After Obama’s proposal to raise taxes on people making more than $250K I heard a lot of supposedly intelligent people, generally Republicans, calling it a disincentive to make more money and anti-American Dream. These people seemed to believe, or were at least trying to persuade people to believe, that your highest tax bracket applies to all your income. In other words, they’d have you believe that if you’re in the 39% tax bracket, all your income is taxed at 39% rather than just the dollars within that tax bracket.

Media Matters “exposed ABC News”: for publishing an article written by the brainless Emily Friedman implying that it is true, complete with an attorney and a dentist explaining that they are trying to figure out how to reduce their income to $249,999 so they pay less in taxes! And that’s an attorney and a dentist, supposedly educated people. I’d bet that 90% of the country does not understand our tax system. The NY Times economics blog, Economix, noticed ABC News’ idiocy too and “explained how taxes work”:

In case you don’t know, if you make more money, you have more money than people who make less even if your tax bracket is higher. Any time you hear someone whining that they pay a lot in taxes, remind them that they paid a lot in taxes because they made a lot of money! There’s no need to feel sorry for rich people… if they don’t like earning lots of money and paying taxes on their earnings, they have an easy way to solve their “problem”: give money away until they’re not rich and they’re paying lower taxes.