In criticizing Obama, Will falsely claimed that Social Security taxes are levied on household income
SUMMARY: In his Newsweek column, George Will falsely claimed that Social Security taxes are levied on household income. He had similarly falsely asserted on ABC's This Week that Sen. Barack Obama "wants to raise taxes on a lot of people, beginning with those earning about $100,000 a year, a household." In fact, Social Security taxes are levied based on individual income, and contrary to his assertion in Newsweek, a married couple with each spouse making less than $102,000 would not face a payroll tax increase if the income cap was raised, even if combined they made more than the current cap.
In his column for the May 5 issue of Newsweek, titled "Questions for Obama," Washington Post columnist George Will, a contributing editor and columnist at Newsweek, falsely claimed that Social Security taxes are levied based on household income, asking Sen. Barack Obama: "You favor eliminating the cap on earnings subject to the 12.4 percent Social Security tax, which now covers only the first $102,000. A Chicago police officer married to a Chicago public-school teacher, each with 20 years on the job, have a household income of $147,501, so you would take another $5,642 from them. Are they undertaxed? Are they rich?" In fact, as Media Matters for America Senior Fellow Duncan Black noted in flagging the Will column, Social Security taxes are levied based on individual income.
Will had made a similar assertion on the April 20 edition of ABC's This Week, during a roundtable discussion of the April 16 Democratic presidential debate, saying of Obama: "[O]n raising Social Security taxes -- or the body of income susceptible to the 12.4 percent rate -- he clearly says he's considering raising taxes on those making more than $103,000, much less ... than what he had at $200,000." Will later falsely asserted of Obama: "[W]hat we heard this week from the probable Democratic nominee is that he wants to raise taxes on a lot of people, beginning with those earning about $100,000 a year, a household [emphasis added]." He added: "That's a Chicago cop and a Chicago teacher."
The Social Security Administration booklet, "Understanding The Benefits," describes Social Security taxes as follows: "You pay Social Security taxes on your earnings up to a certain amount. That amount increases each year to keep pace with wages. In 2008, that amount is $102,000 [emphasis added]." The booklet also says of Social Security taxes, "You and your employer each pay 6.2 percent," and "If you are self-employed, you pay 12.4 percent." Indeed, according to Section 3101 of the Federal Insurance Contributions Act:
(a) Old-age, survivors, and disability insurance
In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to the following percentages of the wages (as defined in section 3121(a)) received by him with respect to employment (as defined in section 3121(b)) --
In cases of wages received during: The rate shall be:
1984, 1985, 1986, or 1987................ 5.7 percent
1988 or 1989................................... 6.06 percent
1990 or thereafter............................. 6.2 percent.
Obama's campaign website similarly makes clear that he supports "increasing the maximum amount of earnings covered by Social Security" above the current level of "the first $102,000 a worker" -- not a household -- "makes." When asked, during the last Democratic debate, about raising the cap on Social Security taxes, Obama said that he would consider a "donut hole," exempting from a tax increase those making less than $200,000 or $250,000.
In a May 2 washingtonpost.com "Post Politics" chat, a reader wrote that, in his Newsweek column, "Will demonstrates he clearly has no concept at all on how Social Security taxes work," and asked Post congressional reporter Jonathan Weisman: "I just wonder how many reporters will be duped by this erroneous GOP talking point, as has Will in such and obvious and embarrassingly public fashion?" Given the opportunity to note Will's error, Weisman instead replied: "How many reporters have you seen jumping on it? Look, among reporters who cover issues like Social Security earnings caps, there's a pretty clear understanding that the median income in the United States is around $44,000. Certainly, an income over $100,000 is pretty common on the coasts, but we're not so stupid that we believe we are representative."
From the April 20 edition of ABC's This Week with George Stephanopoulos:
GEORGE STEPHANOPOULOS (host): Here to debate everything about the debate, I'm joined, as always, by George Will, Cokie Roberts, and Sam Donaldson. Welcome you all to our new home.
ROBERTS: It's great here.
STEPHANOPOULOS: So, George, Wednesday night: first impression, last impression.
WILL: In 21 debates, the two most interesting and revealing questions were asked in this debate, and they were not about his friends or his lapel pins, they were about policy.
One was on capital gains, where he conceded the premise of the question -- as he should, because it's true that when you raise capital gains taxes -- rates, you lower revenues from that -- and said he'd do it anyway. Even if it reduced the return on American investment, even if it cost the government revenues, he'd do it out of some abstract commitment to fairness. And then on raising Social Security taxes -- or the body of income susceptible to the 12.4 percent rate -- he clearly says he's considering raising taxes on those making more than $103,000, much less --
STEPHANOPOULOS: Let me throw you the question --
WILL: -- than what he had at $200,000.
[...]
SAM DONALDSON (ABC News national correspondent): Well, now, if he's the most left-wing candidate, and you look at elections -- beginning with George McGovern, at least -- and say, when the Democrats put up someone who's far to the left, they don't win -- why do you think Obama can win?
WILL: I'm not sure he can. He's beginning to convince me he has a problem, because this remains a center-right country. And while Cokie's right that people evaluate in a presidential candidate go for a gut check, that gut check involves who he is, but who he or she is because of what they believe in. And what we've heard this week -- we'll come to Mr. McCain in a minute -- what we heard this week from the probable Democratic nominee is that he wants to raise taxes on a lot of people, beginning with those earning about $100,000 a year, a household. That's a Chicago cop and a Chicago teacher.
From ABC's broadcast of the April 16 Democratic presidential debate:
OBAMA: What I have proposed is that we raise the cap on the payroll tax, because, right now, millionaires and billionaires don't have to pay beyond $97,000 a year.
That's where it's kept. Now, most firefighters, most teachers, you know, they're not making over $100,000 a year. In fact, only 6 percent of the population does. And I've also said that I'd be willing to look at exempting people who are making slightly above that.
But understand the alternative is that because we're going to have fewer workers to more retirees, if we don't do anything on Social Security, then those benefits will effectively be cut, because we'll be running out of money.
GIBSON: But Senator, that's a -- but that's a tax. That's a tax on people under $250,000.
OBAMA: Well, no, look, let me -- let me finish my point here, Charlie. Senator Clinton just said she certainly wouldn't do this; this was a bad idea. In Iowa, she -- when she was outside of camera range -- said to an individual there, she'd certainly consider the idea. And then that was recorded, and she apparently wasn't aware that it was being recorded.
So, this is an option that I would strongly consider, because the alternatives -- like raising the retirement age, or cutting benefits, or raising the payroll tax on everybody, including people who make less than $97,000 a year --
GIBSON: But there's a heck of a lot of --
OBAMA: -- those are not good policy options.
GIBSON: Those are a heck of a lot of people between $97,000 and 200 and $250,000. If you raise the payroll taxes, that's going to raise taxes on them.
OBAMA: And that's -- and that's -- and that's why I've said, Charlie, that I would look at potentially exempting those who are in between.
But the point is, we're going to have to capture some revenue in order to stabilize the Social Security system. You can't get something for nothing. And if we care about Social Security, which I do, and if we are firm in our commitment to make sure that it's going to be there for the next generation, and not just for our generation, then we have an obligation to figure out how to stabilize the system.
And I think we should be honest in presenting our ideas in terms of how we're going to do that and not just say that we're going to form a commission and try to solve the problem some other way.
From Weisman's May 2 "Post Politics" chat:
Boston: In your sister publication Newsweek, Post columnist George Will demonstrates he clearly has no concept at all on how Social Security taxes work. However, he trots out a scenario I have heard a few GOP flacks use: a married couple -- one a cop, one a teacher -- both with long tenures and higher pay, and how they would be hit by removing the Social Security earnings cap from it's current $102,000. Now, I know from your intelligence and your wife's economic wisdom, you know better. I just wonder how many reporters will be duped by this erroneous GOP talking point, as has Will in such and obvious and embarrassingly public fashion?
washingtonpost.com: Questions for Obama (Newsweek, May 5 issue)
Jonathan Weisman: How many reporters have you seen jumping on it? Look, among reporters who cover issues like Social Security earnings caps, there's a pretty clear understanding that the median income in the United States is around $44,000. Certainly, an income over $100,000 is pretty common on the coasts, but we're not so stupid that we believe we are representative.
Mr. Will didn't do any better with his capital gains question. In his Newsweek column, Mr. Will claimed government revenues from the capital gains tax increased when the tax went down and decreased when the tax rate went up. But he failed to provide a time period for those changes in revenue.
Clearly investors can plan to shift income from ordinary to capital gains, or perform other tax avoidance steps, when they anticipate a change in the rates - either way. They may choose to not sell at all. Additionally, as has been well documented in The Economist newspaper, hedge fund managers enjoy tremendous compensation characterized as capital gains that may well be ordinary income.
As for Mr. Will's statement that 20% of taxpayers reporting capital gains in 2006 [that means at least $1] had incomes of less than $50,000, he doesn't discuss what percentage of the total capital gains tax revenue comes from those sources. Clearly these are primarily retired folks, who have only limited income streams - Social Security (which he does not understand), dividends and interest, retirement/IRA/etc., and capital gains when they sell their stock holdings for cash.
George - poor folks don't hold a lot of securities. That's one of the reasons they are poor!
Regarding Mr. Will's affirmative action question for Sen. Obama, the right wingnutz - from Mr. Will to Sheer Insannity and all in between and on the fringes beyond, never talk about "Affirmative Action for White Folks." This is the preference many, many colleges and universities give to children of alumni. Why don't they ever discuss this huge advantage in college admissions procedures when they rant about equality and fairness?
Grate work Will, rilly rilly grate. Would you be interested in being a shill for Gator Gratorgate. A gated community for the proper people, with the proper money,ie lots and lots of it.
Any gaffes will be met with garrulous gammarays. Gargle with your significant gargoyle under a gastrpod! Reveiw the garrison daily from your own garret.
You can see this has a lot of potential to push people over the top, and make some(!) money.
Operators are standing by....unless their standing arround.
It depends on how you measure political attitudes.
If one goes by self-identification as a "liberal" or a "conservative," a lot more people self-identify as "conservative."
If one goes by party-identification, more people currently self-identify as Democrats than as Republicans.
I think MMFA rightly prioritized going after Will's "facts" as opposed to his opinions on this one. Besides something isn't true merely because it isn't proven false and vice versa.
Besides, I really dislike those arguments that are refuted with polls. Polls change so quickly and really seem to depend on how the questions are asked as to their outcome. People's views of the country's politics usually are a product of the people we talk to everyday. People in a conservative area usually believe people are more conservative and people in a liberal area usually believe people are more liberal.
"how many reporters will be duped by this erroneous GOP talking point, as has Will in such and obvious and embarrassingly public fashion?" -- the fact that Will and other reporters won't be publicly embarrassed is the #1 problem with the media.
They can have their inane trivia, crass stupidity, lunatic fringe guests, biased and boorish hosts, and lie after lie if only they'd actually face some sort of consequence when they screw up.
Sometimes there's a consequence for being "insensitive". There's never a consequence for being wrong.
Doesn't matter. The viewer only needs to know what is wrong, and anyone who is habitually wrong, for whatever reason, should be demoted.
It is probably wrong to call it a lie unless there is a pattern of deception or a person has admitted intentional deceit. That is beside the point. MMFA hasn't called Will a liar and I think he deserves the benefit of the doubt absence any evidence to the contrary.
I disagree with Will a lot and I believe every question he asked had problems in its premise, but I respect him. He has had integrity in the past and I have no reason to believe he just made a pretty boneheaded mistake here. No doubt he will get some letters pointing out this mistake among others and he will print a correction.
If Will does not print a complete correction or a rephrasing of the question MMFA pointed out (after all the mistake was in his basic premise), then it seems Will is not the man I thought he was.
Man, if you think these guys care what the facts are then you have not been paying attention.The question is how the hell do we stop them?Even public radio and tv has been take over by the misinformation machine.Do you need 35% unemployment to get people to take back their government?It is time to mobilize before another election gets stolen or lost.Call every representative you have.Get all of your friends and family to do the same. You are running out of time.
Thanks for the link, Carn. Looks like those making 200k plus are the real producers in our country. ;0)
Lucky for them, they have a good number of working and middle class dupes voting to keep them in their very productive lifestyles.
As confusing as economics, and our tax system, can be, it's really nice to know we have politicians and their friends in the media doing everything they can to keep the American public in the dark as much as possible. I'm amazed at the things I hear from regular middle-class people like myself regarding the dangers of shifting more of the burden to the very wealthy.
Even if Wallace's statement (from the link) was true, that 50% of tax returns showed capital gains, it would be exploited.That is, if 2% of that 50% had 99% of the gains, too many Americans would hear it as 50% of voters would be heavily taxed.
I realize that all politicians monkey around with numbers, but our current administration has really taken it to a new level. From leaving the Iraq invasion out of the budget to omitting those who have given up on looking for work, and those whose benefits have run out, from the unemployment rolls, they've really been shameless.
Coming attractions: avoiding a recession(or mentioning the word) by assuming 2% for inflation in the quarterly economic analysis.Ask most working people if their gasoline, food, home energy and interest on debt have increased more or less than 2% since the last quarter.
* Anyone who thinks that Chris Wallace – or Tim Russert, Bob Schieffer, et al – script their own questions, has no understanding of how these shows are put together.
But here is what I think happened.
1. There is a statistic out there which says that approximately half of all U.S. households have a stake of one sort or other in the stock market. Let's stipulate that this statement is true.
2. Mendacious folks like George Bush, and nitwits like Wallace's script writer, then take this true statement, add to it the following two assumptions:
3. Since the stock market goes up, at least over the long run. (Not an unreasonable assumption if the "long run" is suitably long enough.)
4. Therefore, anyone who is in the stock market the way he is "supposed to be," i.e., for the long run, is looking at the certainty of capital gains.
And conclude with the following gross distortion:
5. Therefore, such a person, which is to say persons in at least 50% of all U.S. households (i.e., the majority, a nice round democratic [small d] notion), if they are acting in standard homo economicus rational fashion, will be more disposed towards lower rather than higher marginal tax rates on capital gains.
Why is Bush mendacious and Wallace's script writer either also mendacious – or maybe just a nitwit?
Not just because, as the Fact Check link given above by Carn points out that only 12.9% (in 2006) of tax returns showed capital gains of any sort, and of that 12.9% <36% came from tax returns showing adjusted gross income of <=$50,000.
Rather, I think the doofus who wrote the script got confused and magically transformed the 50% of households of statement no. 1 into a $50k income threshold (Chris Wallace and his script writer would probably not even be sophisticated enough to speak in terms of AGI, since they probably have their accountant do their taxes).
But here is the punch line.
The vast majority of those lower income people who have a stake in the stock market have it through their IRAs and/or 401(k) or 403(b) retirement plans, what are technically known as tax deferred programs.
And guess what?
Assuming there are capital gains on your tax deferred retirement investments when you retire and – after age 59 ½ at the minimum – you start taking money out of your IRA or tax advantaged retirement program, those capital gains are taxed not at capital gains rates, but at ordinary income rates. Repeat: despite the fact that your gains are coming from stock investments, you are taxed on these gains at your ordinary income rate.
At the time these programs were first initiated it was assumed that ordinary income after retirement would, on average, be taxed at a lower rate than capital gains. But thanks to the Clinton (but with a republican Congress driving it) and then Bush II administrations, that assumed relationship has been inverted. Capital gains rates are at 15% and you have to be not that far above the poverty line to be paying that amount in ordinary income rates. Your ordinary income rate after retirement, assuming the current tax structure holds, will in most cases, especially if you were prudent enough or lucky enough to have invested in an IRA or have a 401(k) program, be higher than 15%.
So the capital gains rate could be 0% and your benefit from it would still be the same: i.e., 0.
In summary, Wallace's bogus observation is either just a garden variety numchuk mistake, which is then used in support of a further misrepresentation, or, it is a piece of head faking mendacity – as it certainly is in the case of the guy who writes Bush's speeches.
Thanks, Billyblog, you're probably right about the combination of confusion and spin.
Another factor that's probably figured in when the Con cheerleaders are painting America as a nation of Wall Street players (and I happen to have run across several of these people in my life), are those whose grandma gave them a couple of shares of Coca Cola stock for their 10th birthday. Even in situations not involving a blatant factual error like the one above, these people are included in those benefiting from capital gains.
Whenever Obama opens a statement with something along the lines of "Well, look," we're about to hear either a lie or a pandering. In this case, pandering.
Why didn't the media pick up on that low-character comment from him about Senator Clinton's view and that she was over-heard (by whom, and give us access to that person) saying something else in Iowa. Nope, he's running a clean campaign. Hillary showed great class in not responding to that schoolyard bully tactic.
Even Obama wouldn't be able to assure anyone that what Will said was actually inaccurate, 'cause Obama doesn't really have a plan.
understand the alternative is that because we're going to have fewer workers to more retirees,
I have to point out that Obama is here repeating another GOP canard. The ratio of workers to retirees is completely irrelevant. According to the SS/Medicare Trustees Report,based on the middle case,SS would require no more than 2.2% of GDP in any year over the horizon. Based on the optimistic case, SS requires no general budget funding over the 75 year horizon
capital gains discussion by pundits is so filled with errors and ill conceived conclusions, that they should be banned .
One interesting way the lower to middle income might come across the capital gains is through their condo fee. If one pays a monthly condo fee, then the association deposits it but the gains are considered capital gains.
The best solution would be to simply exclude the first Hundred dollars or so of capital gains from taxation. This gives everyone a break and encourages investment by the masses
I don't think we should ban misinformation. Afterall, who is to decide whether it is intentional or not? A lot of misinformation is spread without malice. It is much more effective to counter it intelligently. Have faith. Most people, when presented with a bogus explanation and true one can tell the difference. The only problem is as Winston Churchill once said, "A lie gets halfway around the world before the truth can get its pants on."
It is a daunting task to inform people of the truth, but the more people that know the truth, the harder it is to do what Will did and get away with it.
Yes, by all means let's not "ban misinformation". Because there would likely be only one hour of TV left if we did that.
George Will is of the pundit class. Pundits by their very definition are suppoed to be scholarly or expert in a certain field. They should be held to a higher standard.
Putt, are you talking about HOA fees? I'm just curious, as I work for a vendor, and we live off of those monies.It's interesting, as I never ask Clients for this info, but it's volunteered sometimes.
I meet people who bought their (current) 2 million dollar homes for 30k, and are protected by Prop 13 (CA) from paying prop. taxes that reflect the appreciation of their home. I know of communities that are collecting $900-1200 per month in Association fees, and it's pretty funny that these people are usually the most....... "thrifty" when it comes time to talk contract price.
There is no one in America who more deserves the description of "elitist" than George Will, except perhaps for David Broder or Sally Quinn.
The fact that he is spreading misinformation about the social security system is yet another example.
On Sunday. Stephanopolous will agin pay his weekly homage to Will.
Col. I do not know about HOA fees just the condo fee situation when I bought my first home and was involved with the condo association. Our fees were the minimum because people who lived where I did had no excess of money. Every dollar in the Condo fund was important and had to spent wisely. Back in those times the capital gains rate was much higher, so it seemed unfair that such a relatively small gain was nearly halved by the tax.
Nobody wants to hear it but I think home mortgage interest deductions should be capped in order to stop the almost logarithmic gain in tax savings for those buying unnecessarily large homes. This might cause builders to build houses more appropriate in size.
Will knows how payroll taxes work. He's lying.