AP Headline: Keeping 2011-2012 Income Tax Rates the Same Is 'Big New Tax Law'

Did you know that the "big new tax law" signed by President Obama yesterday "will save taxpayers, on average, about $3,000 next year," and that it will have "tax breaks for being married, having children, paying for child care, going to college or investing in securities"?

Don't spend that extra $3,000 yet, because it mostly won't be there. With the only major exception being the 2-point cut in the Social Security payroll tax, and of course barring new legislation the next Congress may take on, the tax laws for the next two years will essentially be the same as they have been since 2003, when Congress lowered marginal income, capital gain, and dividend income tax rates.

This lack of major change didn't stop the Ministry of Propaganda -- er, the Associated Press -- and reporter Stephen Ohlemacher from calling the new legislation "the most significant new tax law in a decade," when there's almost nothing "new" about it, or from trumpeting how much certain American families will "save" as a result.

Here are a few paragraphs from Ohlemacher's report:

What will the big new tax law mean for you?

 

It's the most significant new tax law in a decade, but what does it mean for you? Big savings for millions of taxpayers, more if you have young children or attend college, a lot more if you're wealthy.

 

The package, signed Friday by President Barack Obama, will save taxpayers, on average, about $3,000 next year.

 

But many families will be able to save much more by taking advantage of tax breaks for being married, having children, paying for child care, going to college or investing in securities. There are even tax breaks for paying local sales taxes and using mass transit, and a new Social Security tax cut for nearly every worker who earns a wage.

Geez, Steve, everything you just mentioned has been there for eight years, and you're treating the ideas as some kind of new, wonderful tax-saving opportunities.

It isn't until the fourth paragraph that Ohlemacher owned up to the reality:

Most of the tax cuts have been around since early in the decade. The new law will prevent them from expiring Jan. 1. Others are new, such as the decrease in the Social Security payroll tax. Altogether, they provide a thick menu of opportunities for families at every income level.

This is very "clever" writing by Ohlemacher. He and his AP bosses know that the story will stop at the second or third paragraph when read over the air at many if not most subscribing AP radio and TV outlets. This will leave relatively disengaged viewers and listeners with significant misimpressions about what has just occurred, including a key one: that even though everyone is somehow better off (mostly not true), "the wealthy" (really those with high incomes) are somehow disproportionately benefiting.

This second item is definitely not true. Had income tax rates gone up, the hits to middle and upper middle income taxpayers as a percentage of their take-home pay would have been higher than the hits on the highest income earners. Additionally, the Social Security tax reduction is capped at 2% of the first $106,800 of earnings, so the maximum savings is $2,136, even if you earn a million.

In later paragraphs, Ohlemacher used tax estimates from The Tax Institute at H&R Block to show how much four example taxpayers would "save" as a result of the new law, even though, again with the exception of the 2-point Social Security tax break, essentially nothing changes. His constant reference to "lower rates" when there won't be any beyond Social Security justifies my Ministry of Propaganda reference at this post's introduction. Income tax rates won't be lower next year, Steve, no matter how many times you type "lower rates."

Cross-posted at BizzyBlog.com.

Tom Blumer
Tom Blumer
Tom Blumer is a contributing editor for NewsBusters.