Somebody Slept Through Civics Class…

… and it shows.

Here’s an editorial cartoon from someone who just isn’t paying attention to how taxes work.  Not only that, but the cartoon’s author’s profession is political cartoons, and he’s old enough to be retired – and to know better.  Here’s the cartoon in question:

This is not, in fact, how Keynesian Economics works, even if you're trying to hyperbolize for humorous affect.

This image is hotlinked from gocomics.com, so the picture may go bad in the future.

So, the comic shows* a man who increases his income from $30,000 per year to $33,000 per year, and losing it all in taxes under a Keynesian economic regime (which the author equates with wealth redistribution.)  There is one leetle problem.  Taxes don’t work that way.

In order for taxes to work this way, the marginal tax rate above $30,000 would have to be 100%.  So, I look up the tax due on a taxable income of $30,000** in the 2011 tax table and get a tax of $4,079 for a person filing single.  If I look under $33,000, I get $4,529.  The difference between $4,529 and $4,079 is $450, not $3,000.  Also, if you do the math, the marginal tax rate of the increase is 15%.  Also, the increase in the effective tax rate when the comic character increased his income was 13.6% to 13.7%.

Yeah.

Now, you may be thinking something along the lines of “Hey, lighten up, it’s supposed to be funny.  Who cares if it’s wrong?”  I do, and here’s why: 1) Lots of people think this is how taxes work and 2) They make bad decisions on what sort of public policy they support based on that misinformation.  Unfortunately, I’m one of the many people who has to live with the bad public policies that arise from their inability to understand the most basic facts about how out tax system works.  That’s why I think this sort of thing is worthy of arguing against.

Also, Keynesian economics?  It doesn’t work like that.  At all.  I’ll leave you and your search engine alone if you want to find out more.

* Transcript (just in case the comic disappears):

First panel: Narrator says “You work very hard…” while a cartoon man sighs as he drives a delivery truck.

Second panel: Narrator says “…and you pull in $30,000 per year!” as the same character sighs at the payroll office.

Third panel: Narrator says “So you take on an extra job!..” while the man tosses papers from the driver’s side of his car.

Fourth panel: The narrator says “Now you earn $33,000 per year!” as the man admires his check while walking up a sidewalk.

Fifth panel: A grinning man in a fedora and trench coat snatches the paycheck from the man, to the man’s surprise.

Sixth panel: The narrator says “and the government takes and extra $3,000  in taxes!” while the cartoon man sighs and the man in the trench coat grins as he pockets the check.

** This is a major oversimplification in this case, because our guy would have, at least, one adjustment and his standard deduction, so his taxable income would certainly be lower than $30,000.  I’m ignoring this to keep it simple, folks.

Advertisements
This entry was posted in Current Events, Taxes and tagged . Bookmark the permalink.