Yesterday ABC News published a story suggesting that some taxpayers are intentionally reducing their incomes to avoid a higher tax bracket and thus save money. And sure, perhaps some taxpayers are in fact pursuing this plan. But the plan is based on a premise that is obviously and embarrassingly incorrect. Because tax rates are marginal, falling into a lower bracket can't save you money. The most it can save you is time. Jon Chait pointed this out and many others piled on.
I see ABC has now issued a new version of the piece, with a clarification:
Yesterday ABC News published a version of this story which some readers felt did not provide a comprehensive enough analysis of Obama's tax code for those families making $250k or more. ABCNews.com has heard those concerns and after review has decided to post an updated version of the story below.
No. Look, the problem with the original piece was not the lack of comprehensiveness: the problem with the piece was that it was about a behavioral trend -- making money by falling into a lower bracket -- that was idiotic. This really isn't complicated. The view of the people described in the piece was incorrect. ABC published a piece suggesting that it was correct. ABC should now issue a correction.
You might get the impression that there is the usual room for wiggling because the piece never flat-out says, "Hey, you can make more money by falling into a lower tax bracket." Instead, that view is offered in the quotes. But there is not room for wiggling. If ABC published a piece about how Omaha is actually the capital of the United States, or about how the sky is orange, or about how the moon is made of cocaine, we wouldn't let it slide because the reporter rounded up enough crazies to espouse the view.
It is no less crazy for ABC to publish a piece in which people say things like, "We have to find a way out where we can make [...] just under the line so we can benefit from Obama's tax plan." (The clarified version still has this.) People that say such things are making a factual mistake. Why can't ABC admit that?
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