On Monday, I explained a few problems with the New York Times' attention-grabbing "Budget Puzzle," which encouraged readers to try to address short- and long- term budget shortfalls through a combination of spending cuts and tax increases. One of those problems was what appeared to be a subtle bias against taxing the wealthy in the Times' description of estate tax options.
As it turns out, Felix Salmon of the Columbia Journalism Review had some similar problems with the Times' approach:
The too-hard part comes on the tax-hike side, where the options are far too limited. For instance, you have two choices when it comes to taxes on capital gains and dividends, both of which cap that tax at 20%. Can't I opt to raise that tax to the same level as the income tax? Even the deficit commission does that.
Similarly, for the payroll tax, the most you can do is raise the ceiling so that it covers the same 90% of all income that it covered at inception; you can't raise it any further than that, or abolish the ceiling entirely.
Most importantly, the options for new taxes are extremely constrained.
I'd also love to see the option of a wealth tax, which could raise a lot of money from those most able to afford it.
In my post, I noted that the Times did a poor job of explaining to readers the consequences of various options. According to Salmon, those consequences would generally be much worse for the poor and middle class than for the wealthy:
In general, the NYT options on both the spending-cut and the tax-hike side tend to hit the poor and the middle classes more drastically than the rich; what's missing here is the option to implement something much more progressive, in both senses of the word. It's a missed opportunity, and a shame.
As I noted on Monday, one of the biggest problems with the Times' approach was that it short-changed the importance of economic growth, both by focusing on the budget deficit rather than the struggling economy and by failing to give readers any indication of the impact their choices would have on growth. To his credit, David Leonhardt -- the Times reporter behind the "budget puzzle" -- devoted his column today to the importance of economic growth in reducing the deficit.