary humans. Nor should it be difficult to push back on people who propagate this myth.

Now, if Gregory Connolly's superiors at USA Weekend have used this argument to talk him out of pursuing a raise, he'd better start rethinking things.

[CORRECTION: This item has been corrected to reflect the fact that USA Weekend is distinct from USA Today. As noted by CJR's Greg Marx, it is "a Parade-style weekly spin-off of USA Today." I regret any confusion this may have caused.]

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Comments

[hazel2571]

09:23 AM on 09/08/2011

FYI to all, I know author. The author is a SHE and I'm pretty sure SHE is a serious liberal democrat and fairly sure she's not promoting right-wing anything. And honestly, in the whole book, is THIS the only thing the author of this article could point out? What about other examples in the book. Was the whole book on this subject??? NO. It's intent is to point out, to others, how math is and can be used on a daily basis....by anyone and everyone. Why is everything in this day and time turned into a political agenda. It's not a political book. It's a math book. It's not a math text book. It's a common math book. It's a common math book. IT'S A COMMON MATH BOOK.

[a space alien]

04:28 PM on 09/07/2011

There's a LOT of FAIL going on here, and Gregory Connolly of USA Today is merely symptomatic of it.

[Left on Red]

03:20 PM on 09/07/2011

America's grasp on math has been going downhill since 1980 when the trickle down theory was proposed.

[a space alien]

04:30 PM on 09/07/2011

Tell me about it.

http://images.sodahead.com/profiles/0/0/2/3/8/9/8/0/3/Trickle-down-LOL-41392889324.jpeg

[Adam Story]

11:26 AM on 09/07/2011

I get into this argument at least once a week.

[DennyCrane]

11:11 AM on 09/07/2011

No wonder Americans are so misinformed. The people informing them, journalists, are clueless. This is like learning from a teacher who didn't finish high school.

[twenty2727seven]

11:03 AM on 09/07/2011

So let me get this straight, if you spend more than you earn you end up in America?

[Charles L King]

11:01 AM on 09/07/2011

I've seen this VERY COMMON error often over the years. I always thought it was perpetuated by the very rich who claim that they are on the losing side of the tax code. Their supporters often swallow this without questioning whether it makes sense or not, or considering the very many tax loopholes that were inserted precisely to prevent the tax code from acting as a dis-incentive to enterprise. I assure you that commerce is alive and well in MANY countries who tax the wealthy much more heavily than we do.

[iridium53]

10:59 AM on 09/07/2011

This kind of "journalism" by USA Today and Gregory Connolly is evidence-free, fact-free purposefully misleading ideological tripe designed to support the right-wing Tea-Publican view of the USA Today readership.

It is the worst sort of intentional lie.

USA Today should be ashamed.

[jkenn21357]

10:36 AM on 09/07/2011

Here is simple math for you liberals.

Why S&P downgraded.....

• U.S. Tax revenue: $2,170,000,000,000
• Federal budget: $3,820,000,000,000
• New debt: $1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cut: $38,500,000,000

Let's remove 8 zeros and pretend it's a household budget:

• Annual family income: $21,700
• Money the family spent: $38,200
• New debt on the credit card: $16,500
• Outstanding balance on the credit card: $142,710
• Total budget cuts: $385

[jerrde]

10:45 AM on 09/07/2011

nice

[MrEMT]

10:56 AM on 09/07/2011

Come on... you didn't need to jab liberals. It was interesting all by itself and perhaps taken more seriously without having to treat people like fools. But thank you for sharing.

[celeritas]

10:24 AM on 09/07/2011

Republicans depend on this misunderstanding to justify extending the Bush tax cuts for the rich.

[celeritas]

10:28 AM on 09/07/2011

But they extend the lie further by calling it's repeal a "raise in taxes."

[Floridafish]

10:24 AM on 09/07/2011

"That raise actually might not be as good as it looks. The extra money is nice, but it could very well bump you into the next tax bracket, possibly leaving you with less money than you had before the raise. Better benefits, such as medical, can save you money while keeping you in the same tax bracket."

I think what he's saying is don't hold your breath because you ain't gettin' a raise. They'll be more than happy to cut your hours though so a raies won't matter.

I once had a manager that told me "the boss will give you a raise if you apply for it" while at the same time telling everyone they were cutting our hours. I couldn't help but break out laughing... or was I crying. I sometimes forget.

[Grabski]

09:39 AM on 09/07/2011

Actually, what you earn per hour goes lower when you get a raise at the margin.

What's more, certain benefits go away as income goes higher; there are people whose marginal tax rate exceeds 100%.

[celeritas]

10:32 AM on 09/07/2011

No.

[LeftRight]

11:16 AM on 09/07/2011

No there's not. NOBODY is paying 100% or greater in taxes. NOBODY.

[Grabski]

12:35 PM on 09/07/2011

Reread slowly: 100% marginal tax rate when you factor in lost tax credits

[BeautifulOnDaOutside]

01:40 PM on 09/07/2011

Do you know what marginal means?

[Moarku]

09:16 AM on 09/07/2011

Funny how the "journalist" points out in his response, "I'm so glad that you pointed out this very common misunderstanding," as if he didn't just perpetrate the misunderstanding himself.

A more accurate response would be, "Thanks for pointing out my mistake. Actually, it looks like that's a very common mistake, which could be affecting how large numbers of people think of tax laws. Maybe we should do something about that..."

The first reads like a right winger who got caught and is dodging responsibility. The second reads like a true journalist who made a mistake.

[Benbo]

09:28 AM on 09/07/2011

The writer of the book is the one who made the comment. She didn't write the article.

[Moarku]

03:56 PM on 09/07/2011

Oops. Reading comprehension fail. *hangs head in shame*

Nonetheless, I still find it fishy that the writer just happened to get it wrong in the exact way the right wingers keep trying to make people thing. Especially given the fact that this wasn't a side comment on some other subject, but summary of an author's actual tips which were factually correct.

[jdstelecom]

09:03 AM on 09/07/2011

Although the author's essential point is correct, he is wrong when he says "Therefore, there is no (as in none, nada, not any) way that getting more money, and being pushed into a higher tax bracket will leave you with less money after taxes". He is correct in stating the higher tax rate only applies at the margin, but he fails to take into account that many credits have cutoff points which would result in a net lower spendable income. To take one easy example.

Consider a single person in 2010 taking the standard deduction who has an AGI of $18,000 making a $2000 IRA contribution. His tax would be $883 dollars. But he also qualifies for a $400 IRA tax credit-so his out of pocket tax payment is $483. If he received a $100 raise his tax would go up $15 AND he would lose $200 of the IRA credit (the credit drops from 20% of the IRA to 10% of the IRA at $18000). Thus he would be worse off by $115.

These situations are not common, they are usually small and can often be avoided with tax planning. But it is wrong to imply they couldn't happen

[LJB064]

09:44 AM on 09/07/2011

That's an interesting example. But, to quibble - the statement you quoted is still correct. It says that there is no way that being pushed into a higher tax bracket will leave you with less money after taxes - and that's correct.

Your example shows that getting a raise might result in more-than-offsetting negative tax consequences, but NOT as a result of moving into a higher tax bracket for the incremental income.

[LeftRight]

11:18 AM on 09/07/2011

That's interesting, but ultimately unrealistic. How many people are making an AGI of $18,000 and sending $2,000 per year into an IRA. For that matter, how many people are making $18,000 AGI and even HAVE an IRA?

[early99muse]

08:55 AM on 09/07/2011

Is Connolly a true journalist, or is he an right wing ideologue disguised as a journalist?