August 28, 2007

Updates: David Cay Johnston’s New York Times ‘Income Growth’ Story (082807)

Income Schmincome: If you go to Randall Hoven’s American Thinker post that I discuss in the item following this one, you will see that he used the correct term found in the underlying IRS spreadsheets — “Adjusted Gross Income Less Deficit.” Those spreadsheets are the foundation for New York Times reporter David Cay Johnston’s August 21 report on ‘income growth.’

Hoven recognizes that “Adjusted Gross Income Less Deficit” is not the same as “Adjusted Gross Income.” I assume Johnston does, yet he managed not to include the correct term even once in his 800-word article.

Beyond that, he only used “adjusted gross income” once in the third paragraph, while using “income” or incomes,” by my count, at least 17 other times (not including the occasions where he properly described “investment income” and “income tax” in proper context).

Now listen up: Even aside from using a technically incorrect term, there’s little doubt that Johnston’s lead sentence, which begins with “Americans earned a smaller average income,” along with his use of “income” and “incomes” five separate times in the first three paragraphs of his report before introducing the term “adjusted gross income,” causes the average reader to think that the report is about “gross income” — what most people understand as gross pay (“earnings” or “wages” on many pay stubs). Among many other things, “gross pay” is before any 401(k), pretax IRA, and other pretax retirement plan contributions, and before pre-tax medical premium deductions. “Gross pay” is a far, far cry from “adjusted gross income,” with or without the “less deficit.”

Additionally, Johnston does not describe the $55,000-plus average annual amounts from 2000 and 2005, the ones that form the basis for the story’s headline (“2005 Incomes, on Average, Still Below 2000 Peak”) as “adjusted gross income.” In fact, those numbers are called “average income” in the report’s second paragraph, before readers ever see the term “adjusted gross income” employed. People who read Johnston’s third paragraph, where he finally uses the term “adjusted gross income” to report total AGI of all taxpayers ($7.43 trillion), might come to understand that the entire article is about “adjusted gross income.” But having been conditioned with “earned” in the first sentence and “income” or “incomes” five times previous to the first appearance of “adjusted gross income,” there’s a fairly good chance that they will not, seeing the $7.43 trillion as an aside (telling themselves “he used ‘income’ up to this point, and just invoked ‘adjusted gross income’ — so this $7.43 trillion must be something different from what he’s been talking about thus far.”). Readers who don’t get past the second paragraph won’t have a clue that the article is about AGI unless they are in that very small group of people with specific knowledge of nationwide average gross incomes and AGIs.

The failure to clearly convey the basis of average annual “income” used in Johnston’s report is a serious enough communication breach that I’m going to name it Error #7, adding it to the list of the six previously identified on Sunday morning. This breach clearly goes way beyond the failure to invoke “Adjusted Gross Income Less Deficit” instead of “Adjusted Gross Income,” which was flagged as Error #4 on Sunday.

Oh, in case you’re wondering, I have plenty of other errors in Johnston’s report that I could catalog. They are on reserve in case I feel the need to call on them and have the time.

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Following the Progression: Randall Hove at American Thinker went into a separate criticism of Johnston, the. Hoven looked at average rates of tax paid on “Adjusted Gross Income Less Deficit” in various income ranges, found that the tax system is indeed “progressive” until you get to the the tippy-tippy top $5 million-plus and $10 million-plus categories, and added a bit of needed perspective:

If anyone should be complaining, it should those making between $1 million and $2 million complaining about those making more than $10 million. I’ll let that 0.2% of all tax filers fight that out among themselves.

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Shameless Plug 1: Tom Finnigan at Heritage Foundation’s Policy Weblog noted yours truly’s post, and also questioned the use of AGI as the basis for comparing incomes.

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Shameless Plug 2, with qualification: The Boston Herald had a brief editorial on the NY Times story that included a reference to yours truly’s post. I e-mailed the Herald and informed them that, as briefly described here (in the “10 PM, August 25″ paragraph) and incorporated into the original August 21 post, the original $170 Earned Income Tax Credit effect is best seen as a $132 effect caused by the EITC and other available credits. The rest of the editorial is just fine.

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Cricket-Chirp Report: Up to and including Saturday evening, Mr. Johnston sent me five e-mails relevant to the matter at hand. In one of them, he characterized as “egregious” my $170-per-filer error (which, because of offsets, has since been reduced to $38 per filer), along with my incorrect recall as to what tax credit was liberalized when.

I know full well that at my “Top Six Errors” post on Sunday morning, I put down the ground rule that Mr. Johnston couldn’t post a comment at BizzyBlog until he could refute all six errors. Perhaps that was intemperate and snippy, but forgive me for taking umbrage to Johnston’s e-mail dare (spelling error corrected) to:

Show some integrity and forthrightly tell your readers the truth: that your numbers and facts were wrong (not to mention utterly irrelevant to my report).

Six, and now seven, quite relevant errors later, I have indeed told my readers the truth, thank you very much.

Regardless, early Sunday afternoon, I noted at the post that the e-mail box remains open for cherry-picking if Mr. Johnston to attempt refute his (and his paper’s) errors one by one.

I have not received an e-mail from Mr. Johnston since Saturday evening. If he wants to call the game trailing 7-2, that’s fine by me, and quite understandable (this assumes that all errors are created equal, which they are not; collectively, Johnston’s are humdingers that undermine and refute his entire report). If he wants to get credit for the his paper’s correction of $7.43 billion to $7.43 trillion (even though it should have been rounded to $7.42 trillion), then I get credit for my “I was wrong; I am sorry” statements on my errors. Fine — Now Johnston’s trailing 6-to-zip.

Anyway, given the batters I have in reserve, I’m afraid we’d have to invoke the “mercy” rule should we continue.

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1 Comment

  1. Picking up on Randall Hove’s article – yesterday, I featured a chart showing the change in tax progressivity from 2000 to 2005 using data developed by the Tax Foundation. Factoring in the effects of the EITC and the Additional Child Tax Credit, along with lower tax rates, U.S. income taxes have indeed become more progressive in the years from 2000 to 2005.

    Comment by Ironman — August 28, 2007 @ 12:11 pm

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