I couldn’t help but notice this comment from Christoper Buckley’s Daily Beast entry this morning “The Audacity of Nope:”
Next, I suppose this is because I don’t live in a rich area, and in fact don’t know anyone who is rich as John McCain would define it, but I don’t care how high taxes go on the wealthy 50% or 60%? Hit me.
On American news all I hear is rich men whining about class warfare, while we have lower tax rates for rich people than any other world power. And these idiots didn’t get rich in China, it was American Labor that made them rich.
Obama in my view is opening up the books and not using buzzwords. A tax cut means a minus in the funds. I don’t think it makes Democrats villains to say they don’t want to live in a country where Donald Trump never has to worry about health care but sick children do. I measure progress in poor Trumps and healthy kids.
In response I’ll repost a bit of what Rich Karlgaard said this morning:
Declare war on “entrepreneurs, investors, business and more” and you get a market crash. Stocks, reflecting our future hopes, have bonked 28% since the November election, 14% since the stimulus passed and 5% since Obama revealed his budget last week.
When you attempt to punish the investment class, the group of people responsible for funding the expansion of business and the creation of jobs, for no reason other than personal envy and a healthy dose of a self-righteous entitlement mentality, you get what we have now: rampant economic decay and the slashing of jobs left and right as a result of the investment class assuming a defensive posture.
When you point the finger at businessmen who became wealthy as the result of their own innovation and imagination and screech “THEY DID IT ONLY BECAUSE OF OUR LABOR” then you are overlooking the most important question of all: “who in the hell would have needed your labor were it not for the people who found a way to make you useful?”
I absolutely loathe and detest this type of ignorant, vitriolic populism and it has no place in this country or any other Western country. The poorest people in this country have opportunities that kids in other parts of the world could only dream of – we sit here and harp about how some percentage of this country’s population is uninsured when people in other parts of the world can’t get clean water, food, or even the rule of law. Our own problems pale in comparison to those of other countries around the world. Instead, we bitch about the income divide as though it’s some great moral, social, and economic injustice.
The “divide of income” in this country is an entirely imaginary, emotional problem; we perceive that the income gap between our poorest and wealthiest citizens is somehow the cause of major societal ills. Let me be blunt: my life is not any worse because someone else makes 1,000 times what I do. In fact, that person has probably made my life better by contributing a valuable service that has made it easier for me in some way, shape, or form.
Even the wealthiest heir or heiress, who did nothing to earn their fortune, makes my life easier because their money sits in some mutual fund or some bank somewhere which helps inject capital into our markets and into our loan system. That heir’s inheritance might have been the initial capital loaned by their bank to a real estate developer to build the shopping mall which rented some space to the coffee shop which makes a latte just the way I like it. My life is better off because of that heir’s wealth.
So when I hear some ignorant shit on some blog harp about taxing the balls off of the rich because the “rich” can take the cut, I can’t help but say out loud “you don’t know what the hell you’re doing, do you? You aren’t thinking about this rationally at all. You really can’t see the cause and effect between the wealth of the rich and your vastly superior standard of living compared to the rest of the world? You think that Government will do a better job,based on what? Empirical evidence? I doubt it.”
I try not to be political on this blog, but this really pisses me off. You want to know why the stock market is plummeting? Because the rich people that commentors like this want to soak are dumping their assets as fast as they can – the biggest problem with the economy is confidence, and this kind of class warfare is exacerbating a legitimate economic slump by attacking the class of people who are going to help get us out of it.
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Comments 13
Hear, Hear!
Posted 02 Mar 2009 at 1:44 pm ¶The problem with the classless society that we can surmise is the desire of these people attacking the rich class, is that it is just that: without class.
You never find a society of complete equals in all levels because the only way to accomplish that is to pull everyone down to the lowest common denominator. No one is allowed to be smarter, stronger, or superior in any way to anyone else. Which means we can only hope to attain the lowest of the low.
Thanks for this blog.
Posted 02 Mar 2009 at 1:49 pm ¶I don’t think anyone is calling for a classless society or one where everyone has equal outcomes. However i think what many are saying is that maybe its ok for Trump and others to have only 4 yachts instead of 5 if that’ll mean an extra few thousand kids can have health insurance.
I also have to question the premise/implication that the rich, upper class, investor class whatever you want to call them are not pulling their funds and stopping their investments because of the tax rates. It seems to me regardless of the tax rate if your dollars are generating funds for you through investment you will continue to invest if they’re not you won’t. Sounds simple, but the point is tax rate will only effect how much you make on your investment not whether you make it.
Lastly its easy to say look at the stock market, but most likely obama’s tax policy has much less to do with drops in the stock market (which i’ll add was already tanking) then a complete lack of consumer confidence and other factors.
Posted 02 Mar 2009 at 2:09 pm ¶@Isaac – It’s not just what the rich choose to do with their assets, but it’s also what they do with their business. The majority of the business owners I know have reduced the sizes of their workforces in anticipation of higher taxes, mandates for higher benefits, and so forth.
The mentality of “4 yachts instead of 5″ adds up – when you have 20,000 people who all have had 1 yacht’s worth of money taxed from them then that’s 20,000 less yachts that will be manufactured or purchased over a span of time – even if a yacht isn’t something that the average person can afford, the yacht-building industry is still one that employs a lot of average people – is our government going to create some sort of non-yacht job for those people?
In addition, most of the money accumulated by people like Trump is not spent on Yachts and houses and fancy cars – it’s invested into funds or stashed in banks, primary investment vehicles that keep the wheels of economic expansion in our country turning.
But who gets to say who is rich? What if I came to you Isaac and said “you know, you could probably get by with just one car instead of two – you and your wife should probably carpool – it would be better for the environment anyways.” Is that still ok?
“Lastly its easy to say look at the stock market, but most likely obama’s tax policy has much less to do with drops in the stock market (which i’ll add was already tanking) then a complete lack of consumer confidence and other factors.”
From the post: “the biggest problem with the economy is confidence, and this kind of class warfare is exacerbating a legitimate economic slump by attacking the class of people who are going to help get us out of it.”
Obama’s policies are compounding a problem that already gives a lot of business owners pause – this evidence is anecdotal, but a number of my family friends who own businesses have eliminated jobs simply because they have to assume a defensive posture as a result of Obama’s plan to soak their business. I imagine that it’s a precaution that a lot of other like-minded owners are taking.
Posted 02 Mar 2009 at 2:28 pm ¶Also – the point of my post wasn’t so much about specific policy as it was about a philosophy of aggressively attacking one economic class and using them as a piggy bank.
Posted 02 Mar 2009 at 3:02 pm ¶In terms of hiring/firing based on tax policy I’m not sure i buy it. I wrote an article on why i don’t think tax policy effects hiring… http://isaacbearg.wordpress.com/2009/02/04/would-cutting-taxes-create-jobs/
My conclusion is that smart companies are largely unaffected (at least directly) by what the business tax rate is. They make decisions on whether the person can bring in more then they pay them.
Love to get your thoughts on my math/position.
Posted 02 Mar 2009 at 5:04 pm ¶@Isaac,
Sure Isaac, I’d love to read it when I have the chance.
Posted 02 Mar 2009 at 5:20 pm ¶@Isaac,
“My conclusion is that smart companies are largely unaffected (at least directly) by what the business tax rate is.”
Before I look at your formula, I’d qualify this with “depends on what type of company.” Public companies and privately owned LLC/S-Corps compensate management in different ways, some of which are affect more by taxes than others. All of the people whom I was referring to are S-Corp/LLC owners who make most of their living off of the post-tax profits from their businesses, so it does affect them more than a C-Corp president who’s paid a fixed salary along with a pre-tax performance bonus.
Posted 02 Mar 2009 at 5:23 pm ¶Hey Isaac,
So I read through your math – in the example you gave ($1m/year business earning $100k/year in profit) a change in the corporate tax rate from 35% to 30% wouldn’t do much in the short run to create jobs given how small the profit margin is.
I prepared my own example that took me 30 minutes to write and was rather complicated, but I decided that it would be more effective if I just said this:
1. In good times when business is growing, the sole act of raising taxes would probably not cause business owners to have to fire anybody. It would decrease the amount of dollars that owners have to spend on themselves and it would decrease the number of dollars that they could reinvest into their business, which from a big picture point of view would make it more difficult to expand and grow the economy.
2. That being said, in bad times when sales are dropping, credit markets are tightening, and profits are falling, raising taxes adds another burden on top of businesses (I’m thinking more of S-CORP owners; C-CORPs are more complicated animals that I don’t understand as well) that are already struggling to make a sizable profit. S-CORP owners who depend on their businesses profit to pay for their mortgages, college funds for their children, medical expenses, and other fixed expenses can’t simply “cut down” on their own personal expenditures enough to make up for a 10,20,30% decrease in revenue. The cuts have to come from the business itself -and sometimes that means cropping the workforce.
So speaking in the here and now, consumer confidence has damaged the revenues of a lot of businesses by around 30% – that alone is cause for cutbacks. Decreasing profit by 5% by means of taxation makes the problem worse. More than anything else though, it also makes it harder to invest back into business to begin economic expansion again. The first thing to take a hit when profits fall is investment.
Posted 02 Mar 2009 at 9:11 pm ¶so youre ok with kids without healthcare then?
Posted 02 Apr 2009 at 1:22 pm ¶You explained that rather well, but not well enough for the the Dems to understand.
Posted 02 Apr 2009 at 2:30 pm ¶“so youre ok with kids without healthcare then?”
Healthcare is a service, not an entitlement. If they can’t pay for it, they don’t get it. Ditto for food, water, and shelter.
Posted 02 Apr 2009 at 2:51 pm ¶The Protestant work ethic and the spirit of capitalism lives. Economy, continuity and focus and burn our money at death.
Posted 06 Apr 2009 at 9:10 pm ¶Trackbacks & Pingbacks 1
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