Oh boy. Speaking of faux hawks, Megan McArdle yesterday decided to start getting serious about the deficit.*
In McArdle’s playpen, that means we’ve got to eliminate Social Security for the middle class (and the rich), shifting instead to covering only low-lifetime earners.** There’s more: She offers a Medicare budget “plan” designed to replace the lower cost provider of medical care with more expensive private insurance ones. I’m not going to bother applying a beat down to what she suggests on health care because it is (a) at least partly incomprehensible — what is “long term care insurance for the carriage trade?”*** and because I really do have a day job and thus don’t have the spare minutes to do my usual John Foster Dulles on this subject right now.
No, here I just want to offer one more ranging shot in my ongoing attempt to demonstrate that McArdle’s serial errors of journalistic craft, large and small, are on their own, divorced from her politics, sufficient reason to dismiss her as a particpant in any civic conversation. That such failings support her disastrous views is, to be sure, a feature and not a bug — but what continues to amaze me is that she doesn’t even meet the minimum threshold for the career in which she has had such institutional success. It’s as if she were a cop who never got the hang of that radio thingy.
So what is it this time? Try this passage:
But people looking at percentages of GDP are dramatically underestimating the scale of what’s involved. For example, I was on a panel where someone told me that “all” we had to do to salvage Social Security was lift the cap on social security earnings. My reaction was: all? That’s a fifteen percentage point tax hike on all income above $106,000, much of which is supposed to be taxed, as of 2014, at 39.5%. On top of the 55% marginal tax rates you’re proposing on top incomes, you need to add in state and local taxes, and the already uncapped Medicare taxes, plus the Medicare surcharge, pushing the marginal tax rate on those incomes well over 60%. To look at it from the point of view of the wealthy, you’re proposing to slash their current after-tax salary income by about a quarter in one fell blow.
What’s wrong here? Well, to be going on with, there’s an elementary mistake about the Social Security portion of FICA. Lifting the cap on earnings taxed for pensions would increase tax levels on those extra dollars by 12.4 %, not 15 %.**** That would be because, as McArdle seems to remember in a sentence or two, 2.9% of the payroll tax total of 15.3 % goes to pay for Medicare, and already is not subject to an income cap.
It’s a little error, I’ll admit, perhaps genuinely a careless one. It is notable (at least to me) that the error falls on the side of making the case for the poor worse and the concern for the rich greater — all SOP in McArdle’s stuff. But maybe this truly was just a slip of memory, an instance of sloppiness rather than malice.
__
In the end, of course, the question of rhetorical intent doesn’t matter much, at least not from my perch as an observer and teacher of writing for the public. If you can’t get things right, big or little, to some quite high level of performance, you just shouldn’t stay (or be allowed to remain) in this business.
Still, as so often with McArdle, there’s more to this mistake than meets the eye. She accepts her interlocutor’s premise that it would take a really big tax — whether her 15% or the real 12.4% number — to restore Social Security to perpetual balance. But is this true?
No. (Surprised?)
I don’t have the full range of calculations in front of me, but it happens that last year Rep. Robert Wexford (D-FL) asked the Social Security Administration to calculate the effects of imposing a 6% tax on all income above the current cap.
The results: that change alone would eliminate more than half of the projected shortfall in Social Security as of 2083. In that context, relative minor changes to the benefit structure (e.g. a change in the indexing calculation to shift the index applied to higher earners from wage growth measures to the consumer price index) would render the system in balance indefinitely.
Now, apply Wexler’s six percent number and get rid of McArdle’s double counting of the Medicare charge, you get to a federal maximum marginal income + FICA rate of 48.4 %.
Next, to return to McArdle’s calculation: the Medicare surcharge McArdle mentions for those above the current Social Security income cap level of $106,000 will run from about $1,000 a year to about $3,200 for the highest earners. Which means we’re talking about maxing out at a marginal, not total, federal tax burden of about 50% — instead of the McArdle preferred rate of roughly 44%. The difference between a take home of 50% of (marginal) adjusted gross income as opposed to 56% is, of course, a big chunk less than one quarter. Which is to say that McArdle’s calculator is broken again.♣[see update below]
I’ll reiterate that the Wexler number doesn’t entirely close the 75 year gap. But it gets damn close — and the point is that McArdle postulates in her post that we have to kill Social Security (as a universal program) to save it. Not so: real calculations with honest numbers show that much less drastic treatments can cure the pension program’s ills.
__
The point: yup, Social Security has a long term solvency concern. It is, as everyone here knows, far from the biggest budget issue we face — that would be health care costs — and there are a number of paths out there to get to decent outcomes for the aged.*****
__
Enough. You get the idea: McArdle fails on the elementary journalistic task of reporting the most basic facts within her story correctly. Those errors support larger failures of interpretation and intellection, to the detriment of her own reputation, to the discredit of her venue, and to the disadvantage of the republic.
And with that I’m off the McArdle beat for a while, except for tying up the loose ends of kitchen folly. I’m just not going there for as long as possible. There is a whole web out there; why spend any more time than one must mucking about in the swamp?
♣[Commenter Downpuppy points out that McCardle may well be referring to the general Medicare surcharge of .9 % on wages above $200,000. The resulting charges are less than those for the surcharges referenced above, thus do not alter the basic calculation; using these numbers, assuming that’s what McArdle meant, results in a slightly lower total tax burden on the wealthy than the one offered above. Still, I regret the confusion.]
*Yes, I know. I need a twelve step program. I promise that this is the last McArdle post for a while, but for my promised response to her bit of silliness attempting to excuse her kitchen follies. But she does provide such a tempting target…
**This is the kind of manure advanced by folks who either know nothing about a subject or whose real goal is not the stated one. In this case: look at national support for transfer payments to the poor and ask how long Social Security transformed into a welfare payment of the elderly poor will remain unscathed. This is pure opinion, of course, but it is a historically informed one: Social Security works because the middle as well as the poor understand its value. Erode that, and the whole structure is at risk — and grandma will count herself lucky if she can dine on cat food. Whether this is a bug or a feature for McArdle I’ll leave for others to ponder.
***McArdle’s full “plan” (sic-ed) for health care cost containment: “You put tight(er) means tests on Medicare and Medicaid to encourage the development of markets for private health insurance and long term care insurance for the carriage trade.” Because our private market for health care has tested out so well already, no doubt.
****For 2011, the total SSI tax rate goes down 2% under the tax deal reached during last year’s lame duck session. It won’t last.
*****You can see a wider range of options of both benefit cuts and payroll tax increases in another calculation that the SSA ran in response to a National Research Council/National Academy of Public Administration study.****
rikryah
I think she’s an idiot, and the Atlantic can’t be that desperate for female employees that they can’t find someone better.
I do enjoy all the times you slap her down. they’re always enjoyable.
Fargus
The carriage trade? Like the making and selling of horses and buggies?
Morbo
If the pondering takes more than half a second then others haven’t read very much McArdle.
bemused
Oh dear. I think the poor girl has an overpowering addiction to writing 3,000 word tortured rebuttals to the inevitable reality based critiques.
Bob
For someone who claims to have an English degree from Penn and an MBA from Booth, she fails pretty hard at basic math and basic writing.
Comrade Javamanphil
If we were the Red State Trike Force, we’d be snapping up all those talking Barbie’s that said “Math is hard” on eBay and mailing them to McArdle. Thankfully we are all a bit lazier than that and pointing and laughing is sufficient.
MikeBoyScout
McMegan’s repeated stupidity (along with most of the Very Serious People) shows us that the solution to our fiscal problems is not “means testing” but academic testing.
Magic asterisks and broken calculators and a full fledged propoganda network are doing more damage to our economy and our democracy than anything else.
Carl Nyberg
McArdle is a shill for an ideological camp that is hostile to Social Security.
As such, we should be very suspicious of her attempts to “fix” Social Security.
Social Security is an economic program that exists because it is politically popular.
McArdle’s “suggestion” is to make it more like welfare where the middle class can be told they are paying in more than they are getting out.
Gee, I wonder what will happen next.
McArdle may say that she will be there to defend Social Security from attacks at that point, but we all know what she’ll really be doing. She’ll be doing whatever the people who pay her salary want her to do.
Bob
@MikeBoyScout
Matt Taibbi just wrote an entire screed on why no one got arrested in finance for the crash. It’s the coziness between the people who are supposed to regulate Wall Street and Wall Street that caused damage to our economy.
But according to Meagan McCardle, there are no villains in a financial crisis because people who took bad mortgages were greedy..and it wasn’t say…a form of asymmetrical information.
cathyx
They should just call GOP plans like this what it is. The plan of Natural Selection. No social security, no medicare, no affordable healthcare, no foodstamps. Only the strongest survive.
wkwillis
Kind of reminds me of how PJ O’Rourke was talking about balancing the budget. He deducted unemployment insurance payments to unemployed people from the government outgo side, but forgot to deduct unemployment taxes from the government income side.
Carl Nyberg
This is also a game of making the Left spend energy on the basics, defending Social Security and collective bargaining rights to sap energy that could be going into getting government to hold banks and the like more accountable.
Mark S.
Carriage trade? I’ve always thought Megan’s secret was throwing in enough bullshit jargon to make it sound like she knew what she was talking about, at least to Atlantic editors who don’t know much about economics. Maybe she’s losing her touch, because what the fuck is the carriage trade?
Bob
Oh, and I wish I wish I wish that Sully would stop linking to Megan. She only got well known because Glenn Reynolds and Sully kept linking to her in the warblogging days for misinformation on how oil would pay for the Iraq War and we’d be in and out of there really fast!
Sully linking to her is one of his giant mental blindspots where he doesn’t realize that he’s only linking her because she’s confirming what he wants to believe about economics…despite his complete lack of knowledge in said field.
Sad to say, I have the same affliction as many others of not being able to stop reading her because she has too much influence in the blogosphere.
Carl Nyberg
McArdle is a shill for the banks and financial sector on the issue of bad mortgages?
Is she whoring herself for the money or because she craves social approval for establishment people?
LGRooney
@Mark S.: Carriage trade is a euphemism for the economic activity of the wealthy. WTF she means in this context is anyone’s guess.
cleek
@Mark S.:
“carriage trade” = sales to wealthy people.
think “people who show up to your store in a carriage, as compared to people who have to … walk (eeew!).”
welcome to 1876…
MikeBoyScout
@9 Bob – at 9:15 am February 18, 2011,
Property Rights mean the right of people with lots of property to take yours without due process. Where’s the villainy in that?
We’re f**ked.
Fargus
@LGRooney: Exactly!
I challenge anyone to figure out what the fuck this means. She seems to be saying that the goal of reforming Medicare and Medicaid is to help develop insurance markets for rich people.
We already have insurance markets for rich people. They’re called insurance markets.
Guster
“To look at it from the point of view of the wealthy …”
The problem isn’t so much that McArdle is a lapdop, the problem is that there’s nobody out there pushing just as hard for 90% marginal rate for every dollar over a million. Oddly enough, there aren’t many millionaires willing to fund them.
A Commenter at Balloon Juice (formerlyThe Grand Panjandrum)
Tom, my condolences at your inability to quit reading McArdle and then reflexively writing about her. Do they have a chapter of Megaholics Anonymous in Cambridge? You’ve taken the first step by admitting you have a problem. Stay strong, my thoughts are with you.
joes527
McMegan is actually doing something interesting with her “carriage trade” bullshit.
Translated:
Funny … she seems to have completely omitted the middle class. Bug or feature?
cleek
the best past is the last:
ah, the motherfucking self-described, chin-stroking, preening, Serious People – are they ever right about anything ?
they’re the people who took us to Afghanistan and to Iraq. they’re the people who brought us the Clinton impeachment. they’re the people who swallow every baited hook the GOP tosses their way.
will no-one rid us of these Serious People?
Guster
@cleek: Yes. They _always_ know what’s best for the Serious People.
jehrler
Sorry to be pedantic, but thought you would want to correct this:
Think you mean “know”
dmsilev
It’s worse than that. People who work for wages or salary only pay 6% SS tax; the remaining 6% is paid directly by the employer and doesn’t count towards gross income or such. It’s only self-employed people who directly pay the full 12%.
dms
Bob
Yup, and she still thinks bailing out the auto industry was a bad idea because the money would’ve been better spent giving those people money to retrain in other fields. What fields there are to retrain in I have no idea because we’ve shipped so many of her mystery jobs out…to our detriment.
As a modern MBA with no experience in her actual field or job experience actually doing things, she makes a lot of bald statements, but lacks the ability to actually look downfield when it comes into investing in America because she’s a free market ideologue.
Very Serious People have finally seemed to realize that exporting all our manufacturing jobs to create a service based economy and destroying manufacturing has made us less competitive longterm. This was baldly obvious to a lot of people early on, just like how invading Iraq would be a disaster, but the political and MBA Galtian classes of the last couple decades seem to have focused on making money for themselves by making profits in the short term.
Our Megans will soon start posting that it technological efficiency that eliminated tons of manufacturing jobs and that poor people everywhere else in the world are doing much better! (old frequent Megan strawman: Liberals are accused of being villains for not wanting Iraqis to be free!). While it’s true that technology has eliminated many tech jobs, not having any manufacturing in the US threatens our ability to make tangible things and impoverishes our middle class of real skills.
It’s really funny because Germany’s social network allowed them to keep manufacturing via social insurance in down years, and regulations forcing banks to stay local and from interfering with the national financial industry kept them from wrecking their financial system.
Btw, still haven’t seen a word about Wisconsin on Sully or Megan, and I doubt we will. Revolutions for freedom from tyranny in other countries are great, but when we do it here, we get threatened 2x4s and get told it’s a riot.
Had to get that off my chest. Megan makes me rage.
cleek
@dmsilev:
but if you self-employ yourself as an S-Corp, you can skip a portion of the 12%. and that’s nice.
rickstersherpa
“Means” testing Social Security and Medicare has always been part of the CATO/Heritage strategy for destroying them, because they know once they become welfare programs for the undeserving poor. It will also mean that individuals applying for these programs will have to undergo a ritual humiliation to be eligible, and will be an inveitable temptation to grifters to scam the program, which in turn will be used by the right wing Megan McArdles of the world as a argument for why “Government” does not work.
Ironically, once the right gets rid of these programs, and ends the housing programs of the last seventy years that encouraged home ownership, they will be creating an ever larger group of people with not very much at stake in the current system. The union workers of the 1960s and 70s, who were homeowners with every growing equity and looking forward to a retirement made comfortable and secure by social security and medicare found the calls to revolution made by the Bill Ayers of the world an absurd. It was a call to destroy the system (despite how many Vietnamese it was killing) that sustained their own material security. The Paul Ryans and Meagan McArdles of the moment believe only a deserving Galtian elite deserve such security and the rest are parasites. But when the parasites discover that “Freedom is just another word for nothing left to lose” and rise up, they are shocked, shocked, that they can’t get the plebes to work for nothing.
Mudge
The individual Social Security load is 6.2%, with 6.2% being paid by the employer. Medicare is 50:50 too. Only the self employed pay the entire freight, and half is available as a reduction of gross income for them. If you add the 6.2% and 1.45% for Medicare to 39.5%, the maximum individual marginal tax rate is 47.15%, instead of the current 40.95%.
Tom Levenson
@jehrler: Yup. Fixt. Thanks
@dmsilev: True, but economists would argue that the employer’s share is really borne by the employee, as the employer lowers the wage offer to account for the cost of paying that side of the tax.
In the real world, were the employer’s share reduced, the employee would reap a fraction of whatever savings might accrue.
4tehlulz
In 1945, America was carrying debt = 120% GDP, then had rapid economic growth, had rapid expansion of government in the economy (GI Bill, Social Security expansion, Interstate Highway System, etc.) and fought a hot war (Korean) and a cold one.
Oh, and helped rebuild Western Europe. And while ZOMG taxing the rich! How is that possible????
In 2010, American debt is around 100% of GDP, we are fighting a hot war (Afghanistan) and the right claims America is broke and cannot do anything anymore.
Why does the right hate America?
cleek
@Bob:
actually, the US is still #1 in manufacturing – though we’ll probably slip to #2 this year. for the first time in over 100 years.
lllphd
first point (that is not as unrelated as it first might seem), interesting how walker has repeated the bush ‘shock & aw” doctrine, lower taxes, then ‘shock & aawwww” freakout when the budget won’t balance! solution? AUSTERITY! simple; next?
second point, given how the medicare/medicaid uptick in costs are what’s carrying all the angst about the debt, the simplest solution is to raise taxes, mostly on the rich of course, but also on everybody. but, we then implement universal healthcare. simple; no more escalating costs, and no more unnecessary suffering. those rank&file health ins. workers? slide them over to the fed program. the managers and shareholders? their severance bonus is: they’re completely covered on medical! otherwise, fuck ’em.
third point, more related to the first but kinda the second: i want to say again that getting rid of walker in less than 10 months would be extra sweet if he can be replaced by russ feingold!
Dennis SGMM
McArdle’s use of the phrase “carriage trade” (No matter how twisted the context) is telling. She sees herself as a member of that class and, like them, she pines for a second Gilded Age in which the worthiest among us, people like her of course, float on an ocean of despised and underpaid wage slaves. Fiscal austerity is the latest tactic in what has been a decades-long war to dismantle every last thing that stands between the upper class and what they see as their rightful place in the world. Those people are not into austerity – fiscal or otherwise. They’re into aggrandizing themselves and if that means impoverishing the rest of the nation then so be it.
Canadian Shoggoth
The only reason Megan has her job at the Atlantic is because it was part of her divorce settlement with reality.
kay
@Fargus:
I’ll translate. In the Conservative War On Medicaid, they’ve consistently omitted a huge fact.
Medicaid supplements Medicare. 40% of Medicaid spending goes not to “young bucks” but to very old and very disabled people. Nursing homes.
In a dishonest and facile manner, she’s (sort of) acknowledging this fact. She wants very old and very disabled people to purchase private long term care coverage.
Barry
@Mark S.: “…because what the fuck is the carriage trade?”
Borrow from one source at X%, and loan it to another group at X+Y%.
In this case, I believe that it’s taking deposits in at just about 0%, and buying 3% Treasury notes.
Villago Delenda Est
You know, an actual conservative came up with the concept of Social Security as a means of forestalling and taking away an issue from his leftist political opponents.
Of course, he wasn’t Ferengi. He was German.
dmsilev
@Tom Levenson: That’s of course true, but we don’t usually count things like employer matching contributions to 401(k) accounts and so forth towards someone’s gross earnings. I would maintain that the most consistent way to measure the tax rate is to start with the gross wages paid by the employer, and then add up all of the taxes paid by the employee on that money. The cost of the employee to their employer is a different, albeit related, question.
Now, all of this assumes honesty in argument. A dishonest arguer such as McMegan will cheerfully mix numbers and skew things around to try to make whatever case they’re shilling for today.
dms
p.a.
Interesting failure-of-free-markets thought: there must be numerous conservo-liebertards out there who could do McArdle’s job for less $$, and possibly be better at it (meaning obfuscate the obvious bs better). Why hasn’t she been underbid for her position? After all, she produces virtually a howler per week that gets eviscerated across the web, severely weakening The Atlantic‘s brand. And yet she doesn’t get dumped. Why isn’t she writing op-eds for South Carolina weekly community newspapers; that would be more in line with her talent level.
The Republic of Stupidity
@Carl Nyberg:
Why does it have to be one or the other?
Why can’t it be both?
Villago Delenda Est
@p.a.:
Perhaps she has video tape of her editor having sex with a goat or something?
Dennis SGMM
@Villago Delenda Est:
No need to impugn goats: a video tape of them having sex with her would be shameful enough.
R. Porrofatto
In 1983, Ronald Reagan and his Greenspan Commission (there’s that Randlubber’s name again — his screwing the middle-class goes way back) not only increased our Social Security tax rates on a sliding scale, but included a long-range formula that kept raising the cap so that it would tax 100% of an average middle-class income for decades. (It’s laughable that the median wage has been so flat since Reagan’s destructive term — thank you Wall Street! — that the cap is now way beyond the median income.) They even included a special rate increase on self-employed people like me so that we would pay the entire worker and employer portion combined. The aim was to deliberately overtax the boomer middle-class more than current payouts required — thus creating the huge Social Security surplus — on the promise that there would be sufficient funds to pay their retirement benefits in the future.
Being self-employed, and having never made more than the Social Security tax cap, I’ve been paying this double tax for 30 years, on 100% of my income, before any other taxes are imposed. I must have missed McArdle’s sympathy for us non-rich folks having to contribute so much of our essential income as compared to her weepy lament for rich people threatened with parting with even a fraction more of their precious disposable millions.
What makes it so ironic in a not at all funny way is the flagrant borrowing from the SS surplus of Republican deficit hawks in order to shower tax cuts on these same rich folks McArdle is so very, very concerned about.
So you can see why it also pisses us off when they propose that we should be inclined to sacrifice benefits we’ve already paid for.
kindness
Megan continues to fluff teabaggers & yet Sully continues to come to her aid and call her positions good.
I hardly ever read Megan as I don’t have a lot of extra time and prefer to spend it on worth while endevors. I do read Sully regularly but when I see him protecting Megan & Ryan and such, I have to say it affects how I value his other positions (ie- makes you look bad Sully).
How The Atlantic stays in business I can’t quite figure out. Maybe they are running illegal casinos/immigration/drugs/counterfeiting or something. Like Megan’s numbers, they just don’t add up.
Legalize
“Carriage trade” seems like a slip-up on McMeghan’s part. What she means is “fuck the middle class; we didn’t need a middle class before FDR sold us out, because wealthy people who owned ‘carriages’ drove the economy just fine.” This is a slip up on McMeghan’s part because she’s actually stating very plainly what she and her “class” actually want – an institutional repudiation of the New Deal and everything remotely associated with it.
Stefan
Fucking Social Security portion of FICA, how does that work?
Stefan
McArdle’s full “plan” (sic-ed) for health care cost containment: “You put tight(er) means tests on Medicare and Medicaid to encourage the development of markets for private health insurance and long term care insurance for the carriage trade.”
Oh, if only we’d had private markets for health insurance already! Oh, if only there were already private businesses that sold long term care insurance! If only it wasn’t against the law to start such businesses!
Brian
How can Social Security have a solvency problem if the ability of the Federal government to meet all future payments is unlimited? There may be a problem related to the consequences (I’m thinking primarily currency inflation) of “printing money” to meet the obligations, but is incorrect as a matter of fact to think of this as a solvency problem. The Federal government, by the fact that it is the issuer of the currency in which its debts (including social security) are denominated, cannot possibly have a solvency problem.
Fuck U III: The Duck Fucks Back
So, Tom Levenson is just another DougJ spoof?
Comrade Nimrod Humperdink
I confess that I’d love to see McMegan show up in the comments section here to attempt to defend herself against Tom’s foolish insistence on basic competence, but to do so would be to dignify the attacks, and thus legitimate the elitist view that shit should be factual and honestly cited in order for it to be printed in any current affairs publication with national reach. The barrage she’d get hit with would be so gratifying.
I have to wonder what kind of ass kicking she’d get from anyplace that actually had a fact checking process that they cared about. Like the National Enquirer. Or even Weekly World News. Bat Boy’s exploits in Afghanistan are frequently more plausible than the positions she takes, and SO much cooler besides…
Anonne
Robert Reich said that all you needed to do was raise the income cap to 180k.
http://robertreich.org/post/3331762717
birthmarker
@dmsilev: I think a large part of the whole SS battle is to get the employers out from under paying anything, or reducing it to a match more in line with a typical 401 contribution. Any plan that makes more burden on the employer is DOA in my opinion.
The whole political process is geared right now to the benefit of big business and their profit margins. Why should SS be any different?
jamey
Would someone please sucker-punch her when they see her on the streets in NW DC? I mean, just fucking lay her out cold.
IM
The idea that Medicaid needs more means testing is especially idiotic.
dollared
@Bob: This. Thanks, Bob.
El Cid
This is the silver-spoon bitch whose Daddy made it rich by getting government construction contracts in New York.
Fuck you, McAddled, you piece of shit.
Another Commenter at Balloon Juice (fka Bella Q)
McMegan fatigue, I haz it. Though I still look forward to the kitchen follies response.
Judas Escargot
Ironically, once the right gets rid of these programs, and ends the housing programs of the last seventy years that encouraged home ownership, they will be creating an ever larger group of people with not very much at stake in the current system.
Feature for them, not a bug.
Alienate folks from the public/civic sector (which can, in theory, compete at cost), and the private sector comes in to fill the gap (for profit!).
Bob
If the MBAs from Booth are as brilliant as Megan, we’re in a whole lot of trouble.
Oh hey look, she posted on Wisconsin in her typically mealy mouthed way.
Downpuppy
Um, Tom, your link for Medicare surcharge goes to the additions for Medicare recipients. I think Megan is referring to the general increases of .9 % on earned income over $200,000 & 3.8% on investment income.
Anyhow, adding 1.8 to 12.4 is 14.2, although that’s 13.08 if you raise the denominator to 1.0855 by including the employer share.
Tom Levenson
@Downpuppy: Could be. Doesn’t actually change the calculation (though I’ll throw in an update above in a moment. In either case, the associated increase she’s talking about is 1 percent or less of total taxable income (other than investment income…which is otherwise taxed at a much lower rate than the 39.4 percent she’s using above.)
So the question of the 25% tax hike she posits above is still not her friend.
Downpuppy
acck – this stuff is messy.
Now I see that the .9 is employee side only – unlike every other part of this tax.
But you know the rules. Megan is right if she gets 1 thing in 10, you’re wrong if you hit 9 out of 10.
gocart mozart
My guess is baby carriage manufacturers and/or the horse and buggy industry.
Brachiator
@rikryah:
Maybe it’s not too late for her to sign up for the SXSW show. They had trouble getting enough female comics this year:
DFH no.6
@Villago Delenda Est:
Some years back (Clinton impeachment time) I mentioned to a co-worker that Republicans seemed like Romulans to me, and he rejoindered, “Nah – Ferengi is more like it”. I thought, yeah, that seems much closer to the truth. Ferengis, the lot of them.
And they all lie about taxes. Summer of ’09 I attended a family reunion (wife’s family) where I was informed by a winger relative a few years younger than me (a lawyer; wife’s 2nd cousin) that he paid out over 50% of his yearly income in taxes. I responded that that was ridiculous – no one in America paid over 50% of their total income in taxes. He insisted it was true in his case, whereupon I told him that if that were so, he should look into getting a refund from whatever college provided him his law degree. Turd in the punchbowl, right there.
Well, there was drinking involved, and he had loudly declaimed earlier (with nothing to back it up) that “Obama hated the Constitution”, so I felt provoked.
azlib
McMegan’s strategy, like all the anti-tax ideologues, is to make the marginal tax sound like it is the actual tax rate, so it scares people. The ideologues want the Federal budget to shrink. All the long term financial shortfalls must be composed solely of spending cuts. These folks simple hate Social Security and Medicare and want them both to go away. Always remember that is their real goal.
DFH no.6
@Villago Delenda Est:
In similar fashion to Bismarck and the original Social Security, the Koumintang in Taiwan outflanked their political opponents in the 90s by creating their country’s universal health care coverage.
Skippy-san
Megan McArdle is the DUMBEST BLOGGER ON THE FACE OF THE PLANET. And when you consider how many really stupid people there are like Uncle Jimbo and Gateway Pundit out there, you really have to work to earn that title.
It’s a wonder that those “three start-ups, a consulting firm, an investment bank, a disaster recovery firm at Ground Zero, and the Economist”-ever made any money.
Stella Barbone
By “long term care insurance for the carriage trade”, I think she’s actually taking a swipe at the CLASS ACT, which is a voluntary insurance program that allows people to purchase long-term care insurance. It was one of Sen. Kennedy’s last pieces of legislation and it is estimated that it will save Medicaid $2B over its first 10 years. Therefore it is something that the Grift and Obfuscation Party despises; Teddy Kennedy, budget savings, and help for the middle class all in one bill.
liberal
@Tom Levenson:
Depends on the elasticities. You have any evidence that the economists’ claim is untrue?
liberal
@Brian:
True.
Barry
liberal – February 18, 2011 | 3:26 pm · Link
@Tom Levenson:
In the real world, were the employer’s share reduced, the employee would reap a fraction of whatever savings might accrue.
liberal: “Depends on the elasticities. You have any evidence that the economists’ claim is untrue?”
Yes – the Great Financial Crash, and every prediction made by both neoliberal and classical economists for decades.
Tom Levenson
@liberal: Not entirely sure what you are asking here.
I was saying I think the economists’ claim is true: there is an impact on wages due to the imposition of a payroll tax on employers.
I was also saying that I do not think employees would capture all of that tax back from the employer were that tax eliminated — either in increased paychecks or increased numbers of employees. Rather the employer would seek to retain as much as they could of that cash. How much that would be would depend on lots of factors — but I do not know of a single economist (and I know some very good ones of the absolutely mainstream variety — remember where I perch) who thinks that such a number would be zero.
Claro?
Wile E. Quixote
I’ve said it before and I’ll say it again: McMegan got her job at The Atlantic because some horny Randroid nerd who got wood over her blogging as “Jane Galt” wanted to fuck her, sort of like Howard Roark did to Dominique Francon in The Fountainhead. Or perhaps he wanted to be fucked by her, who knows? She certainly didn’t get hired because of any qualifications she might have and in real life she’s every bit as helpless, hapless and pathetic as she is as “the business and economics editor” at The Atlantic. For proof of this check out her screeds how hard it was for her to mail her wedding invitations and how hard it was for her to get her car registered in Washington, D.C..
I wish that someone would pay me money to blog about all of the stupid shit I do, but no one will and to tell the truth I’m embarrassed to admit to it. But if someone were, and if I had no shame, I could probably spin the story of how my car got towed in October because I parked in a restricted zone and didn’t notice the signs that said that said that any cars there would be towed after 4 PM into at least a month’s worth of screeds at The Atlantic.
Comrade Kevin
@Wile E. Quixote: Also, she “forgot” to register to vote in the 2008 Presidential election.