Even Slate sees through the OBAMA IS BLEEDING TEH RICH stuff we’re hearing from the Galt-going GOP gasbags:
On Tuesday, Washington Post columnist (and former Bush speechwriter) Michael Gerson argued in an op-ed that “Obama chose a time of recession to propose a massive increase in progressivity—a 10-year, trillion-dollar haul from the rich, already being punished by the stock market collapse and the housing market decline.” The plans are so radical, “there will not be enough wealthy people left to bleed.” CNBC’s Larry Kudlow wrote that “Obama is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.” Other segments on the financial news network warn of a tax on the rich, a war on the wealthy. My personal favorite was a piece from ABCNews.com, which had to be rewritten and reposted because the original was so poorly done. (The revised version isn’t much better.) It quotes a dentist who is contemplating reducing “her income from her current $320,000 to under $250,000 by having her dental hygienist work fewer days and by treating fewer patients. [That way, she] would avoid paying higher taxes on the $70,000 that would be subject to increased taxation if Obama’s proposal is signed into law.”
[…]Second, this return to 2001’s tax rates was actually part of the Bush tax plan. The Republicans who controlled the White House and the Republicans who controlled the Congress earlier this decade decreed that all the tax cuts they passed would sunset in 2010. They put in this sunset provision to hide the long-term fiscal costs of the cuts. The Bush team and congressional supporters had seven years to manage fiscal affairs in such a way that they would be able to extend the tax cuts in 2010. But they screwed it up. Instead of controlling spending and aligning tax revenues with outlays, the Bush administration and its congressional allies ramped up spending massively—on two wars, on a prescription drug benefit for Medicare, on earmarks, etc. Oh, and along the way, they so miserably mismanaged oversight of Wall Street and the financial sector that it required the passage of a hugely expensive bailout. Even before the passage of the TARP, the prospect of extending all the Bush tax cuts was a nonstarter. Once Bush signed the $700 billion bailout measure into law, extending tax cuts was really a nonstarter. The national debt nearly doubled during the Bush years. So if you want to blame someone for raising taxes back to where they were in 2001, don’t blame Obama. Blame Bush, his feckless Office of Management and Budget directors, his economic advisers, and congressional appropriators like Trent Lott and Tom DeLay.
John’s graph sums up the myth about increasing marginal rates on taxes quite well:
Anyway I’d like to tell Jim Cramer and Rick Santelli that there will always be a space in my parking lot, when you need a little coke and sympathy.
Zifnab25
Oh heavens no! Whatever shall we do?
Perhaps next she’ll donate all her money to charity and start living out of the back of her car so she doesn’t have to pay ANY income tax like all the rest of the lucky duckies.
Is this the financial equivalent of holding your breath till your face turns blue and you pass out because you can’t get your way?
gnomedad
So if Bush hadn’t cut taxes those Wall Street guys would have been too disgusted with the tax rates to steal all that money?
jl
Good that Slate is starting to work for Good and not for Evil, and not doing its BS shallow contrarian shtick.
Unless I missed it, the article does not mention that this relatively minor tax rate rejiggering is more of a tax shift rather than a tax increase overall, in the middle of a recession. (the ‘tax shift’ terminology was coined by Biden, I think, during the campaign.)
If we shift the income tax rates so that the poorer folk have higher after tax disposable income, and the rich have less, then the average marginal propensity to consume should go up for the nation as a whole. Therefore, it could serve as an overall part of the tax stimulus. It will still be a minor factor compared to the spending stimulus, but the idea that it is some economy killer is nonsense.
For more BS from the reactionaries, some good looking and very quick and intelligent gal on Hannity’s show got Hannity to acknowledge that Saint Ronnie Reagan raised income taxes. But Hannity tried to say that raise was a minor adjustment. Well, look at the graph and compare the minor adjustment was a little over half as big as the proposed sunset on the Bush tax cuts. But that is the difference between free enterprise Paradise and totalitarian Hell.
Also note that Clinton had much bigger increases than are proposed now on the top bracket, and that was also predicted to kill the economy. They were wrong then and they are wrong now.
I still propose raising the top marginal rate to 50% (for an approximately 60% increase). Then more of these poor little richy riches will go John Galt, which will also increase national productivity.
I think Senator Kyle was griping on the TV that it was unfair to the poor little rich people that they would pay more than 60% of the tax revenues, and he asked whether we really wanted that. Well, I for one do not want that. But that should be fixed by adopting measures that encourage a more equal distribution of income, so that the poor and middle class pay a reasonable percentage of income tax revenues because they are prosperous again and have more income, not because they are squeezed to death. Many of Obama’s proposals are relatively timid and centrist measures (by the standards of communists like Truman and Kennedy) to restore that balance in relative income.
Robin G.
I hope they all do hold their collective breath. I want to see that happen at the next Tea Party. Hell, I’ll take unpaid leave just so I can go and take picturea of the little blue-faced douchebags tipping over like dominoes. We can set up lawnchairs for easier viewing. Who wants to bring the beer?
Delia
Aw, come on. We all know they never intended to sunset those tax cuts. No matter what the circumstances they would have been screaming about socialism and class warfare at any hint of letting them actually expire. I guess they didn’t actually expect to tank the world economy with the sum total of their clever little games in the meantime. That’s why the fundamentals of the US economy were sound (remember that) right up to the hour when, um, they weren’t.
The suffering of these people is very touching. We’re going to have to do something to make them shut up sooner or later.
Delia
Damn. I used the s-word in my comment and now it’s in moderation.
calipygian
Are you seriously suggesting that po’ folk should be buying more CELLPHONES???????
Llelldorin
I’m all for this. Ideally, it will force the market to create a saner wealthy class, which this country needs desperately.
jenniebee
She’s reducing her income by $70,000 to protest having to pay an extra $2,100 in taxes. Brilliant.
Indylib
@Zifnab25:
More like the financial equivalent of cutting off your wingnut nose to spite your Randian face.
Ivan Ivanovich Renko
Fixt.
jl
It is interesting to note the difference between top bracket income tax rates since St Ronnie and the rates back when the nation was crushed under the totalitarian heels of those ruthless commie thugs Truman, Eisenhower and Kennedy.
I think those tops rates were too high, but there is no evidence that they hurt growth. That was the era of highest growth in per capita national income and productivity.
But that chart shows how silly this debate is.
dmsilev
@jenniebee:
Just think of it as evolution in action.
-dms
NonyNony
@jenniebee:
No kidding. I had to go check to see if it happened to be one of the dentists at the practice I go to (it isn’t – the fool in question lives in Boulder Colorado). If it had been I probably would have had to find a new dentist because I’m not sure I want someone who is either that stupid or that petty working on my teeth. You’ve got to trust your dentist – dentists, doctors and auto mechanics. When trust fails in any of those three professions you’ve got to find a new one.
jl
That dentist is probably not the best person to be putting you under anesthesia and wielding sharp instruments in your mouth, IMHO. Get them tax rates up, I want to get rid of those kinds of dentists. They need to be able to do simple algebra.
gnomedad
@Delia
lolz! Only at Balloon Juice.
Mnemosyne
Maybe someone should check her office for a nitrous oxide leak.
jl
Has Eisenhower apologized to Rush yet? Why not?
Wile E. Quixote
While this was published in Slate it was written by Daniel Gross, one of the few Slate contributors who doesn’t engage in what DougJ referred to brilliantly as "facile contrarianism" a few months back.
Indylib
OT Don’t know if this was mentioned earlier today, I haven’t had time to go through all the threads, but the Birthers were chastised by a federal judge today.
Genine
Jamison Foster has a great post on Media Matters about the current tax debate and "class warfare".
Its a great piece.
DougJ
Activist judges.
4tehlulz
Fuck the Randroids. Perhaps if one of their own be Fed Chair, this mess would never have happened.
Dennis-SGMM
Has anyone actually spotted an item about a real person with a real business who’s going to restrict his or her income to $249,999? All I’ve seen as evidence of people "going Galt" is a smattering of blog comments from people who are likely referring to the success that would have been theirs to stifle if only their eyes hadn’t dark-adapted to mom’s basement.
burnspbesq
The Laffer Curve in action. Tis truly a wondrous thing to behold.
4tehlulz
@Dennis-SGMM: It’s probably the same people peddling the same bullshit.
A truly new strategy among Righttards.
jenniebee
What really gets me is that one of these geniuses, I think it was TigerHawk, complained that the earlier reduction in his taxes had shifted tax burdens to the states, so his state taxes had gone up, and now his federal taxes were going back up, so he’s hit more than those lucky duckies – I’m sure it was him, in the youtube comments.
I keep going back to what a friend of mine who owns her own business said last summer: if your business is hitting the $250K mark, you need to get a new accountant. Or you’re outrageously, stupidly, greedy. Or both. Whichever.
Meanwhile, grade schools are seeing explosions in the numbers of their students who are homeless, and that was before unemployment hit 8%.
AhabTExpropriator
Is there a website that has a rundown on squatting and absentee ownership laws in the various states?
Also, we need a manifesto.
The Socialest Manifesto?! Class warfare, but with a casual party atmosphere. Something that says "your money, but not your life, baby!"
And fruit cocktail!
chrome agnomen
why the hell shouldn’t we declare war on the rich? didn’t they just break into our homes in the night and take everything that wasn’t battened down. sympathy: right between shit and syphilis in ye olde OED.
burnspbesq
Let me see if I’ve got this straight.
If one has taxable income of 350K, one’s Federal income taxes are going to increase by five grand. Five grand divided by 24 means an extra 208 bucks will be withheld from each paycheck.
Like anyone will notice that if their takehome is $8,500 twice a month.
Good fucking grief.
Jay B.
From Gross:
Yes. But I appreciate the question.
brian griffin
so where are these guys gonna go to pay less income tax than here?
Afghanistan always had a low income tax, but it’s just no fun any more. tho I do hear Haiti is real nice this time of year.
les
Actually, this is brilliant–for the rest of us. Assuming she could actually sell those additional services, someone else surely will. More dentists employed, with all their employees and furniture and office space and blah blah blah. Best thing that could happen is if all these wannabe rich cut back–to say nothing of laughing at their sorry asses when the Giant Galt Revolution turns to Epic Fail.
jcricket
Slightly OT, but I thought this was interesting. Let’s say the top tax rate is 90% (quite high) – and there are no loopholes or deductions. And let’s say you’re someone who makes enough to get charged that on some portion of your income. If you’re in a position to take another job/project, which would take 5 hrs/week, and you’d gross $100k, but only net $10k, you might choose not to do the project/job (not worth the effort for the net proceeds). At first blush this is, Oh noes! Lost money for the economy and government.
But wait, there are other people, who don’t earn as much as you, who have a top tax rate of (say) 50%, who are 2nd or 3rd in line for that same job, and they will do the work. Hoo-ray, people move up the income ladder, government gets its revenue and the economy gets more money flowing (and the work gets done).
So even if the top, top people "go galt", there’s plenty of "almost top" people happy to step in. Even in St. Ronnie’s days as an actor, where he talked of turning down projects because of the 90% tax rate, he ignores the other actors who were then be offered/take the project/film.
Is there anything Libertarians or Republicans get right, even at a theoretical level? Do they, in any way, understand human nature? No.
anonevent
@$4.10 A Day | Oliver Willis:
LOL!!
@jenniebee: Yeah, my 3rd grader has been talking about multiple friends that have had to leave school because their parents could no longer afford the houses they are in. It’s still tough to explain that to someone his age.
JWW
What your graph does not display is that most of the highpoint years display inherited wealth that came to smart businessman and passed on to families from the late 1880’s and early 1900’s, then in one swoop compare that wealth with the new business environment which may grow the next set of those who will inherit.
Tax the hell out of a growing business and it does not grow.
chrome agnomen
ok, mnemosyne and jl at 17 and 18. you bastards! how do i clean hummus spray from my keyboard?
anonevent
@jcricket: Something I had read at OpenLeft . The premise was that some people cannot see beyond the individual to how an entire group works together. Your point, while making sense to me and probably most of the people here, would be lost on the people described as being stuck at level 3 in this categorization.
Dennis-SGMM
@JWW:
Now, Chewbacca is a Wookie…
NonyNony
@jcricket:
This is pretty much the analysis I had in my head of this whole "go Galt" phenomenon. With the added bit that there are a good number of folks who will go ahead and take that marginal $10 grand increase in their income to ensure that they’re keeping their share of the market at a certain level and are willing to take the lower return on their work in exchange for keeping a competitor from growing in the market.
But basically the more people who sit on their hands because they’ve reached their "maximum point" for income, the more opportunities open up for people further down the chain. This is actually a really fucking GOOD THING when unemployment is rising, since it opens up opportunities that otherwise might not be there. We should be encouraging these people to "go Galt" as quickly as possible for the good of the economy.
jenniebee
@les:
I know – it’s the same with all the egomaniacs threatening to "Go Galt." You want to take some time off and you can afford to do it, knock yourself out. You should. Life is short, spend some of it with your kids. Just don’t think I’m going to run crying after your overcharging, parasitic ass asking you to please come back and skim a little more off the top because the rest of us need you, we really need you, to profit off our work.
Seriously, Galt-abees, you think if you threaten to stop making money off of repackaging, reselling, speculating on, and hedging against my work product, I’m going to be scared? Buddy, you ain’t nothin’ special. if you leave, there’ll be five other assholes lined up to take your place fucking me over financially. You want to scare me, threaten to stick around.
jl
@JWW
How does that work for the 50s and 60s and 70s? Evidence, please.
Those who did not get their grandpa’s wealth wiped out in the Great Depression were like the top 0.1%.
Hewlett-Packard was founded in the late 1930s when the top rates where far higher than 50%
Les Miserable Fulcanelli
Articles like that frickin’ parasite Gerson’s need to be plastered everywhere for all to read. Right under a 40 point type headline that reads…
"To America’s Hardworking Middle Class: This Is What America’s Wealthy Think When The President You Just Helped Elect Keeps His Campaign Promise".
Good post, Doug, great song too…
But this one is better, and more appropriate these days:
Gimme Shelter
Turn it up, smoke em’ if you’ve got em’ and enjoy.
burnspbesq
@chrome agnomen:
You don’t. You buy a new one. Stimulating the economy is everyone’s patriotic duty.
But wait, you may say, all the new keyboards are made in China.
Yes they are. But the technology is American, and in the modern economy the guy who owns the IP gets most of the money. Of course, he’s probably shifted ownership of the IP to Ireland, and will pay tax there at 12.5 percent, but that’s another story for another day. Somebody in America will make about $1.25 for selling you a 50 dollar keyboard. And they will pay tax on that $1.25.
Ash Can
@jl: Ike may be a slacker, but Eric Cantor has finally made nice with the GOP capo. (Wow — he held out for five whole days.)
Church Lady
The people who talk about "going Galt" are all self-employed. Doing this while employed by someone else really would be difficult, if you wanted to hang on to your job. When you are self-employed, on the way up you work your ass off 60 hours a week or more, trying to increase your business and your income. After you get to the point of $250K or so, it becomes fairly easy to decide to slack off a bit. That extra $10K or $20K per year, after all taxes, might just not be worth the effort any longer, given that a loss of that size income probably won’t really cause a lifestyle change.
As pointed out above, this can be a good thing – others, striving to reach that point, may well have better opportunities with the ones above them on the income ladder choosing to pull back a bit.
jl
People can go here and download the Bicentennial Edition: Historical Statistics of the United States, Colonial Times to 1970. vol 2, Chapter V, business enterprise
at
http://www.census.gov/compendia/statab/past_years.html
You can look through all kinds of business start-up and incorporation stats from the late 19th century and see if you see things crashing for booming due to changes in the top marginal tax rate.
@46 Ash Can: yes, the Obama Borg got to Cantor. Scary stuff.
Les Miserable Fulcanelli
@Church Lady:
Pull back a bit? My dear Church Lady, the "Go Galt" crowd are the ones who pull the ladder up after them. They’re whining about Obama spacing the rungs out just a little. You’d think they just bought the mansion of their dreams and then found out Tony Soprano was their garbage man.
Tavi
This is the second time this graph has shown up, and I’m still not sure what message it conveys. While it’s true that the top marginal tax rate was about 92% in 1952 (just to pick a year), the tax bracket that applied to kicked in at $300,000 for head of household. In today’s dollars that’s just over $2,400,000. (See here for the tax rates and this inflation calculator)
In 2008, however, while the top tax rate was only 35%, for head of household that applied to income over $357,000. Not quite apples to apples, it seems to me.
In 1952 dollars, that $357,000 today had the same buying power as $43,900. That would have been in the 25% tax bracket in 1952. So comparing these, it seems that, in a sense, the relevant tax rates have in fact gone up, rather than down.
(On the other hand, comparing the tax rates on the lowest income bracket we see that the rates in 1952 were 22.2%, compared to 10% in 2008 — that does seem to be a progressive improvement.)
Maybe I’m missing something, but again, I don’t quite get what the graph is supposed to be telling me. Except possibly that what we need are a couple more tax brackets at the high end.
Mnemosyne
Here’s a hint: if, even after paying all of your business’s expenses and employees and making your capital investments for the year, you’re still able to give yourself a salary of more than $250,000, you’re not a "growing" business anymore.
gbear
Doesn’t Keith Richards know that smoking cigarettes is BAD for you??
Church Lady
@Mnemosyne: Well, you’re not exactly Proctor & Gamble either.
Conservatively Liberal
Everyone remembers the horrible financial times that people lived through under Truman, Eisenhower and Kennedy, right? No? Things were doing well? Relatively speaking, people were doing extremely well. Why? Because, in part, the top marginal tax rates are (actually, were) not only what you see on the face of them, they also acted as a regulatory/pressure valve in discouraging businesses from sucking wealth out of their companies via gawd awful levels of compensation and bonuses.
Paying tons of the company cash to the government wasn’t seen as a very smart executive decision, so executive pay was kept in check. This forced the companies to reinvest in themselves, pay back debt or to pay out greater dividends. Anything rather than handing huge chunks of their cash over to the government. Heck, we even saw some of this money as it was better for the company to ‘share the wealth’ and keep a happy, stable workforce that was rewarded with good benefits.
Once the rates were lowered to the point that it was no longer punitive for executives to pay themselves large sums of cash, everyone decided that they deserved these gawd awful ‘compensation packages’. Once they could focus on moving money into their pockets, you will notice that wages started flattening out. Why should they waste the money on workers when they could now take it home with minimal losses to the government via taxes? Unfortunately, this shift in monetary policy in business had a secondary effect that helped to contribute to the collapse of the markets today, and it wasn’t because of the rich getting richer while everyone else was treading water or even sinking.
What do these newly minted millionaires (and billionaires) to do with all of this money? The smart thing to do would be to invest it, right? When you are talking about the outrageous sums that were being loosed into their hands, there just weren’t enough investment opportunities to put all of that money to ‘work’. Our financial world saw these huge sums floating around looking for a home to ‘make money’ and they knew they had to get their hands on their share of it. Thus the creation of unchecked financial horrors like the CDO and CDS creatures, to provide a ‘home’ for the money from this newly rich class of investors.
Problem is that since they are uninsured and/or entangled, complicated investments that would unwind horribly, the investors were looking at losing their cash if, heaven forbid, the music were to stop. Plenty of assurances and twisted logic was used to dispel these silly notions but one day our pols saw the writing on the wall (that the music might be turned off one day) and thus injected the provision into the bankruptcy bill that moves CDO/CDS holders to the front of the line in a bankruptcy, which would virtually assure that all remaining assets would be used to satisfy those obligations first.
Leaving everyone else high and dry. The bankruptcy bill was passed in 2005. The Republicans own this one and people are going to be pissed when they figure out what has been going on. Our politicians, on both the left and right but led by the right, sold us down the river to the highest bidders.
Now they want to hang it on Obama, like it is all his fault. Just like the fuckhead Republicans did to Governor Gray Davis in California in regards to blaming him for the Enron "Get Shorty" energy scams that raped the consumers of the state.
Fuck them, they made this shit sandwich and they are going to eat it. They can howl all they want but Obama is NOT the problem, they are. He is just the poor guy who has to deal with it or they will blame the complete failure on him. Bullshit. Right now, as far as I am concerned, the system has failed. Doom is slowly coming, but it will arrive when it is ready to and not a minute sooner. In the meantime, Obama can attempt to save the system and will get big kudos from me if he pulls off a miracle and turns things around.
If it fails, as I expect it to, Obama is the last person I am going to blame. One guy didn’t cause this mess, anyone who takes the simpleton approach to placing blame isn’t worth giving the time of day to. It took a whole party to lead the way to this clusterfuck and another party to spinelessly go along with it to allow it to happen.
Obama is the distraction the Republicans want to wave because if anyone looks behind the curtain they will see the real culprits in this mess: Our so-called fiscal conservatives.
They OWN it and I will remind them every single day. Same with the spineless or opportunistic Democrats, it is theirs too. Sorry for the rant but I am sick of hearing whining about Obama not saving the day. That is a distraction to keep you from focusing on who really is to blame for this clusterfuck.
shibby
@Conservatively Liberal:
Very interesting comment. You should repost it somewhere else so it will get some additional visibility.
Mnemosyne
@Church Lady:
True, and Procter & Gamble should be paying their share, too. I’m more pointing out that if your business is doing well enough that you’re able to pay yourself far enough over $250,000 that a 4 percent increase in your taxes that starts only at $250,001 becomes a large sum, you’re not exactly a struggling small businessperson anymore.
Bill H
One needs to qoute Slate with a certain degree of caution. I could find no such story at ABC News. Of course, it may have been there and I could not find it, or it may have been removed.
Anyway, assuming the story to be true (ahem), This person is going to spurn $44,140 because it is not $46,600.
"If I cannot have $46,600, then I don’t want $44,140." Really?
That’s like a spoiled three-year-old denied ice cream and offered a candy bar instead.
"No, I don’t want no stinking candy bar. I wanted ice cream."
Conservatively Liberal
@shibby:
Thanks shibby. The problem with the issues we are facing is that there is no one answer to the problems due to the multifaceted approach to dismantling the system that our pols have done at the behest of those with the cash. After looking at this mess long enough, after delving into the issues I figured out how the initial changes all tied together to create the situation we are in today.
That post is about as clear as it can be explained for those who don’t want to dive into the deep end to figure this out. Laws and regulations were changed, money shifted, banks dived in to the fray, the writing was on the wall and the pols ‘fixed’ the problem by inserting the provision into the bankruptcy bill.
The banks claimed that the CDO/CDS mess did not need regulating, claiming that it would basically take care of itself if it unwound for whatever reason. When they realized that the house of cards was shaky they pressed for our pols to sneak in a clause in the bankruptcy bill that would give them first shot at any remaining assets if a company folded.
I really have nowhere else to post my rants and John is good enough to tolerate my mind dumps…lol! BJ is my home blog and I guess it gets to sink into obscurity here. I guess I don’t have the reach of Santelli or Cramer.
But then again, I am not ripping the American people off. ;)
Thanks for the notice shibby, at least I know someone got something out of it. :)