October 23, 2008

18-foot hedges and a motion sensor

10/23/08

Great discussion in the comments section yesterday, and I really do have to continue this line of reasoning further.

Put simply, I'm constantly amazed at how the conservative mindset seems incapable of understanding just how uneven the playing field is. For instance, my buddy craighill said that people who want the good life need to earn it by choosing a high-paying vocation. But let's look at what that usually entails:

- having some sort of childhood role model that encourages success

- surviving whatever neighborhood you grow up in

- doing well enough at a good high school in a good neighborhood to be taken seriously at a good college

- getting into that good college, and have enough money to pay for room, board and tuition (or pray for a scholarship that gives you enough to get by)

- graduating, which is easier said than done in many cases, given family obligations and money

- coping with the possibility of enormous debt after school

- having enough contacts to get an interview somewhere, and be taken seriously

- living, arbitrarily, in a part of the country that still has the kind of economy you can flourish in (or moving)

- managing to work through the lean years long enough without any health issues, let alone the problems of a family you're probably starting.

Make any one of the above statements mandatory, and you've just eliminated millions of people in your state alone. You've effectively bounced the entire neighborhoods of El Monte, East St. Louis, Atlantic Ave. in Brooklyn, South Boston, and about 8,000 others.

Guys – and I'm including myself here – we have NO FUCKING IDEA the amount of incumbent largesse we were born into. Our way has been paved for us in so many hidden instances that it staggers the imagination. Old boy networks, legacies at prep school and college, inheriting a nice neighborhood from our parents, friends that encouraged our academic achievements, fantastic doctors, healthy and plentiful food as babies... hell, just being WHITE opened doors we didn't even know were ever closed.

I get it, you work hard. And other people, like Emma mentioned, abuse the system. But where is the empathy? When you've got nothing, no prospects, and don't even KNOW to ASK how to START getting a $250K job, wouldn't you game the fuckin' system too? And do these despondent poor people truly cloud your vision of the entire lower middle class?

Let me repeat the stats: The top one percent of Americans own 34.7% of the total wealth. The top TEN percent own 69.8% of the wealth. By conservatives' own logic, that must mean 90% of Americans are lazy and don't deserve to be wealthy. Do any of you honestly think that's true?

And rich people, let's be honest. Obama's tax plan constitutes a difference of puny percentage points in your overall portfolio. We could probably find that much cash lost in the back seat cushions of your Lexus. I know it physically pains you, and it's abject torture to part with what you believe to be rightfully yours, but you know what? I have this funny feeling that you're going to be just fine.

Posted by Ian Williams at October 23, 2008 11:50 PM
Comments
Posted by: GFWD at October 24, 2008 1:22 AM

Ian makes a good point today. I can't stand the people who were born on third and thought they hit a triple.

My parents were the first generation in their families to attend college. The question in my house growiung up was never "if" I was going to college, but "where". Because of my grades and their sacrifice, I was able to both attend and afford Carolina. Because of my neighbor who happened to like how I lead the neighborhood basketball games on my driveway, I got an interview after college for a job at State Farm. Because I had that job, I could afford to take a $795 six-week prep course for the LSAT. Because I took that course and had the advice of friends like DFB's & T's (among others) and the good recommendations of professors from UNC, I was able to go to law school at Carolina. Because of my Carolina connections, I was able to garner an interview at a big firm in Atlanta upon graduation from law school. Because of that job, I was able to land successive job interviews to get to where I am now.

Notice how I said I got opportunities. Not handouts. Opportunities.

I know I was lucky. I told my mom just this week that I know I've worked hard but I also realize [metaphorically speaking] that I was "walked" to first because of my parents' efforts and had a good head start that others didn't.

I sometimes think of the uncompassionate rich or wealthy as the guy in the photo on top of a mountain. Sure, he accomplished a rare feat climbing the mountain, but he also relied on some friends to help him; some Sherpas to carry his supplies and others to assist him on the way. Yet, he stands on the mountain top all alone and thinks he did it all by himself.

For those of you small business owners on this list, somewhere along the way you got an assist. Whether it was a bank loan or loan from family, you had to start out somewhere with a business plan, with your hat in hand and you had to rely on someone.

Why forget that compassion shown to you for everyone else who might follow?

I don't begrudge the rich. I don't begrude the people who are self-made and I don't even begrudge the folks born on third who get knocked down and reinvent themselves to work their way back to third.

I just wonder how many of them did it without a little assistance along the way.

In response to the comment yesterday about my fellow Carolina grads, I think the subsequent posters missed the point the person was trying to make about the residents of North Carolina. We all benefitted from the handouts of some very generous donors and alums who never forgot where they came from and helped us along the way and kept our tuition pretty low. By funding professor chairs, donating buildings and keeping excellent faculty in Chapel Hill, those donors made our time at Carolina special and our degrees worth so much more.

Sorry for the disjointed rambling. And, for the record, I voted for Obama earlier this week.

Posted by: josie at October 24, 2008 2:06 AM

I was tickled by the business owning trickle-down posters who complained that they create opportunities and take all the risk.

In the next breath they threaten that because of Obama taking more of their personal pie, they may be faced with cutting jobs.

Seems like the only thing they are willing to risk is others' paychecks.

Posted by: herman at October 24, 2008 3:45 AM

It's interesting. America has had for the larger part of its history a progressive tax system, in which more affluent folks are in a higher tax rate.

For about a generation now however cutting taxes has domeinated the political debate. Not coincidentally the federal gvt has increasingly gotten in debt.

This Joe the Plumber thing is about three percent more on what one makes over 250K. From 36 percent to 39 percent. And people are acting like the sky is falling. Pardon me, but this is ludicrous. Taxes rates have been much much higher in the past, and people ran businesses back then, too.

It reminds me of the outcry over gasoline prices. Americans (I'm in Europe now) have always been driving ridiculously inefficient cars because the gas was so cheap. (And when cars got more efficient they just moved on to bigger cars.)

Americans need to get used to the idea there's no such thing as a free lunch.

Herman

Posted by: dean at October 24, 2008 4:26 AM

God, I feel so ashamed now. I had no idea that the hard work of my parents, friends, sibling, neighbors, "village" -- all the people that raised me and gave me opportunities -- was something to fret about.

How far do you guys want to take this? Do you want to make everyone ABSOLUTELY equal? Seriously, how far?

QUESTION FOR THE DAY: In your ideal scenario, what is the top tax bracket percentage? Should the federal government take 50%? More? Less?

Back to my point yesterday . . . do you really think that higher taxes on business-owners will NOT harm the overall economy? Do you really think that business-owners are going to 100% swallow a tax hike w/o passing it on?

Posted by: salem at October 24, 2008 5:09 AM

A little off topic, but I was disgusted to hear how a woman was robbed in Pitsburg, then the Black man that allegedly robbed her carved a "B" in her face after seeing her McCain Bumper sticker. Then I learned she was a campaign volunteer and saw the picture of her face. I could not have painted a more perfect "B" on my daughters face as it rested in the hands of the man she trusts most in this world. It is also upside down, which would imply that the offender left her arms, legs, and torso unrestrained as he stood over her face. I feel like a monster for assuming she is a fraud,but I am highly suspicious that we are going to see an increase in news coverage of any crime allegedly committed by a poor black man from Fox news. There are no poor black men from Fox news, but you get my point. I hope Willie Horton didn't move to Florida. I can hear the Olds-mo-buick door locks clicking all down A1A.

Posted by: herman at October 24, 2008 5:21 AM

Dean, the point is you're the one who's fretting, and you're fretting about the beginning of tax rates getting restored to a level that the gvt budget can be sustained, no further debts to China would be incurred and perhaps even a couple of potholes could be mended.

Herman

Posted by: anonymous agian at October 24, 2008 5:37 AM

Ian,

Why even respond to a post unless it is just to agree with you and tell you how right you are?

Yesterday, I made a serious attempt to express a view point different than your own and you answered me with sarcasm “because of all my "fancy doctors" and all the crackling firewood I've been looking at” and then essentially accused me of telling you your opinion was worthless “obviously I shouldn't be trusted with an opinion.”

I did not say I was right and you were wrong. I just expressed a different point of view and then asked you not to be highly critical of it. Is that so terribly hard to do?

Congrats to you and your wife for managing your money so well. How you do what you do while making less than 250K while living in California is a mystery to me.

My husband and I are going to crunch some numbers tonight to see how we can fit in more travel and redo the barn of the farm. With what we make we should definitely be able to afford to do so!

Posted by: Salem at October 24, 2008 5:39 AM

A few quickies about Small Business
1. I was a small business owner for the last 11 years. I averaged 1.3 million in annual sales, and over 100K per year in salary. I employed an average of 40 employees year round, paying over 300,000 in employee wages per year.
2. I paid more taxes (exluding payroll tax, and property tax) when I worked for someone else making half as much money. Investing in my own business was the most tax efficient thing I have ever done. Owners who chose to cheat on their taxes, have a license to steal, running most of their living expenses through the business to reduce taxable income. Even playing by the rules, TAXES were not even on the radar.
3. What caused me to sell my land and close the business? My concept was no longer worth the investment risk and profits were shrinking rapidly despite high sales volume. This was due to three primary factors.

Unprecedented all time highs in the price of Beef, Poultry, Dairy, Oils (Canola,Soybean..etc), energy costs, for consecutive years. My buffet made this a bigger issue as opposed to fixed cost "plates" at most restaurants.

Household Incomes,in my rural market were stagnant or shrinking as my prices were rising, creating a more price sensitive market. Building contractors rising fuel and material costs meant that they no longer brought their employees with them to lunch..etc.

Lastly, I made so much $#%^#^ money, on the SAME SALES, from 1996 to 2000, that I paid too much money for the land and building when I bought out my partner. Based on the economy in the 90's it was a smart deal.

Anyway, pick your candidate for your own reasons, but if Joe the Plumber has ever been held back by a Tax burden, he needs a new accountant.

....and Thank You God for for sending us Sarah Palin to derail the McCain campaign, and helping us get her out of politics and on TV with Nancy Grace where she belongs, Amen.


Posted by: Anon at October 24, 2008 5:39 AM

Dean,

Yes, I really think that a 3% tax increase on the highest marginal rate will NOT harm the overall economy.

Two things:

1) Not to get too technical, but remember that your higest marginal tax rate is determined by your "adjusted gross income". That is, it is your total income less all of your deductions. For small business owners, all expenses are deducted. A portion of capital investments are deducted. The $250,000 number is, for the most part, your PROFIT number. And the 3% kicks in only on this profit that EXCEEDS the $250,000. That means for each $1,000 above the $250,000, you'll pay an extra $30. As Ian said, I think you'll somehow manage.

2) The above factual clarificaitons aside, the great thing about this debate is that we don't really have to guess the impact. Let's just look backwards at what happened before. The year after Clinton was elected, the Omnibus Tax Reconciliation Act of 1993 was passed WITHOUT A SINGLE REPUBLICAN VOTE. Among other things, it cut taxes for low income Americans, made tax cuts available to 90% of small businesses, and raised taxes on the top 1% of taxpayers (to 39.6%).

Sound familiar?

Posted by: Salem at October 24, 2008 5:52 AM

Anon, Exactly!
If Joe the Plumber has equipment or a building associated with buying his company, the depreciation alone for the first few years, will probably offset ALL of his income tax. If he acquires 500 to 800K in assets, he could probably make 150,000/yr tax free for the first few years. That's ZERO income tax, unlike his employees, and unlike his situation today. It's not easy to captain your own ship, but taxes are not the big obstacle for owners.

Posted by: Josie at October 24, 2008 5:59 AM

To Ian's point today, people who are born into families that "got it goin' on" are not necessarily smarter or savvier than people who are born into broken or poor families.

The advantage they have is being marginally freer from worry, concern over where the next meal is coming from, or being one monumental fuck up away from destitution. These things are never a concern for them...and they dont hear or feel it from their families.

This lack of survival anxiety in their lives frees them up to see their own potential, with few obstacles to realizing it. I think Ian's just looking for people to demonstrate a little humility here.

You know, this is one of the things I like about Obama – he did not have advantages, and likely takes nothing for granted. I think humble beginnings make compassionate leaders. Same for Bill Clinton.

Posted by: another anonymous opinion at October 24, 2008 6:29 AM

An earlier commenter talked about the “rich” getting a free lunch. What hasn’t been mentioned is that the wealthiest 5% of Americans pay over 50% of the federal taxes. 40% of Americans pay no income tax at all. As one of the people who has worked hard and made the right choices to be able to have a salary in the top 5% I don’t feel like I’m getting off easy. I’m paying significantly more money into the system already. Instead of being thanked for this, I’m to pay even more?!? Maybe I would feel better about it if I didn’t think a lot of the federal taxes collected are wasted by politicians funding their own self interests over the good of the country. If you think that will change with the new administration you have your head in the clouds. For me Ian, the amount of extra taxes that Obama is supporting is not insignificant. Don’t forget that it’s not just the increases on federal income tax, but also social security taxes, capital gains, and god know what else he will try to do to pay for his proposals. To be clear, I’m not asking for a reduction in taxes which is what I think McCain is proposing. Just don’t punish me any further for my success.

Posted by: jersey at October 24, 2008 6:55 AM

A few disclaimers:

(1) I am voting for Obama.
(2) I make more than $250,000 a year.
(3) I am curious to see how Obama utilizes my restributed wealth.
(4) The top ten percent have 70% of the wealth, but don't we pay 70% of the taxes, too? Just saying.

Forgive me if you've all seen this before, but I love this take on taxes. This little story about some beer drinkers explains a lot. A good lesson for our country.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers, he said, 'I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.
But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now paid $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
'I only got a dollar out of the $20', declared the sixth man.
He pointed to the tenth man,' but he got $10!'
'Yeah, that's right', exclaimed the fifth man. 'I only saved a dollar, too. It's unfair that he got ten times more than I!'
'That's true!' shouted the seventh man. 'Why should he get $10 back when I got only two? The wealthy get all the breaks!'
'Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!'

The nine men surrounded the tenth and beat him up.
The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

Posted by: CM at October 24, 2008 7:06 AM

"Do you want to make everyone ABSOLUTELY equal? Seriously, how far?"

No, we don't. We just want to help stop people from being miserable - for instance, dying because they lacked proper preventative care, or being homeless because they were 55 years old when their husband left them and they never got a job.

How can you see elderly people who are homeless and think anyone is worried about making everyone "equal"???

Democrats are not Soci**sts or Communists, just like Republicans aren't Anarchists. It would do us well not to argue in those terms.

Posted by: Anon at October 24, 2008 7:22 AM

The beer drinking e-mail forward that has been circulating the web doesn't discuss how much each man earns before the bar tab and thus how much he has left after paying the tab.

Also, it doesn't say where the rich person moved overseas, to avoid these unfriendly taxes. I assume it was neither France nor Coastopia.

Posted by: LFMD at October 24, 2008 7:22 AM

To "another anonymous opinion". . . . are you really in the top 5%? Can I have some money? I have some credit cards to pay off.

Posted by: Schultz at October 24, 2008 7:43 AM

IMPORTAN XTCIAN NEWS.......

I totally agree!!!!!

We just disagree on the execution and implementation of change.

I cannot ever be convinced that our federal government and porkfilled politicians can get out of their own way to create real change.

Would I be as opposed to tax increases if I knew that money was staying closer to my home? Probably not.

So let' just agree to disagree and hope that our next President steers us down the road towards real change. I think we are all tired of beating each other up. :-)

Posted by: Annie H. at October 24, 2008 7:53 AM

Anonymous agian, bear in mind that you made the first personal and sarcastic crack against Ian with your initial "fancy doctors" comment. He responded in kind. Your reaction reminds me of Matt--you seem shocked that he returned sarcasm for sarcasm. Why?

I don't know why you expressed a your point of view here expecting to be exempted from critique, particularly when you rounded out your opinion with a very personal jab at Ian. Please, take responsibility for your own contribution in bringing sarcasm and personal attack into this debate.

Posted by: Annie H. at October 24, 2008 7:55 AM

Btw, I am learning a lot through this discussion. Thanks to everyone who is taking the time to thoroughly explain his/her position on this issue.

Posted by: Claverack Weekender at October 24, 2008 7:55 AM

You keep using that wealth statistic incorrectly, I think. There is a difference between upper 1% of income and upper 1% of wealth. Obama is talking about spreading the income around, not the wealth. Warren Buffet, Bill Gates, the Pritzkers, and a couple hundred super-rich families control most of the capital in the country, and they will continue to control it regardless of what tax regime is in place. I would love to be in this group of people, but I am happy for now to be lucky enough to be in the top 1% of incomes. It would take a lightning strike to get from upper 1% of income into the next tier, Just like it takes a lightning strike to get to where I'm at now. The impact is much larger than 3% Ian, it is a 9 to 14 point swing depending on income makeup. The change in $ available for savings or consumption (i.e. 100%-taxes) is much larger, more like 20%+. And regardless of what josie thinks, a 20% change in after-tax income will cause anyone to change their behavior, including people in higher tax brackets.

Oh well, I'm still voting for Obama. In fact, I'm going to do early voting next week. Maybe even "curbside voting"--defined here courtesy of the Texas Early Voting web page: "If you can drive or if you have a friend or relative who can drive you, you don't even have to get out of the car. Call ahead to notify the early voting clerk that you want to vote from your car. " Bring a six pack and light it up!

Posted by: anon III at October 24, 2008 8:00 AM

whoa whoa whoa, you mean it wasn't because I was an Eagle Scout that I got into UNC?

Posted by: kaz at October 24, 2008 8:05 AM

so, a couple of random thoughts:

first, it never makes sense to me that people who are better of and, presumably, have some notion of how the world work are the ones who don't think that investing taxes into bringing up the less well off people, so that we can focus on reducing the burdens ON US ALL which come out of those circumstances: lower crime, lower homelessness costs, lower the amount of money WE TAXPAYERS pay for people without health insurance, who inevitably end up in the hospital with more severe problems because they've waited to go. i'm not sure i've ever seen these statistics broken out, because they're probably so interwoven in the statistical spin, but how much do taxpayers spend paying for the ramifications of not wanting taxes raised???

second, if we don't believe that the politicians can "get out of their own way" to create real change, what are we to do? seriously. not vote? vote for the lesser of two evils? vote for the more smarmy, disingenuous politician because he'll play the game better?

i'm sticking to voting for the best man (or, if you can't squeeze optimism out of your hardened heart - the least worst as a friend would say). because, putting aside all of the reasons i think it's the right choice, it's another way for us to tell the world we're mad as hell and we're not taking it any more.

Posted by: anonymous agian at October 24, 2008 8:28 AM

Annie H.
I did not use the term fancy doctor to be sarcastic. Honestly I didn't. I just would be that that doctor is an out of network provider or doesn't accept any insurnace at all and that in my mind is a fancy doctor. I guess I should have referred to

the doctor as a "private pay only physician." Would that have been acceptable?

I do not expect to be exempt from citicism. I am sorry if I inferred that I thougth I should be.

Also, how did I make a personal jab at Ian?

Bottom line, I think Ian is a nice guy and I am happy for whatever he has in life. By and large I think he is a modest person who has worked hard and is generous with others. I jsut asked him to live and work like I do for a year before he is overly critical of me.

Posted by: Schultz at October 24, 2008 8:30 AM

Kaz- what I am trying to convey is that, while we all agree that American needs change, we disagree on how to best go about making it happen.

You absolutely should vote for who you think is the best man to do this. By doing so- you are buying into his method of change which is fine.

I'm only stating that I prefer Jefferson to Hamilton so I will be voting for the "smarmy, disingenuous politician" who can best accomplish this strategy.

Posted by: josie at October 24, 2008 8:57 AM

Can someone explain to me how tax breaks incent you to invest in your business during lean years?

Because what I hear some business owners here saying is that when revenue is down, they will cut employees to preserve their personal income. A tax cut, or even a tax status quo cannot make up for lost revenue - revenue driven by consumers' willingness to part with their cash stash -- thus your business will likely still not net you what you made in years prior.

I just got back from a project meeting with a vendor. I am anxious to pay the vendor before year end, so that the cost of this project will reduce my tax burden for '08. I am making a decision to invest this year, while I am profitable, than have the project costs drain my retained earnings/opex for next year, a year which I believe will be lean.

Why is my thinking different? Is it b/c I account on a cash basis?

Posted by: anon at October 24, 2008 8:59 AM

Back to the beer analogy:

Using 2004 figures (link to pdf of study: http://www.levy.org/pubs/wp_502.pdf), if the total wealth of the 10 beer drinkers were equal to $1,000:

The first 4 beer drinkers would have $2 of the $1,000, to share between them.
The 5th and 6th beer drinkers would have $38 of the $1,000 to share between them.
The 7th and 8th beer drinkers would have $113 of the $1,000 to share between them.
The 9th beer drinker would have $134 of the $1,000 for himself.
The 10th beer drinker (who has apparently moved overseas because of his plight) would have $712 of the $1,000.

Posted by: anon again at October 24, 2008 9:18 AM

why doesn't Obama come up with a system to tax according to assets as opposed to income? Wouldn't that be more fair?

Posted by: Annie H. at October 24, 2008 9:29 AM

Anon again, perhaps I did misinterpret your tone yesterday. If I did, I am sorry. You did include that disclaimer at the beginning of your post. The fancy doctor comment, obviously, did strike me as a critique of Ian, hence I questioned your response to Ian's response--I assumed that you meant it to be a sarcastic sideswipe. Again, I am sorry if I misinterpreted you.

To move forward in the next several months/years, we are better off if we sincerely understand each others' differences of opinion here, and by and large I think we are doing a pretty good job yesterday and today of having a frank and thorough exchange about what the differences in tax policy mean to us and how this issue is influencing our votes. I am glad to know that some McCain supporters have cogent arguments that support their tax positions, and I do see how some of you have arrived at your opinions. We're all kind of playing fortuneteller when it comes to the economy right now, making educated guesses as to what will benefit whom and how that will affect the overall well-being of the nation. For me, neither economist nor lawyer, I agree with the general thrust of Obama's economic proposal, as its fundamental intention is to balance out some of what's become grossly imbalanced. I see that it has its flaws and I hope that Obama will continue to seek the advice and counsel of the best and brightest as he (god willing) fleshes out the steps he will actually take to address this crisis. I'm sure he has no illusions that his current policy is beyond improvement. This is one if the qualities I admire most in him--his willingness to seek help and create consensus.

For me there are so many other issues on which I agree overwhelmingly with Obama, the tax policy issue is not going to swing anything for me. But I respect many of the points of view here of folks who have argued their reasons why it is a decisive issue for them.

By the way, just in case any of you haven't see this: Opie, Andy & the Fonz give the thumbs up to our man!

http://www.funnyordie.com/videos/cc65ed650d

Posted by: Claudia at October 24, 2008 9:33 AM

Josie,

I think what you're getting at is that those opposed to Obama's tax plan are concerned that his tax plan would result in MORE of the lost revenue you're discussing. So, while tax status quo, or even tax breaks, might not make up for lost revenue, at least the problem of lost revenue wouldn't be exacerbated.

Yesterday, every single commenter who acknowledged that he or she would see their taxes go up under Obama's tax plan also acknowledged that he or she would reduce his or her spending as a result. I stated then and I'll state now, I have yet to hear a reasonable explanation for why a "trickle-down" theory doesn't work. Conversely, Hoover raised taxes during a period of tremendous economic downturn, and look where that got us. If someone can convincingly explain to me why a "trickle-down" theory doesn't work, and why my fears of exacerbating the economic downturn are unfounded, I will seriously consider voting for Obama.

Posted by: josie at October 24, 2008 9:46 AM

Claudia: Does this help?
http://fora.tv/2008/10/01/Robert_Reich_Dismisses_Trickle-Down_Theory

Posted by: Claudia at October 24, 2008 10:02 AM

Josie: Thanks for the link. I watched the whole thing. I did find it quite interesting, and I think Reich makes some good points--notably, investment vs. spending. That said, I'm not convinced that "trickle-down" as I'm discussing it doesn't work. Reich discusses it as "giving big tax breaks" at the top; we're discussing it as "not taxing more in an economic downturn." Second, while I can't argue that this is a global economy, and that huge businesses do channel an awful lot of dollars overseas, our discussion yesterday was about small businesses. As such, small businesses are far more likely to stay local, both in terms of job creation and in terms of spending. I still maintain that if you reduce the spending capability of small businesses making $250K or more per year, then such businesses will reduce their spending. This spending reduction will clearly "trickle down," and the ripple effects will be felt throughout the economy. The little guys, naturally, will bear the brunt.

Additionally, let me give another anecdotal example. My family used to spend money quite regularly at Union Market (an upscale local grocery store well known to Ian) and Blue Apron Foods (a local gourmet store). These outings have now become incredibly rare indulgences; we simply can't afford them any more.

I kid you not--I am, within the next 10 minutes, heading to Target to buy shredded cheddar cheese and Bays English muffins there, where they are much, much cheaper than at my local stores. Do I feel shitty about it? Absolutely. I love, love, love local businesses, but I can't afford them right now. If anyone local is interested, meet me there and we can discuss politics over a McDonald's cappuccino (since, as I said yesterday, I'm not buying them so regularly at Ozzie's anymore). I bet Target and McDonald's channel significantly more money overseas than my local grocery stores and coffeehouses, no? CONSUMERS with reduced spending power turn to big chain stores that send money overseas at the expense of local businesses, too, Mr. Reich.

Posted by: Claudia at October 24, 2008 10:03 AM

Correction--can't argue that this ISN'T a global economy, etc.

Posted by: Josie at October 24, 2008 10:13 AM

Claudia: It's funny, but what you're saying supports my assertion that it's the consumer body which drives the economy, not the businesses. Obama does not propose taxing BUSINESSES, he proposes taxing PEOPLE who make over 1/4 mil a year. Everyone's belt is tightening. EVERYONE - no exceptions.

As a body, our demand at the retail store trickles out to the retail stores suppliers and then to the manufacturers or growers who sell to the supplier, etc. The retail shop owner is probably the "littlest guy" out of all of them, excepting of course, for the consumer.

Posted by: josie at October 24, 2008 10:15 AM

trickle down - supply side econ
bottom up (per Reich) - economy driven by demand.

Heck, even Bush agrees. Remember his chants to buy, buy, buy - go out and spend - after 9/11?

Posted by: Neva at October 24, 2008 10:52 AM

One thing you small business owners aren't taking into account is the growing cost and economic effect of health care. I think the rising cost of premiums for providing health care for employees has much more effect on the small business owner than any tax increase will (especially since as Salem mentions there are so many ways to deduct expenses such that you never end up with a gross net of 250K). Taxes are just one part of what should influence your vote this year.

Health care is an economic issue for all Americans - even the insured ones - because we are paying for everyone else one way or another.
We might say health care isn't a right and some don't deserve health care but when they miss work or are too unhealthy to work or rack up huge ER bills it all "trickles down" to the rest of us.
Not having a better health care system is not only morally reprehensible in this country (at least in my opinion) but it's economically bankrupting us.

Posted by: Neva at October 24, 2008 11:56 AM

http://www.jacksonhealthcare.com/news/revamp-healthcare-system_102008.aspx?sc_cid=HRS

In case you care (and even if you don't), I don't really love Obama's health care plan. I just hate it less than McCain's. The link above is a better idea than either and doesn't involve "socialized medicine". Fixing this is going to take a bigger hatchet than either one of them is willing to swing at the moment.

Posted by: josie at October 24, 2008 12:17 PM

per Salem's post:
http://www.thepittsburghchannel.com/cnn-news/17789356/detail.html
Fraud revealed

Perhaps if we had a better healthcare system, she could get the care she needs to stop the self-mutilation.

Next, and off topic: I received a Republican National Committee sponsored mailing yesterday - addressed to my late FIL, who was a registered Republican. Interesting piece discussing how shady and corrupt Obama is.

The piece had not one picture of McCain, nor a single picture of Obama (perhaps that was the back of his head in one), but it had LOTS of pictures of some Arab-looking dude.

I am not so naive as to think that this mailing was sent to every registered Republican. I am certain it was targeted to my FILs specific demographic - white voters over 75 years old.

How can anyone support such insidious demagoguery?

Posted by: Claudia at October 24, 2008 12:50 PM

Okay, got my English muffins.

Josie, you make some valid points, but businesses drive the consumer body, as well. Of course Obama is taxing everyone, not just businesses. That doesn't make things any better. If we're all tightening our belts, we're all spending less. What, then, is trickling up? I do agree with Reich that spending to invest in infrastructure is different than spending for the sake of consumption. I'm just not convinced that Obama's proposal will have the desired effect. I'm not convinced that the money will go to grow the infrastructure at the rate it would have to in order to offset the belt-tightening effect on the economy. And I don't think we can afford to take on much more debt at this juncture.

Neva, I hear you on not being thrilled with either candidate's health care plan. I'm not, either. As I said yesterday, I don't think there are any easy answers when it comes to health care.

For the record, I, too, loathe the "insidious demagoguery" that Josie is referring to. I loathe it on both sides.

Posted by: Ian at October 24, 2008 1:06 PM

Claudia - don't stop shopping at Union Market! I'll give you five bucks! We gotta keep that place in business...

Posted by: ChrisM at October 24, 2008 2:05 PM

Health care economics is a funny thing.

Today Americans spend far more per capita on health care/insurance than the did in, say, 1948. Of course, we consume far more health care and the supply of all sorts of health care has grown enormously. For some 20 years these ongoing developments have been labelled a "crisis."

You can make similar comparisons in per capita spending growth for automobiles compared to 1928, or TVs, electronics and air conditioners compared to 1958. Yet no one asks why there is no pressure to have government intervene to reduce working families' expenditures on iPhones, HDTVs, cable, and tricked-out snowmobiles.

Are these things not sufficiently important? Too important? Too fun to risk their ruin?

If we take money from Guy 1 to pay for part of Guy 2's health care, why doesn't Guy 2's spending on consumer items merit government oversight?

Posted by: ruppstew at October 24, 2008 3:27 PM

Hi - I've never posted here before. I am a principal of a large elementary school in NC. We have seen our free and reduced lunch (FRL - the barometer of poverty) increase from 17% to 40%. I felt like my staff needed help and guidance in dealing with a population that they were relatively unfamiliar with. We did a book study of Ruby Payne's "A Framework For Understanding Poverty". It is an eye opening and fascinating book - I whole heartedly suggest it...

Posted by: Neva at October 24, 2008 4:43 PM

ChrisM - this comes down to one thing that is really a question of perspective. Your point of view could be correct if you see health care as only a commodity to be bought and sold - like TVs or iphones. We can live without iphones but not without health care. That's the difference and that's why it shouldn't be managed in the same free market way.

Posted by: Claudia at October 24, 2008 6:37 PM

Ian--Five bucks??? The most I can get for that there is two Kashi bars! Half a pie costs nine bucks! A delicious, delicious pie....ever had their strawberry rhubarb? Yeah, you're right; we've got to keep that place open.

Posted by: Triangleheel at October 24, 2008 7:34 PM

To go off topic a bit, I have encountered more and more of my Republican friends. The vitrol they have for Obama puzzles me and the constant spewing of Fox News sound bites is alarming- but more confusing and bothersome is their complete disregard, almost amnesia, about the last 8 years. It almost pains them to mention Bush and then they scramble to say how different McCain is. I am utterly stunned by their complete lack of understanding of where W has put us and just HOW some of us want no part of even a HINT of it continuing. The funny thing is, they say I'm the one that is misguided.

They then say McCain is the lesser of two evils. That is quite the selling point I must say- it just screams "I am a McCain supporter!" I should mention these same people told me that W was the lesser of two evils in 2000 & 2004. I wonder why I don't believe them now?

As Bush said, fool me once, shame on you... and I won't get fooled again.
http://www.youtube.com/watch?v=eKgPY1adc0A

I guess the real question for this election- who really are the fools?

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