Horrific Tax Reporting from CBS

This CBS story on the McCain and Obama tax plans is so bad it seems designed to stupidify viewers. It takes three family case studes and purports to calculate the effects of the Obama and McCain tax plans on their tax bills.

First, a lesser but still egregious error: for the two-earner family with three kids making $32,000 last year, the report says the family "paid no taxes last year." They may have paid no income taxes, but the family undoubtedly paid federal payroll taxes, not to mention state and local sales taxes.

CBS saves the worst reporting for the one-earner family earning $213,000 with three kids. Here's what they say:

The Wilsons are at the other end of the spectrum, earning $213,000. That puts them in the 28 percent bracket. If Gilbert's business improves, his income could push him into the 33 percent bracket, which under Obama's plan would jump to 36 percent of income.

"That would be painful. Another 8 percent of the income," Gilbert said.

The distortions in this short piece of misinformation are almost too many to count. Of course if their income improves they will be in a higher tax bracket. But that fact is entirely independent of Obama's tax proposal!

The really shameful part of this story is that the reporter apparently told this family--and millions of viewers--that if they were to move from the tax bracket with a rate of 28 percent to a higher bracket with a rate 36 percent, their tax bill would increase by 8 percent of their total income. But the higher marginal rate is only payable on income in that higher bracket. For example, in 2008 the 33% tax rate starts at $200,300 for a married couple filing jointly. A couple making $200,900 only pays the 33% rate on the last $600. On the other $200,300 they pay the lower 28% rate.

So Gilbert came away from the CBS interview convinced that Obama will raise his taxes by 8 percent of his $213,000 income, which is absolutely false.

What are the true facts of the Obama tax proposals as they pertain to Gilbert's family? Here's what Obama's advisers wrote recently:

Sen. Obama believes that one of the principal problems facing the economy today is the lack of discretionary income for middle-class wage earners. That's why his plan would not raise any taxes on couples making less than $250,000 a year, nor on any single person with income under $200,000 -- not income taxes, capital gains taxes, dividend or payroll taxes.

And according to the tax calculator, a typical single-earner family with three kids making about $200,000 would see its tax bill would fall by $5,856.62 under Obama's proposals. Try out the calculator for yourself.