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WSJ: Lie in the headline, bury the truth in the 3rd graph

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May 28, 2009 – Comments (13)

This is a pretty despicably piece of editing, clearly attempting to attribute an effect ("disappearance" of millionaire taxpayers) to a cause (increased taxes on millionaires in Maryland.)

Millionaires Go Missing

Here's a two-minute drill in soak-the-rich economics: Maryland couldn't balance its budget last year, so the state tried to close the shortfall by fleecing the wealthy...

Insert graph about class warfare, loss of revenue, lead readers to a false conclusion by summing it up: Instead of the state coffers gaining the extra $106 million the politicians predicted, millionaires paid $100 million less in taxes than they did last year -- even at higher rates.

Wow, pretty clear action and reaction, right? Well, they didn't actually say that I guess, they just seemed to say it. Why?

Because the truth is the contention they're trying to make (Millionaires left Maryland because of those high taxes, which shows why you shouldn't tax the rich, you stupid liberal communists...) is bogus. Only 3 graphs in do they grudgingly admit this.

No doubt the majority of that loss in millionaire filings results from the recession.

With the truth out, they carefully bury it by dutifully digging up someone to provide a soundbite, taken out of context, to imply that, despite the lack of evidence, that millionaires left anyway because of the law. Christopher Summers, president of the Maryland Public Policy Institute, notes: "Marylanders with high incomes typically own second homes in tax friendlier states like Florida, Delaware, South Carolina and Virginia. So it's easy for them to change their residency."

Then, despite that brief admission that the tax policy is not responsible for a measurable flight of millionaires, they conclude the article with the following, which is another clever attempt to say that the policy sent millionaires elsewhere, without actually saying it did:

All of this means that the burden of paying for bloated government in Annapolis will fall on the middle class. Thanks to the futility of soaking the rich, these working families will now pay Mr. O'Malley's "fair share."

Cleverly worded. And slimey. The WSJ used to be better than this.

The contention they're trying to make here is that the policy means the middle class pays more. Absolutely false. The middle class will pay less that it would have otherwise, though more than the taxers hoped.

If you admit that the disappearance of 1/3 of your millionaires is a result of the economy reducing the number of millionaires, then you admit that those folks aren't available to pay higher taxes. Thus, the shortfall has to be made up either way.

In other words, it's not "thanks to the futility of soaking the rich" that the middle class has a higher-than-the-government-hoped tax bill. It's thanks to the crappy economy. Now, because the remaining 2/3 of millionaires paid taxes at a higher rate, you still had more coming in than had you simply lost those millionaires as well as left your rates the same.

And I doubt the middle class will pick up the tab anyway. Borrowing and creative accounting are two great, traditional political tools you can use to magic away your budget problems. (See U.S. gov.)

The WSJ is the one "stoking class warfare" here. And doing it with carefully crafted words to draw readers to a fictionalized conclusion, even while admitting the truth, however briefly, in the article itself.

There may be good arguments for not raising taxes on the millionaires in Marlyand, but this isn't one of them.

 

13 Comments – Post Your Own

#1) On May 28, 2009 at 7:26 AM, rd80 (98.32) wrote:

The Yahoo republish doesn't make it clear, but the original article was from the WSJ opinion page.

The column doesn't present any breakdown of how many of the 'missing millionaires' were people who changed their residency because of Maryland's tax policy. Without knowing that, there's no way to conclude that higher taxes decreased revenue for the state. There's also no way to conclude they didn't.

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#2) On May 28, 2009 at 7:32 AM, Gemini846 (50.29) wrote:

I live in Florida. We'll be happy to have them. Usually they go out and spend money in restaurants, buy gas and discresionary consumables that increase our tax base.

I do meet more and more people who say they moved here for taxes, but often they have to be mindful of property taxes which can be higher. Its one of the reason the Orlando area and other central locals are booming so much. The coast is still relatively expensive compared to 5 acres outside of Apopka.

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#3) On May 28, 2009 at 7:35 AM, alstry (35.36) wrote:

Welcome to Alstrynomics.......this nonsense is all over the mainstream media today.

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#4) On May 28, 2009 at 8:16 AM, OldEnglish (28.13) wrote:

The article is poorly done. However, the question is whether other states have seen a 1/3 decline in their millionaires. If not, then tax flight may actually be the cause.

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#5) On May 28, 2009 at 8:41 AM, alstry (35.36) wrote:

There is no doubt that incomes have evaporated all across the nation....the earnings of the S&P alone are down 90%.  The earnings of high earners such as Real Estate Agents, Mortgage Brokers, Finance Professionals, and Plastic Surgeons have evaporated and are much lower today than just a few years ago.

Same with contractors and small business owners.

But where the pain is really being felt is the middle class where wages are contracting and benefits are being extinguished.

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#6) On May 28, 2009 at 8:57 AM, gembree (99.91) wrote:

The WSJ managed, in the course of their legendary due diligence, to overlook this quote from the original article in the Sun two weeks ago:

"During a fiscal crisis in the early 1990s, the General Assembly temporarily raised the tax rate to 6 percent for those with taxable incomes of more than $100,000 for single taxpayers and $150,000 for joint returns. The number of filers in those brackets actually increased during that time, according to the comptroller's office."

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#7) On May 28, 2009 at 9:19 AM, TexasChris (67.65) wrote:

Hey I'm one of those stupid liberal communists.  OK, not really, I'm just a socialist.  (the uneducated, regrettably,  won't know the difference)  Interesting article.  It touches on a subject of millionaire/corporate welfale that city's go through, where we have to give the millionaires all this welfare or, oh my goodness, they may take their toys and go somewhere else.  The amount of property tax exeptions that happen in Dallas are staggering.  Then everybody flips out when they cannot make the budget and have to eliminate jobs, benfits, and pay. 

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#8) On May 28, 2009 at 9:31 AM, jstegma (29.27) wrote:

The Yahoo version I saw seemed to be a pretty good example of lying in the headline and burying the truth somewhere deep in the article.  If it came from the opinion page, then I don't know if you can really blame the WSJ as slimy though.

I think this is a problem that has become more common in journalism in recent years.  It is not specific to left or right.  Both sides do it and the other side is always happy to point it out.

In the longer term, it will be interesting to see what happens if states do diverge too much in their tax policies on the rich.  I think we'll see some moves if the states are close together.  Maryland millionaires won't move to Texas, but they might move to West Virginia or Virginia if the tax laws are significantly different.

There could be real a real exodus from states with a tax-oriented attitude.  Maryland is probably the worst example of this mentality.  What do the residents of Maryland receive in return for those taxes that we don't get in Texas?  Maybe a few government jobs.

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#9) On May 28, 2009 at 9:48 AM, EverydayInvestor (< 20) wrote:

The WSJ's opinion has been rejected due to the following (check all that apply):
( ) They assume their conclusion
( ) They offer no facts and the facts of which I am aware contradict their conclusion 
( ) I am having a really bad day and choose to take it out on them
( )  Regression to the mean
(X) Post hoc ergo propter hoc fallacy  

That doesn't mean they aren't right, it just means that their evidence is lacking. But the same is true of what Pokeytax writes. 

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#10) On May 28, 2009 at 10:24 AM, gembree (99.91) wrote:

I'm not saying it didn't have some impact, it may even have had disproportionate impact - I mean, half of Americans were convinced Obama would not only raise taxes (duh), but their taxes (what).  I'm just pointing out that the article not only mixes causation and correlation, but calculates correlation based on a sample size of one.

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#11) On May 28, 2009 at 12:25 PM, FleaBagger (29.02) wrote:

Okay, let's assume everybody's happy to pay a lot more in taxes to bail out the government's increased spending in these tough times. If nobody has the capital to pay for the government's spending, doesn't that lead to the same conclusion as the one implied in the article? The government has to reduce spending. You can only get so far with a back-door inflation tax on bondholders and dollar-holders, because the issue is whether or not the productive side of the economy has enough capital to continue producing the wealth that government is spending.

Of the thousands of examples of faulty reasoning every day in formerly respected newspapers, what made this one stand out to you? Why this one?

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#12) On May 28, 2009 at 12:32 PM, masterN17 (< 20) wrote:

I've been looking for a standardized form to reject WSJ claims.  Thanks EI.

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#13) On May 29, 2009 at 10:16 PM, TMFBent (99.81) wrote:

"Of the thousands of examples of faulty reasoning every day in formerly respected newspapers, what made this one stand out to you? Why this one?"

Check all that apply:

(x) I don't read thousands of news stories every day.

(x) I don't I need a reason to point out this bit of idiocy at the Wall Street Journal.

(x) I saw it.

(X) I noticed it was idiotic.

 

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