From the NY Times (via the comments, and I can not remember where), it appears that Republican governors are facing a little backlash for their political theatrics:
As governors in nine states, mostly in the South, consider rejecting millions of dollars in federal stimulus money for increased unemployment insurance, there is growing anger among the ranks of the jobless in those states that they could be left out of a significant government benefit.
The stimulus bill recently passed by Congress includes incentives to states to expand benefits to many more jobless people, including part-time workers and those who have cycled in and out of the work force, who are not covered in many states.
The Republican governors of Alabama, Georgia, Louisiana, Mississippi, South Carolina and Texas, along with Alaska and Idaho, have raised protests, saying that expansion could eventually require them to raise taxes.
***Mr. Kight, who worked for more than three decades as an engineering technician, discovered in September that because of complex state rules, he was not eligible for unemployment insurance after losing a job at a major electronics manufacturer he had landed at the beginning of the year.
Unable to draw jobless benefits, he and his wife have taken on thousands of dollars in credit-card debt to help make ends meet.
***“I don’t understand the whole thing,” said Kelley Joyce, 43, of Myrtle Beach, S.C., about indications from Gov. Mark Sanford that he may reject some of the stimulus financing in that state. “Apparently because he has money and he doesn’t have to worry about everybody else who doesn’t have money.”
***In Mr. Kight’s case, he was unemployed for the second half of 2007, after losing an earlier job he had at a different electronics manufacturer in a downsizing. As a result, when he applied for unemployment benefits, he did not have enough immediate work history to qualify.
“I have worked for so many years, a total of probably 30 years, contributing to the support system that helps people when they get in a tough spot like I’m in,” Mr. Kight said. “I haven’t needed it too much in the past, but I sure could use it right now.”
This should reinforce Larison’s point yesterday about the simple fact that the reason the GOP is hemorrhaging middle class votes is because they simply do not represent the best interests of the middle to lower classes. And has been pointed out numerous times, the Governors could simply amend the law after the federal money runs out- presumably by then we will be out of the recession and back into a growth period (or we hope). At any rate, Schumer and company are already working on this issue, trying force the governors into an all or none decision regarding stimulus funds:
No one would dispute that these governors should be given the choice as to whether to accept the funds or not. But it should not be multiple choice. The composition of the package was rightly dictated by economic considerations; we should not let the implementation of the package be dictated by political considerations.
From a purely political (and deeply cynical) standpoint, I would tell Chuck Schumer and company to cease and desist and instead keep handing these guys rope. Now, that would require standing by and letting people in need hurt, and since I am a new Democrat and an Obama voter, I am not allowed to be that cynical and must be earnest and concerned with the best interests of people, so clearly that is not an option.
But you have to at least appreciate the stupidity of the Governors. Given the choice between a couple hundred rich nitwits with “porkulus” signs play-acting at tea parties and thousands of their constituents, out of work, in need of assistance, and racking up poisonous credit card debt to temporarily stay afloat, and the Governors have chosen… the nitwits. And considering this recession is probably going to get worse before it gets better (and unemployment is a lagging indicator), all they are doing is giving their voters a crystal clear recent example of why they are unfit to lead.
Impressive, isn’t it?
zzyzx
So I listened to Rush for a few minutes this morning and while I didn’t get the entire gist of his point, it sounded like he was going on a rant about how people on unemployment are overpaid and UI needs to be cut.
Hey Rush, I was on unemployment for 3 months in 2000. Yes it pays pretty well in WA, but you know what? That meant that I didn’t have to move to a smaller apartment which meant that my landlord didn’t have to find a new renter. It’s about some basic stability, the sort of thing that lets lenders feel confident to hand out loans. However understanding that doesn’t let you go on rants about how people are losers so you’re probably not interested.
Genine
The re-education camps have done well. Next thing, you’ll be singing Kumbaya and planning your trip to Burning Man to liveblog for Network for Positive Futures.
Nikki
Who are these governors listening to and why? And why should we consider electing anyone who has such obviously poor political skills?
Comrade Stuck
Where’s Condi when you need her.
Pissed off southern jobless wingnuts (likely most, not all). No one could have predicted that. It takes some kind of genius to alienate probably your one remaining bedrock base. Carry on GOP!
Martin
Shorter GOP:
We don’t care about your actual hardships, we have a philosophical principle to defend and to protect you from the elite egghead intellectuals that don’t care about real people.
gwangung
bago
Adding to the Win pile.
Dennis-SGMM
Nitwits elected these governors because the nitwits were more interested in who was the most extreme anti-gay, anti-abortion, anti-government idiot the party could. Now they find that the posturing, empty suits whom they voted for are incapable of good governance in a crisis. Fancy that.
Zifnab
This will make an excellent scientific test case over the long run. You’ll have states refusing portions of the stimulus money and states taking it on. Everyone gets tax cuts – that’s controlled for, more or less – but only certain states get benefits that Democrats support.
So, when people start asking the question, "How much did unemployment benefits help in economic recovery?" we only need to compare Mississippie to Tennessee, North Carolina to South Carolina, California to Texas.
I’d rather be taking Obama’s economic medication than Perry’s placebo, but I’ll be intrigued to see how this all plays out – particularly in my state’s governor’s race where the more liberal Hutchenson will be coming down most likely for the money.
Stooleo
I seriously don’t know what the hell the Republicans think they are doing. Now they are comparing Obama to…wait for it… Robin Hood. Wasn’t Robin Hood, you know, the hero of the story.
Zifnab
@Stooleo: Prince John / Sheriff of Nottingham ’12!
The Grand Panjandrum
Now that the Republicans the failed Obama administration on the ropes they can go in for the kill and drown it in the bathtub.
toujoursdan
It has to be said over and over again. Unemployment insurance isn’t welfare. It’s insurance. WE pay into it so WE can maintain a reasonable standard of living if WE lose a job. It’s just like any insurance policy. It should be there when people need it.
The people receiving it aren’t deadbeats. It’s our money paid into a system to manage risk.
Dennis-SGMM
@Stooleo:
For doctrinaire Republicans, taking anything from the rich in order to give it to the poor is bad because it weakens the character of the poor.
John Cole
@Stooleo: The Colbert Report handled that last night.
Comrade Dread
It doesn’t pay nearly enough in CA. At least not now, when jobs are a lot harder to come by.
Stooleo
Damn you Colbert! (shakes fist at sky).
Napoleon
What is even funnier is the governors are turning down the money at the same time some on the right are throwing a hissy fit about Obama letting the tax break on the rich to expire.
Jay Andrew Allen
Giving a shit is a bitch, isn’t it? I think that’s what made being a libertarian type so compelling to me for so many years – it’s an intellectual blank check to turn your back on other people’s suffering.
Seitz
These governors need to realize that the stimulus bill was passed for a reason. That reason being for the benefit of Mr. Kight.
Sorry, couldn’t resist.
Dennis-SGMM
Speaking of dumbass Southern governors:
Jindal Admits Katrina Story Was False
Jindal lied in his response to Obama’s speech. He didn’t misremember, he lied to make a compelling story. Bobby Jindal: Representing the best that the Republican party has to offer.
Fwiffo
I forget who wrote it, but somebody in blog-world wrote the other day was that Republicans’ biggest mistake was just being in denial about wage and income stagnation over the past decade. They didn’t notice, or didn’t care. Whoever wrote it was correct. And they also didn’t notice or didn’t care about the huge explosion in health care and other expenses has made that hurt even more.
Now, even some of the people who were victims of the wage stagnation, and the cost of health care, also didn’t notice because they were living off their HELOCs during the bubble. But everybody notices now, and the Republicans still don’t get the kind of pain that people are in.
Mike S
According to this dairy at dKos, they called it a "teabagging party."
The pictures are great, especially the one of Malkin with her typical scowl. The diarist asked everyone if they were teabagging and they all said yes.
Can the GOP be any farthr out of touch?
SpotWeld
Wasn’t Rush on unemployment for a while during the vox-jock’s formative year’s? (During his marriage to his 2md wife I think?)
Stooleo
John Scalzi.
Garrigus Carraig
Btw when does the credit card revolt start?
Conservatively Liberal
You’re a good guy John.
Political considerations enter into everything politicians do. That is to be expected when things are ‘business as usual’ but things aren’t ‘business as usual’ right now. I hope the voters of these states take their ‘leaders’ to task for such petty partisan behavior. These politicians are more interested in political posturing than they are in the condition of those they represent. Talk about some seriously screwed up priorities.
In many ways, watching the Republican party melt down is a pretty damn sad sight to behold. It truly is distilling itself down to the mean and hateful dregs at the bottom of the barrel taking over the helm of what remains of the party and driving it off the cliff. While I am glad to see what is left of the party being marginalized I can’t help but think about how destructive this is to our political system.
I know we will recover and carry on, we seem to be able to do that when confronted with tough times. Witnessing the demise of what once was the Grand Old Party isn’t all joy for me, but I do say that they have earned it.
Brachiator
Class warfare, bitches!
I pointed out in another thread (since I’m in the tax business) that for 2008, thanks to Bush, a married couple with 2 kids whose only income is $90,000 in capital gains from the sale of stock pays …. ZERO in income taxes.
The same married couple with $90,000 in wages would pay $6970 in federal taxes; the same married couple with $90,000 in net income from a business would pay $18,723 in taxes. So, by any reasonable measure, the Republican "tax cuts" favor the wealthy with investment income over wage earners.
Oh yeah, the estate tax goes to ZERO in 2010, so it’s not too late to get hitched to your favorite Sugar Daddy or Cougar, though preferably one with a weak heart.
I heard some right wing nimrod insist that Obama was either going to tax everyone or "spread the money around" to the underserving poor who don’t pay taxes anyway, and besides everyone knows that the first thing that corporations do when they get a tax cut is hire more people. Apparently, stuff like outsourcing is an optical illusion, and news stories about how a company’s stock price rises when they announce layoffs is just the slanted liberal news media lying again.
This is one of the reasons that the GOP loves nitwit stalking horses like Joe the Plumber to front for them. The fantasy is that even if the middle class is getting smashed down now, if they work hard enough or get lucky enough, one day they too can join the ranks of the plutocrats.
Brian J
I’m unfamiliar with how unemployment insurance works, but from what I can tell, there could very well be some sort of tax increase. But is it likely to be anything significant? I’m not sure, but a commenator at Brad DeLong’s site estimated it to be about $6 a year, per worker, hardly anything that’s going to kill the state economy.
Of course, if Republicans had some ideas about making the unemployment assistance program better, I’m all ears. I’m trying to find it now, and assuming I’m thinking about this and not trade adjustment assistance, there was an interesting proposal from one of President Bush’s CEA members a few years ago about private accounts for this. Again, assuming I’m remembering this correctly, people would essentially save on their own for unemployment instead of contributing to the government, and the government could be the support of last resort. It would essentially be forced savings but not for retirement. Or what about something like wage insurance, which people from all ideologies have expressed interest in?
But no, we don’t get anything like this from Republican governors and congressman. We get the same nonsense that we’ve seen for the past eight years.
Napoleon
@Brachiator:
Just so everyone is not confused by this, I assume your second $90k example in the above quote I took from you are reporting on a self employed basis and therefore the "employer" half of FICA essentially shows on their return as a self employment tax, whereas for the first $90k example that tax is paid, but it doesn’t show on the individuals tax return since the employer pays it direct. To put it another way any economist would tell you that those 2 taxpayers at the end of the day are paid the same and pay the same amount in taxes.
Comrade Dread
I’m not. I’m not entirely unconvinced these days that their answer wouldn’t involve literally terminating workers.
Wow. A rare triple negative. My English teacher weeps.
Conservatively Liberal
@Mike S:
That is f’ing funny! I guess they aren’t aware of all sexyooal tradishuns.
Fwiffo
Everybody says that Republicans don’t get it, but I don’t think anybody yet realizes the degree to which they lack clue. They’ve got Michael Steele out there saying "my bad" and apologizing for deficits. They really, honest to God, think Americans are upset right now because of pork. They think they’ll win if they fix that earmarks thing. This is right after their candidate, John McCain, one of the few Republicans that can claim to be on the side of the angels when it comes to pork, got his ass kicked soundly by a guy promising to raise taxes.
Even a lot of non-Republicans think they’re in such bad shape because they’ve lost credibility on fiscal responsibility. It’s a problem insofar as it’s supposed to be their brand, but it’s so, so much worse than that. It’s like the party’s problems are one of those Russian nesting dolls, except when you open each one, the one inside is bigger and more terrible, like some sort of jabberwock emerging from a dimensional rift.
"Young conservatives could apply for regular jobs, they acknowledge…" In this market? And still be Republicans?
Chris Johnson
He ought to be careful. If Hillary Clinton wasn’t happier and in more power these days than she used to be, she could sue him for plagiarism…
flounder
They should have made it so you could turn down the money, but if you did you had to re-install the "Fairness Doctrine" in the state. That would have been awesome
Jon H
The GOP has a great philosophy of lean-budgeted governing… if you’re running a condo board.
A nation is not a condo.
Mike in NC
Robin Hood was a thug, of course, leading that scary gang of unemployed blacksmiths and bakers hiding in the woods. They were probably in the country illegally to begin with. The green tights and the funny hat: screams GAY! So yeah, not so GOP-friendly.
Brian J
I wouldn’t worry about your grammar until you start writing "u r really dummm dontcha think??" in a professional context. I’ve had wonderful English teachers who spoke a lot more casually than one might expect.
Anyway, I can see where you are coming from, but I only listen to the really insane Republicans to laugh.
Jon H
"Even a lot of non-Republicans think they’re in such bad shape because they’ve lost credibility on fiscal responsibility."
To a certain extent, this is true.
But it’s a problem that they are now trying to over-correct when it isn’t economically appropriate.
They’re like a novice baseball player who missed a golden opportunity to steal a base, and later tries stealing bases constantly, when it isn’t remotely appropriate, such as when batting.
Brachiator
@Napoleon:
To put it another way any economist would tell you that those 2 taxpayers at the end of the day are paid the same and pay the same amount in taxes.
This is why economists are often not the best people to be put in charge of tax policy. They focus so hard on the macro level that they miss the impact of taxes on real people in the real world.
At the end of the day, an individual only cares about, and is responsible for, what is on his or her own tax return. The portion of FICA that the employer pays is not relevant to the income taxes owed by an employee.
And of course, my larger point (the example of the investor with $90,000 in capital gains who pays ZERO income tax) is that the Bush Administration fundamentally believed that a person who earned income from investments should be valued more highly than someone whose income consisted of wages or self-employment income, and that the rich deserve to be rewarded with bigger tax cuts than the middle class.
Xecklothxayyquou Gilchrist
the Governors have chosen… the nitwits.
I have to admit that I’m pleasantly gobsmacked that my own redder-than-red-state Utah governor has done just the opposite.
Common Sense
Just got back from the Tea Party here in Houston. Hilarious stuff. A few dozen angry middle aged white folk with their kids, who thankfully were spared another day of secular public indoctrination (seriously — the only two minorities I saw were a black speaker and a cop watching with arms crossed) were livid about the government taking their tax money — so they protested at a city park. Said park (Discovery Green) opened up last year and was paid for by those same taxes. If it weren’t for that eeeevil gummint, you wouldn’t have a pretty park to protest at. Money where your mouth is bitches. Protest at a privately run facility. And while you are at it, stay off the damn interstate. All that money is just pork from DC anyway.
But the best was the aforementioned sole AA who willingly attended the rally. The guy was railing about Congress ignoring the first line in the Constitution by allowing DC to vote (comparing it to the Bible — "How do you miss "In the beginning?"") The next sentence out of his mouth was about how our fathers fought for "No Taxation without Representation." I’m confused — is this guy saying DC residents shouldn’t pay taxes, since according to him they don’t get Representation?
celticdragon
Indeed. Having been one of the life long Republicans who helped put them there, my chagrin is…palpable.
It all really started one I found out they didn’t like my different type of family, since I am a trans woman and I am still married to my wife. (interestingly, many Republicans are not at all fazed or unfriendly in person, mind you. Many have told me they support my decision to change gender etc etc. They just can’t stand the "gay agenda" in abstract. Whatever the frak that is)
Than, I got injured, and had to get public support to help pay my bills. My (former) employer challenged my workers comp case…while the management was raping the company for millions (the President was taken out in handcuffs by the FBI after a cool one million went missing form an employee comp fund, and execs were manipulating the stock prices)
Of course, they couldn’t bear the price of dealing with my on the job injury. So, after the humiliation of getting welfare, charity from churches and applying for S.S. disability, I got a quick and nasty lesson in being one of Phil Gramms "losers" in poverty. (Yes, I did sue for the Workers comp. Most of the settlement went to pay back medicaid for the two surgeries I incurred).
None of this made feel well disposed to my party, which pretended that problems like mine were simply not a problem at all:
Sink or swim, right? Your company screwed you over? That is your fault for working there. Not a problem for anybody else. If you got hurt, then why does that have to be my tax problem? Better die now, and decrease the surplus population.
*sigh*
My actual court hearing for Social Security is Monday. It took 4 frakkin’ years, two very painful back operations, rehab, and failed attempts to get back to work to finally get here. If anybody is inclined to prayer, positive vibes or anything else, I could use them on Monday.
Thanks for hearing me vent.
AnneMarie, recovering Republican
*at least we have Battlestar Galactica tonight!*
AnneLaurie
Whine: "Nobody could have predicted… "
I’d gladly let the nitwits suffer (‘starve in the dark’, as the Sunbelt Rethugs used to taunt us Northeastern Dems) but even if I assume every Perry/Barber/wingnut voter had the brains to understand they were voting against their own self-interest, it would be cruel and inhumane to let their innocent children, much less their neighbors, suffer as well. It’s hell to be a progressive with a well-developed spite gland…
lutton
class warfare…you’re doing it wrong
Xanthippas
I love how at the very top of that piece there’s a picture of our very own idiotic governor, Rick Perry. If he somehow becomes the head of the "Governors who play politics with the economic well-being of their citizens" movement that’s fine with me.
AnneLaurie
P.S. Tried to edit the accidental double-posting & now I keep getting "Comment editing denied". FY, WP!
AnneMarie, you’ll be in my…. positive pings.
Napoleon
@Brachiator:
I agree with you and your point is clear from the post, I just thought it may leave someone with the impression that a self employed "wage" earner gets hit harder then a more typical W-2 recieving employee of, say, Home Depot, or IBM. In reality that is not the case. But in either event they get hit and Paris Hilton does not.
Jon H
Apparently the lowest minimum weekly unemployment insurance benefit in the country is in… wait for it….
Louisiana: $5/week
Fwiffo
@Jon H: I’m not saying that their track record with respect to deficits or whatever isn’t a problem. And your base-stealer analogy is apt. My point is that it’s really small potatoes compared to the underlying problem.
Republicans are trying these little tactical things, like porkulus and highlighting their minority membership with Steele and Jindal. And it’s true that those are real problems. But the party is missing some longer term trends that have just now bugun to kick their ass.
Part of it is bad luck. There were two bubbles that served to hide their problems. Most recently, there’s the housing bubble, which just served to conceal the failure of their economic policies. A lot of people thought they were getting wealthier, even though everyone was taking on more debt than they could afford and wages were going nowhere. And before that, they had the Fear bubble brought about by 9/11, which temporarily gave the country an artifical GOP tilt.
That all just covered up the long-term demographic trends (increasing number of racial and religious minorities, and increasing liberalism among the younger generations on social issues like gay marriage). As both bubbles fell away, Republicans are left with nothing but their ideas to attract voters. That’s obviously not going to work. The demographic trends working against them aren’t going to go away, the current economic crisis is going to sour voters on conservative economics for a generation, and the debacle in Iraq is going to sour them on neoconservative foreign policy for even longer. But all the party is stuck with that ideology and has nowhere to go. They are well and truly fucked.
A Mom Anon
@Comrade Dread:
yep that big 330 dollars a week my husband is getting here in GA (the most allowed,he used to make 1200 a week)is really paying the bills and oooh the parties we’re having. Let’s see,I can pay my house payment and not eat for a month,or maybe I can pay COBRA and live on some cardboard under an overpass with my son. Wonder if the bus will stop there and take him to school?
Jesus Christ,these fucking people have no genetic predisposition for empathy at all. It’s fucking depressing as hell.
gex
@Fwiffo:
It’s all "didn’t care" and no "didn’t notice". Wage and income stagnation were the point. That’s what happens with greater globalization. The utilize the ability for capital and all other resources except for labor to flow and they use the structural disadvantages that labor has to take an ever larger piece of the pie.
Expensive health care was the point. They deliberately fought health care reform. These exploding costs most of America is bemoaning are PROFIT$ in their eyes. So what if millions of children are uninsured?
They expressly rely on people not realizing that Repubican policies are bad for 90% of Americans.
Ned R.
@Common Sense:
Stuff like this makes me realize that if this crew ever did pull a John Galt and disappear, not only would they not be missed, but we’d all be more relaxed because they wouldn’t be around making random noises. And we’d be better able to enjoy a nice day in the park.
Brachiator
@Napoleon:
But you’re still wrong. In my examples, the wage earner must write a check to the "US Treasury for" $6970. The self-employed person must write a check to the "US Treasury" for $18,723. It’s not relevant to the wage earner’s bank account that his employer had to kick in some FICA on the employee’s behalf.
[To Mike in NC]
Good one. Seems to me that Robin Hood could also be described as a community organizer.
Church Lady
@zinfab: Don’t be too quick to throw Tennessee into the comparisons. Bredesen is also debating taking the portion of the funds tied to unemployment for the same reason the GOP govs have given, i.e., temporary federal funds tied to permanent program changes.
Max
lutton@45 for the win.
lutton
I hope that image embedded; if not see it here:
http://lanekenworthy.net/2008/03/09/the-best-inequality-graph/
Elie
— I guess what continues to surprise me is their level of profound immaturity and lack of character… Really, HOW did these people get elected?
For a party that all 2008 ran around saying they were for blue collar whites, how can they field 9 Governors with so little sense of the political reality of the times — that lots of working class people are out of work and therefore it might be political suicide to disrespect their situation? Its actually stunning to me that such an obvious flaw could be overlooked.
They have been rendered irrelevant and as though they just don’t have what it takes to understand and step up to the situation. They are weak, disorganized and completely without a functional and organized approach. Michael Steele and others of their so called leadership lurch from response to response, not bothering to check for consistency or a coherent set of ideas..Its all reaction. And then the loonies join in with various violent alternatives.
They are coming apart. Obama has got them on the run and they are, I expect, going to get more frantic, not less as they spin, spin, spin down the toilet bowl. As John C. says, they are unfit to govern…but we have to be careful — they are dangerous and its not clear that they won’t sacrifice the whole thing just to be in their own sick version of dominance. It seems less and less important to them that their ideas, points of view or solutions actually work or not —only that they get their way and impose themselves in the center of whatever — Sad, sad, sad and very scary
Brandon T
@Brachiator
Of course, this is deceptive because of all the business expense deductions that self-employed people can make to their income, so their AGI is effectively lower. Of course that’s difficult to predict in theory, but in practice their taxes shouldn’t work out to much more than the W-2 wage earner (unless they don’t know what they’re doing).
L. Ron Obama
@Brachiator:
No, you are wrong.
The first wage earner already sent half of that difference to the government, as it was subtracted from his total wages (the employee’s share). Whether he pays it on Schedule C, or has it automatically deducted from his paycheck, does not matter a bit.
As for the other half, which is the employer’s responsibility, it is utterly relevant to the wage earner’s bank account. If the employer did not have to pay this amount, they would not have to budget for it, and could pass it on to you.
So the fallacy here is that both wage earners are both grossing "$90,000". They are not. The self-employed person is grossing $90,000, and the other is making $90,000 plus the employer FICA share. You did not say whether the two were doing the same job. If they are, the freelancer is being underpaid, and should add an extra 7.65% into his next bid.
It is the same with any benefit, such as employer-provided healthcare and pension. For a fair comparison, you have to include these values, just as you have to include employer FICA. When you’re self-employed, you have to pay for all your own benefits, and FICA is no exception.
ksmiami
Just to add – the smart half of the 5% about to be taxed where shock – oh no Bill Clinton taxed – is perfectly happy to pay for things like
a workable healthcare system
infrastructure
a stronger domestic America
sound defense policy
After 8 effin years of watching chimpy destroy America and bury lives and treasure in that Iraqi hellhole, goddamit, I am happy to spend some money shoring up the country I love and possibly helping people who are hurting get through these times. If Obama is successful and we pull ourselves out of this with a sustainable economy and future, the Republicans are done as a party and good riddance to those stupid, mean fuckers. I mean Earmarks WTF???
Brachiator
@Brandon T:
Come on people. Let’s keep it simple. My example (based on real tax returns) is for a self-employed person with NET Schedule C income of $90,000 (after all business deductions). So the AGI would not be "effectively lower" (whatever you intend by that). I know that there is a conventional wisdom that people who are self-employed can report whatever they want on their tax returns, but a good number of those people (especially here in CA) end up paying massive fines or doing jail time because the state Franchise Tax Board loves to make examples out of tax cheats — and then reports them to the IRS so the feds can chew on them a bit.
[to L. Ron Obama]
None of what you wrote is remotely relevant to a W-2 that the wage earner would get or to what a wage earner of self-employed person would report on a tax return.
[to Elie]
Great point. The GOP is reduced to lying about Obama’s proposals, saying that he is going to raise taxes on the middle class because, I guess, the Republicans can’t chuck their mantra that liberals must "tax and spend." I’ll bet that this is one of the reasons that Obama mandated that the tax cuts be reflected in changes to withholding. It makes it harder for a worker to claim that Obama is raising his taxes when he has more income in his paycheck at the end of the day.
Chuck Butcher
If you’re self-employed and using a business income as a tax base you’re crazy. There are a few reasons not to S-Corp, but not many.
But the problem with tax guys talking about structural inequity lies in the dispute they had about self-employed vs employed. Tax load isn’t covered on IRS forms.
I’m a construction contractor, by the time I pay all the mandated employee related costs (including one end of SS/FICA) my costs are 150% of wage with no health care, but UE & Worker Comp. That does not allow for fed/state income tax or their share of SS/FICA. My state has no sales tax, but on incomes up to $50K that is nearly a 100% liability so your 5-9% rate applies to income. Those costs to millionaires virtually vanish, with SS/FICA on $90K+.
I don’t argue that the added 50% of wage doesn’t need to be paid, but to ignore it is ludicrous when talking about class warfare. I admit my comp costs are horrid compared to office workers (my state 27% vs 7%) but it’s real. Yes my guys would be those dirty carpenters and roofers – and me, though I have no comp or health care either and UE is past not worth trying for, though I pay it.
You cannot leave my payments as employer out of the equation of tax load, that’s horseshit, it is a tax on the guys since I’d give it to them otherwise or at the least it affects their wages. Think about it, a $1/hour raise costs me $1.50 and has to be justified against what I’m paid for the work.
(why are illegal hires a problem in construction???)
Napoleon
@Brachiator:
Yes it is relevant that the employer had to kick in the tax because he now does not have it to pay to you. If he pays you as an independent contractor then that money would come to you but you would have to pay it out as self employment tax. The self employed person has to pay a self employment tax which appears on 1040 line 57. That number would be exactly twice what the same person working as an employee would show in box 4 of their W2 as withheld for Social Security. What your W2 does not show is that what the employer actually paid to the Social Security fund is twice that number, or the same number the self employed person reports on 1040 line 57. Now, of course, if this was all the IRS did the self employed person would in actuality be whacked harder tax wise because the person who is an employee is not reporting as income the half of the SS contribution the employer pays. But the IRS thought of that and on 1040 line 27 they let the self employed person just disappear part of their income that is magically equal to 1/2 the self employment tax, which is exactly the same as the what would have been the employers 1/2 of SS contribution, and exactly the same as not reported by the employee.
Whether you are self employed or work for someone else the tax burden is exactly the same.
L. Ron Obama
@Brachiator:
I made concrete points. Would you care to rebut any of them? Start by examining the numbers again for a Sched. C individual and for a W-2 earner doing the same job, not context-free numbers on "real tax returns".
Chuck is right that employer payroll taxes exact a hidden cost for employee wages, as an employer could otherwise pass it through (or charge less for the work). Furthermore, it disproportionately affects the low-end of the income scale as the calculation is based on the first X dollars of wages. This cost is simply more obvious when you are the business owner paying yourself, not monetarily more; a sole proprietor doesn’t have to pay unemployment, for example.
Somewhat tangentially, a sole proprietor making that much money might wish to form an S-corp or LLC.
Brachiator
@L. Ron Obama:
Irrelevant to my point. The wage earner reports what shows on Box 1 of his W-2. This amount never includes the employer share of FICA (nor is it included in the wage earner’s Social Security Wages as shown on the W-2). My example explicitly stated that the self-employed person has $90,000 of [b]net self-employment income[/b]. This is (in my example) the self-employed person’s adjusted gross income (AGI). Even when you allow for the SE adjustment on Form 1040, page 1, the tax liability is higher for the self-employed person than it is for the wage earner.
Again, not relevant to my hypothetical Form 1040 for the self-employed person.
Again, irrelevant to my point. If my hypothetical person had a $90,000 in net self-employment income from Schedule K-1 (1120S), the tax result would be the same as an individual showing net self-employment income on a Schedule C.
This is simply not true. Run the numbers through a tax program. Assume that the two kids qualify for the child tax credit.
You are right here, but again, this is not relevant to my example. As an aside, hypocritical employers in California (and elsewhere) get around this simply by employing illegal immigrants. Even if they pay a relatively high wage (as is the case in construction), they still save money by not giving raises and in not paying payroll taxes.
Again, you are right, but this would not in itself affect the taxability of the earnings from self-employment on Form 1040.
Everyone made good points, but the fact remains that if you plug the numbers into a tax program, you get the results I noted on Form 1040. But everyone did get the central idea that the tax rate on investment income is clearly out of whack in comparison to the tax on ordinary income (wages and self-employment income).
Tax Analyst
Naw, dude, they just wanted to argue about SE Tax, life as an employer, whether employer FICA & Medicare contributions should be considered part of an employee’s overall compensation (of course not), the bite Worker’s Comp takes out of the employer’s profit, etc. All of varying degrees of importance and many of them had a point. But hey, everybody…keep you eye on the damned BALL! Brachiator’s POINT was that unlike folks who get their hands dirty as W-2 Wage Earner’s or the Self-Employed who have to deal with taking in enough revenue to pay those wages and FICA share, and worker’s comp, etc., plus their other expenses and still have enough left to take care of themselves and their families, the INVESTOR CLASS (Oh, oh…"Class Warfare Warning") is currently allowed to make a fairly significant amount of income from Capital Gains and Qualified Dividends and pay a ZERO Tax Rate (for the portion of the Cap Gains bracket that only a few years ago got dropped to 5%) on a fairly decent-sized part of it, while we squabble about who is getting screwed more royally – Wage Earner or Boss. But Wage Earner or Small Business Boss, we’re all just peons to them and they would probably get a good chuckle out of this discussion. Now you’ll have to excuse me, I gotta review the return for some guy who probably made more money than all of commenter’s in this thread but might be paying less tax than three-quarters of them…all according to Hoyle, too.
Eye on the ball, people.
Cruel Jest
I was reading this post and the full weight of the Republican opaque worldview struck me like an epiphany. I simply can’t believe how fucking stupid these people are. Do they really not see it? Do they really think these flaccid theatrics are going to propel them back into a permanent majority? The entire Republican plan can be summarized in four words: The ‘B’ is backwards.
Church Lady
Both Tax Analyst and Brachiator make the best point. It is ridiculous that investment income (the primary source of income of the very, very wealthy) is taxed at such a low rate in comparison to income earned from wages.
Although I’m not particularly looking forward to my taxes going up due to the proposed increase in some of the brackets and decrease in the allowed amount of deductions, the two shining lights I see are the proposed increase in capaital gains rates and the loss of the carried interest provision that allows hedge fund and wealth managers the unfair advantage of payiing taxes on their income at the capital gains rates. My only disappointment with the proposed increase in the capital gains rate is that it is so low – I would have preferred at least 25% to 28% instead of the 20% that’s on the table.
Et Tu Brutus?
Brachiator: Dude, two words- free market ( as they like to say,"let the market sort itself out" ;>). When investment income enjoys the lowest tax rates, people invest- good for the market ( until returns on investment plummet, like now?). Need a workforce, go where labor and associated overhead is cheap ( ain’t the U.S. of A). Corporate tax rates too high? Move to Dubai ( hell, Darth Cheney’s outfit did). It’s all good as long as you get a piece of the pie, and the peons can enjoy trickle down economics ( its warm, just ignore the odor).
Brachiator
@Et Tu Brutus?:
Tax policy is not directly, or even indirectly, related to a "free market." The profits a person makes, whether from excess of wages over living expenses, gains from investments, or profits from business, or even gambling winnings from the casino, are whatever they are. For the gummint to say that they will give preference to one type of gain over another is arbitrary, and produces its own types of distortions.
Shorter: the gummint ain’t supposed to be the free market’s bitch.
For example, one of the (gasp!) good things about the Reagan tax cuts is that they attempted to lower the rates on all kinds of income. The theory, which has some validity, is that if you don’t have super low rates on capital gains vs ordinary income, people will not spend huge amounts of time on devious tax-cheat ways to convert income from a more highly taxed type to a more favorably taxed type.
This is partly proved by behavior to the Bush tax cuts. I saw it with my own eyes reviewing tax returns. Instead of running a business and being fair to employees, some owners would slash wages to the bone, convert people to part time or outsource them altogether, do everything they could to boost the paper value of their business and then sell it for a huge ass capital gain (taxed at obscenely low rates compared to ordinary income rates), taking the money and running.
As an aside, to everyone, I listened to NPR during my morning commute. Juan Williams was weighing in on Obama’s tax proposals. Much of it was sadly ignorant of basic tax concepts. He tried, but mangled a contrast between capital gain income and ordinary income.
Whenever a pundit bleats ignorantly about topics beyond his or her grasp (typically science or economics), an angel weeps.
Et Tu Brutus?
Brachiator: your point is well taken; my point isn’t that tax policy should reflect market philosophy, but rather that under the neo-cons ( as well their progenitors ), all governing policy was driven by the twin goals of capitalism and empire. Just stating the obvious, ie, when profit is king, all energy in the system will move towards the monarch.
Da Bomb in Houston
@Zifnab: The only type of placebo that Perry and his hair should promote, is the one that will pack his bags and keep his ass out of the political sphere forever.