Errors are as certain as death and taxes

Today, in the Letters section, Features editor Martin Lukacs gets another Phrase of the Day award. He begins his letter,

Whenever a minimal tax raise is suggested for the richest, conservative pundits love promising to scream fire.

“Love promising to scream fire”? Don’t they just “scream fire”? What’s this about “loving to promise”?

…

I’m still puzzling together this comparison of U.S. and Canada tax rates, but it seems to me Features editor Martin Lukacs has a basic fact wrong in his letter defending himself against the accusations of the last couple issues about his attempt at writing a CCP tax pamphlet.

One of the major complaints was over this line of argument Lukacs tried:

Before you start clamouring about rich investors fleeing to the U.S. at the threat of tax increases, consider this: Canada’s top federal tax rate is actually lower than the U.S.’s.

The top federal rate in the U.S. is 35% and the top in Canada is 29%. A letter from a McGill graduate and a column by the Public Editor (which wasn’t full of “bluster,” as Lukacs says, apparently not knowing the meaing, and had nothing “stern” — is Lukacs trying to make using words totally arbitrarily a trademark?) point out the same thing: the combined state/provincial and federal taxes on Canadians are much higher than on Americans, with social services like health care funded by provincial taxes. In his letter today, Lukacs responds:

I pointed out that top federal income tax rate in the U.S. is actually higher than in Canada, but was branded with some nasty adjectives for leaving out the complicated comparison of provincial and state income taxes. While state income taxes are generally lower than provincial ones, the richest investors in New York pay about a 50 per cent top marginal tax rate – much higher than the richest Canadians.

New York state applies a top marginal income tax rate of 7.7%, lower than EVERY province, including Alberta. The state with the highest top marginal income tax rate is Vermont at 9.5%, making it also lower than EVERY province, including Alberta (10%). Lukacs’ attempt at bullshitting readers with the phrase “generally lower” implies that some provincial taxes are lower than those of some states, and this is false. Not only does that deserve a correction, but Lukacs is broaching a percent figure for the top marginal tax rate which New Yorkers pay that is a COMBINATION of state and federal income tax. Fair enough, except that his 50% figure is wrong.

This piece in Newsday indicates it could be at most 42% (35% federal + 7.7% state, and the writer graciously doesn’t round up, even though he seems to be one of those guys who Lukacs says “love promising to scream fire”). And as late as 2003, according to the Financial Post,

top marginal rates for individual income in respect of salary and interest, the two types of personal income that are not subject to special rules, are as follows: British Columbia, 43.7%; Alberta, 39%; Saskatchewan, 44.5%; Manitoba, 46.4%; Ontario, 46.4%; Quebec, 48.2%; New Brunswick, 46.8%; Nova Scotia, 47.3%; Prince Edward Island, 47.4%; Newfoundland and Labrador, 48.6%

—also the combination of state/provincial and federal income tax.

So one of the highest taxed states in the U.S. (Vermont and then California surpass it), has residents paying a lower top marginal tax rate with federal taxes than everywhere in Canada except the province with the lowest top marginal tax rate, Alberta. (And if we compare New York to Alberta, we’re comparing a progressive marginal tax rate to a non-progressive, constant marginal tax rate. Alberta taxes 10% at ALL levels of income.)

Only correct about Alberta — where every citizen pays 39% of his income to the federal and provincial governments — Lukacs misleads when he says ” the richest [...] in New York pay [...] much higher than the richest Canadians,” when he could have accurately said, “the richest in New York pay much higher than the richest Albertans.”

Furthermore, this U.S.-to-Canada comparison doesn’t touch on where the top marginal rates start and end. In the U.S., the highest federal tax bracket is $175,000; in Canada, the highest federal tax bracket is $120,000, affecting a bigger portion of the middle class. The highest tax brackets in the provinces range from $60,000 to $120,000, with the three highest around $120,000. The highest tax bracket in New York starts at $500,000. (For New Jersey, it’s also $500,000. It’s a bit over $325,000 for Wyoming, Vermont and Rhode Island. It’s $120,000 or over for Arizona, Ohio, North Carolina and Wisconsin.)

And B.C. had cut its highest top marginal rate to spur economic growth. Recently, according to the Newsday article, France, Germany and Ireland have done the same. So in defending his claim to the Public Editor’s definition of “integrity,” Lukacs seems to have shot himself in the foot with his turn to top marginal rates (it’s debatable whether a shot to the brain would do much).

Whereas the Features editor can imagine his readers who disagree with him as “shrill” and “huffing and puffing” (are they trains?), he couldn’t imagine his fellow editors huffing and puffing while they go in search of correct figures, since he’s not going to do it.

Is the Comment editor supposed to be responsible for not fact-checking the Features editor when he writes a letter? Man, this is getting complicated … More simple is the beginning of the Ethics section in the DPS Constitution (which the Public Editor recently discussed):

The contributors and voting staff should be fair and accurate in their reports, and must equip themselves with facts to support published statements. They must realize their personal responsibility for everything submitted for publication. They must not falsify information or documents, nor distort or misrepresent the facts.

Where did Lukacs get the 50% figure, if not from a mistaken recollection at the back of his mind? Does he have the source on-hand, so that he can explain his misunderstanding?

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[ Note: This evening, I added the Phrase-of-the-Day portion to the top of the post, as well as the parts pointing out how the Features editor attempted to mischaracterize his critics. ]