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Reminder of Obama's Campaign Promise: A Net Spending Cut:

Obama, in the third debate, on the video below within the first minute: "what I've done throughout this campaign is to propose a net spending cut.... What I want to emphasize ... is that I have been a strong proponent of pay-as-you-go. Every dollar that I've proposed, I've proposed an additional cut so that it matches."

Also, I wonder how Obama's high-income supporters in high-tax, high-cost areas like NYC, California, and DC are feeling right now? According to an article I read today, the top 7% of taxpaying families make over 250K a year, while the top 1% make over 380K. So the vast majority of those affected by Obama's tax plans are in the 250-380K range.

If you live in DC, on your marginal dollar of you'll be paying 39.6% in federal taxes, 10% in DC income taxes (with no deduction thanks to the AMT), ... oh, and that 800K mortgage you took out in 2004, on which you pay 50K a year in interest? Instead of a 20K deduction, it will be 14K. And that's not counting the inevitable push to add 6% or so in social security taxes (really, 12%, half payed by the employer). Your other deductions with face similar limits. For a couple with adjusted gross income about 250K, I'm estimating a marginal tax rate without additional social security taxes of around 52%, 64%, including the employer share, if new social security taxes added.

Tax the rich?

My friends in this income bracket tend to have have high mortgages, work 60-80 hours a week, pay 40-50K or more a year for child care (a nanny is necessary when you often work into the late evening--and even day care for two kids in the DC area costs close to 40K a year), and have six figures worth of student loans, primarily from professional school, that they are still paying off. In other words, approximately 100K of their pretax income is taken up by their student loans and child care costs, which are the equivalent of "startup costs". Their mortgage costs may seem excessive, but you don't easily make six figures in low-housing cost cities like Des Moines, and living in outer suburbs is very difficult when you work 12 hour days.

If a hypothetical couple's initial income is a total of $300K, and they work an average of 70 hours each, and assuming two weeks vacation, they are in effect getting a grand total of $28.57 an hour for their labors, and a fair percent of that is going to pay interest on the mortgage. I'm sure they are glad to know that they are rich enough to be taxed at over 50% of their marginal dollar.

UPDATE: Of course, the situation described above only applies to some fraction of the relevant taxpayers, but in my experience, young professional couples in large urban areas were among the most enthusiastic Obama supporters. Yet they also find themselves lumped by his administration into the category of "the rich," when, because of scenarios like the one described above, they certainly don't think of themselves as such, and indeed, in practice are not, despite their high gross income.

For that matter, my friends and acquaintances in such situations who supported Obama tend to be somewhat fiscally conservative, but voted for Obama for other reasons. In part, I think his calming rhetoric on economic policy (see video above) persuaded them that he wasn't going to govern as a "tax and spend liberal," so they could vote on, e.g., the Iraq War, abortion, et.

Related Posts (on one page):

  1. More on the "Rich":
  2. Reminder of Obama's Campaign Promise: A Net Spending Cut:
Blue:
But they have the psychic benefits of Hope! Change! Euros Loving Us! Logical Result of the Civil Rights Movement! to comfort them. How can you just cast aside such non-monetary gains?
2.26.2009 11:08am
lonetown (mail):
Welcome to a new age. Here we have a name for people like your hard working friends...

Sucker!
2.26.2009 11:10am
rick.felt:
The "net spending cut" never passed the laugh test, but I think the more telling thing is what Obama (and McCain) said at the first debate, after the stock market had cratered and it was clear that the economy was in serious trouble: there's no need to adjust my tax or spending plans to account for these new realities. I don't have to give anything up. Everything that I proposed all summer long still stands.

Now Bam's in office, and he has discovered that - oh my heavens! - he can't do everything that he promised last summer, because the economy has changed drastically. Well, yeah, it has, but we knew about the change back when Obama was still promising a unicorn in every pot.
2.26.2009 11:11am
Redman:

Reminds me of this lyric from a song of 40 years ago:

"You knew darn well I was a snake before you took me in."
2.26.2009 11:13am
MCM (mail):
Amazing. Who knew that if you stacked all the assumptions you could make the conclusion say whatever you want?
2.26.2009 11:18am
Tony Tutins (mail):

If you live in DC, on your marginal dollar of you'll be paying 39.6% in federal taxes, 10% in DC income taxes (with no deduction thanks to the AMT), ... oh, and that 800K mortgage you took out in 2004, on which you pay 50K a year in interest? ... My friends in this income bracket tend to have have high mortgages, work 60-80 hours a week, pay 40-50K or more a year for child care (a nanny is necessary when you often work into the late evening--and even day care for two kids in the DC area costs close to 40K a year), and have six figures worth of student loans, primarily from professional school, that they are still paying off.

Why should I feel sorry for people who keep making bad lifestyle choices? I lost any sympathy for them after "If you live in DC"
2.26.2009 11:20am
rick.felt:
But they have the psychic benefits of Hope! Change! Euros Loving Us! Logical Result of the Civil Rights Movement! to comfort them. How can you just cast aside such non-monetary gains?

Not to mention the pride of witnessing the historic event of the first African-American to confiscate half of their marginal income!

My patience for hearing about how nearly every damn thing that Obama does is "historic" because he's the "first African-American president" to do it is exhausted. I'm definitely looking forward to Obama being the first African-American president to lose his re-election bid.
2.26.2009 11:22am
Preferred Customer:
I voted for the guy. I knew what I was getting into (roughly).

I'm not a fan of taxes. I'm not a fan of government spending. But I'm also not a fan of the policies of the past 8 years which saw huge spending bloat coupled with tax cuts that drove up the federal budget deficit even in times of prosperity...and involved chicanery to hide the full extent of just how bad that deficit had gotten.

So, do I want to pay more taxes? Hell, no. But the "lower taxes" that I've been enjoying for the past eight years always had a price tag attached--we were borrowing money to pay for them, knowing the toll would come due eventually. I'd rather pay that toll now before the bleeding gets any worse than continue to indefinitely rack up interest charges on unsustainably low tax rates.

Bottom line? Any prudent President was going to have to raise taxes, and since I make more money than a lot of people do there was no great secret where that would hit.
2.26.2009 11:22am
UnintelligibleLiberal (mail):
Interesting post. As a student at a professional school, it's informative to see the financial demands of professors laid out in detail.

On the other hand, I'm not so sure you will find much sympathy outside of academia. Yes, you have serious financial demands (student loans, day care, taxes, etc...) and you are required to work long hours. But, you have a job that pays $150,000/yr and you are presumably able to provide for your family without concern that your income stream will disappear tomorrow. There must be some comfort in that.

On another point more related to the issue of taxes, how do you propose we (1) reduce our debt; and (2) stimulate the economy. It seems like we have little choice but to raise taxes somewhat and increase spending for at least sometime. China is not going to be able to consume our debt forever.
2.26.2009 11:23am
SeaDrive:
Sorry, I don't buy it. Just because you have high expenses does not mean that your income is not high. If your income was lower, you would not have burdened yourself with luxuries like $40K/year child care. There are a jillion single moms out there who are in a constant struggle to find places for their kids while they work for $40K or less per year.

This is just a pale imitation of banker's arguments of the need to make over $10 million/year.
2.26.2009 11:24am
Pete Freans (mail):
Informative post...By no means am I an economist but how can 8% of the US population be expected to pay for these spending initiatives? My guess is that income tax credits and benefits that the middle class have enjoyed must be curtailed in order to subsidize this spending.

If this is the case (and I am asking), then it seems disingenuous for the President say that merely "the rich" will subsidize his spending initiatives. How much will corporate taxes shore-up these deficits, as well?
2.26.2009 11:24am
Constantin:
The couple can just stop paying their mortgage. Nobody's going to do anything about it, especially not this soft president. That should save a few dollars.
2.26.2009 11:26am
accountant ed (mail):
So therefore we should have just kept the leadership we had and continued the policies of the past eight years? Yes, those were working really well.
2.26.2009 11:26am
Steve:
I am pretty sure Obama's high-income supporters are fine on balance with paying a little more in taxes, or they wouldn't have been Obama supporters in the first place.

I have a decent income myself and I fully understand that it's not all yachts and caviar and more disposable income than you know what to do with. But if someone has to pay a little more and it's between me and the checkout girl at Wal-Mart, I doubt anyone wants to hear about the price of my nanny.

I approve of most of the things the federal government spends money on, and I recognize that the money has to come from somewhere. Those who think the government should have a different role get a vote too, of course, but I'm not in that group. I guess everyone loves "majority rules" until they're out of the majority.
2.26.2009 11:26am
Paul B:
David,

Keep your day job and stay away from tax law. If you are subject to AMT and don't get to deduct state or local income taxes, your marginal federal rate is 28%, not 39.6%.

That being said, there are any number of quirks in the federal code (e.g., phaseout of individual deductions)that can give you a marginal federal rate considerably higher than the quoted one in the tax tables.
2.26.2009 11:26am
ruuffles (mail) (www):
Something tells me that average (middle class) americans who live

in low-housing cost cities like Des Moines, and living in outer suburbs

won't be sympathetic to the "burdens" of

that 800K mortgage you took out

and

day care for two kids in the DC area costs close to 40K a year

You'd have a much better argument if you used numbers closer to that of the middle class families and show how Obama's plan burdens them, not some small % of the c.
2.26.2009 11:28am
rick.felt:
Why should I feel sorry for people who keep making bad lifestyle choices? I lost any sympathy for them after "If you live in DC"

I don't have a whole lot of sympathy for these folks, but they may start to make good choices. Atlas may shrug.

At a 52% marginal tax rate, if one spouse makes $250,000 and the other makes $100,000, and the family has $50,000 in child care taxes, it makes no sense for the lower wage earner to work.
2.26.2009 11:28am
Thales (mail) (www):
And yet your friends keep working at that salary and those hours and buying those expensive houses (with debt) and paying the nanny to raise their kids . . . Why isn't Atlas shrugging?

Could it be that they enjoy the power and status of their jobs and their education levels and living in vibrant cities (well, I don't feel this way about LA or DC, but clearly a lot of people do)?

As an educated high income professional myself who knowingly voted for Obama, I am actually sympathetic to your point, hyperbole aside, and think that more of the tax burden should be spread to nonwage income, which the *really* super-rich and powerful tend to depend on. Indeed the "lock-in" effect that the 90s proponents of big dividend and capital gains tax cuts kept warning us about seems like a good thing in hindsight--maybe it would encourage more caution in investing instead of the get rich quick schemes (many backed by your friend' bubble-priced houses) that have devastated Wall Street?
2.26.2009 11:29am
eohippus (mail):
1) $28 an hour after taxes is a very decent living.

2) If you have a nanny and live in an $800,000 house (even in New York or DC), you are doing very well by the standards almost everyone in the country, let alone the world, and a 50% MARGINAL (that can't be emphasized enough, that we're talking about a rate applied to each additional dollar and not total income) rate including Social Security, state, local and federal taxes doesn't seem unreasonable to me.
2.26.2009 11:30am
Cardozo'd (www):
I apologize if my sympathy for the rick is not as strong as yours. I find it hard to reel bad for those forced to live on 200k a year because of child rearing costs and student loans. Like the rich say to the poor about their problems in the same areas...work hard and get a scholarship and don't have kids if paying for them are a problem. Be responsible.

Also, criticizing a president for reacting to a current crisis against a political promise during a campaign is poor rhetoric. I'd much prefer a President willing to take a political chance on crossing himself to do what he thinks is right than one that will stick to his promises despite the current situation.

This post was a waste of time.
2.26.2009 11:30am
rick.felt:
But, you have a job that pays $150,000/yr and you are presumably able to provide for your family without concern that your income stream will disappear tomorrow.

You haven't been spending much time over at AboveTheLaw recently, have you?
2.26.2009 11:30am
Keith Jackson:
Historical Top Tax Rates

However did those top earners survive between 1932 and 1987 or so? David, the top tax rate is not the problem, it is still quite low compared to historical values. The problem is the level of income at which one becomes subject to the top tax rate. I will confess to not having done the numbers, but I would be shocked if $250K is any where near as high as the top bracket used to be, adjusted to 2009 dollars. Same problem as the AMT... not its existence, but the fact that it was never properly indexed to inflation.
2.26.2009 11:33am
A Law Dawg:
I am tired of the argument that because a person is paying back money borrowed to increase their living conditions, that should have any bearing on their tax rate.
2.26.2009 11:37am
Thorley Winston (mail) (www):
So therefore we should have just kept the leadership we had and continued the policies of the past eight years? Yes, those were working really well.


Funny but I didn’t see George W. Bush’s name on the ballot. Mine had one candidate who voted against Medicare Part D, opposed earmarks, campaigned against ethanol subsidies in Iowa, and was one of the few voices of fiscal sanity when Congress and the President were overspending. Unfortunately he lost to the guy who said Bush didn’t spend enough and since he took office has made Bush look responsible by comparison.
2.26.2009 11:37am
Steve:
I always roll my eyes a little bit at arguments which ask us to imagine a family which barely makes enough to qualify for the highest tax bracket, and then presents a parade of horribles centering around their "marginal tax rate." At the end of the day, a difference of a couple percentage points in the marginal tax rate doesn't affect these families much at all, because most of their income isn't even being taxed at that rate. But rather than talking about how much of their total income gets taken away by taxes - which is the statistic most normal people would care about - it's apparently far more fun and alarmist to talk about the tax burden on their "marginal dollar"!

Also, the hypothetical young couple making $300K is going to be doing pretty well in a few years, when the student loans are paid off, when the kids don't need child care, when the mortgage is refinanced. Of course then we'll be hearing about how private schools are a necessary expense for them, yadda yadda.
2.26.2009 11:38am
agda capoopula:
Well, anectodally, my high income acquaintances in SoCal $300k to $1M/year), mostly in the entertainment, law and business communities, and overwhelmingly democrats and ardent boosters of obama, are beginning to get pretty ticked. Most are being hard hit by the plunge in local real estate values (only recently spread to the west side, beach and hill communities) - they assume they will not qualify for mortgage relief. And most do not really consider themselves "particularly wealthy" given the high cost of their living expenses. Several have expressed grave concern to me regarding the potential loss of itemized deductions and the increase in state and federal taxes. So far, they seem to remain favorably predisposed to the president, but quite angry at congressional leaders - an intersting bifurcation.
2.26.2009 11:40am
SPO:
What really sucks is the discrimination against wage-earners. There are many many many people who earn a hell of a lot more than $250K and pay nowhere close to the top rate.

As for the poster who said, "Don't have kids." How about GFY back to you. Liberals want us to work our asses off to pay for other people and not have kids too. Whatever.
2.26.2009 11:41am
U.Va. Grad:
they are in effect getting a grand total of $28.57 an hour for their labors

In the small Ohio town I grew up in, that's living like a king. Pardon me if I don't exactly hear the violins swelling for these people.
2.26.2009 11:42am
DavidBernstein (mail):
(1) Historically, there were a lot more deductions and tax shelters. They were mostly gotten rid of in the Reagan years, in exchange for (the promise of) low marginal rates.

(2) The $28.75 is pretax.

(3) In 2004, you literally couldn't find a house, any house, in a safe neighborhood in DC for much less than 700K.

(4) Typically, Obama supporters in this thread are looking only at income levels, not at hourly wages. If a two teacher couple managed to get two jobs each instead of one, and worked 70 hours a week each instead of the 36.4 (BLS stats as to how many hours teachers work), in major metro areas they could also be pulling in well over 200K.

My advice if Obama's plans go through: Get a government job. GS 13s can get around 100K each, work 40 hours, have flexible work schedules, guaranteed pension, guaranteed not to be fired, nice vacations, etc. Why knock yourself out at a law firm, consulting company, small business, engineering firm, etc., etc.?
2.26.2009 11:42am
Thales (mail) (www):
David, I'm wondering why (by implication) you consider the "net spending cut" claim a falsehood, given that Obama never claimed other than that he would let the Bush tax cuts expire according to their terms and that he would draw down forces from Iraq. He certainly didn't claim a net tax cut for everyone, though he did (accurately, as far as I can tell) claim a net tax cut for the bottom 90% (which yes, does mean for a lot of low income people, a transfer payment in the form of Milton Friedman's negative income tax the EITC). The last point is that Obama's tax plan, as far as I can tell, cuts average tax rates while raising marginal ones. The margin affects incentives, obviously, but it may not to the same degree that supply-siders have been telling us for decades. There is still no empirical evidence study establishing the shape of the Laffer curve at tax rates between 100 and 0.
2.26.2009 11:45am
rick.felt:
I am tired of the argument that because a person is paying back money borrowed to increase their living conditions, that should have any bearing on their tax rate.

I make $20,000 a year and pay 0% in taxes. My take-home is $20,000.

I borrow $80,000 to attend a school that gives me an income of $100,000. My net is $20,000, but I am taxed at 25%. My take-home is close to zero.

I'm sorry that you're tired of this argument, though.
2.26.2009 11:45am
Elliot123 (mail):
"But if someone has to pay a little more and it's between me and the checkout girl at Wal-Mart, I doubt anyone wants to hear about the price of my nanny."

If that professional works 8o hours per week, why not just have him work 40 hours, and have the Wal-Mart checkout girl work the other forty. As a society, wouldn't we be better off if the Wal-Mart girls were designing bridges, teaching constitutional law, and removing tumors?
2.26.2009 11:46am
AndyinNc:
Do conservatives like Bernstein really not get it?

You think you're going to curry sympathy from average Americans with tales of woe about near millionaires with nannies? Boo hoo, your rich friends are going to have to pay slightly more in taxes after a decade in which all of the growth in economic wealth went straight to the to this very group.

It just makes you look callous and completely elitist. But please, keep it up! It will ensure that your kind is out of political power for a decade.
2.26.2009 11:46am
DavidBernstein (mail):
In the small Ohio town I grew up in, that's living like a king. Pardon me if I don't exactly hear the violins swelling for these people.
Sure, in a place where houses cost 30K and the neighbor teenager will babysit for $2.50 an hour, $28.75 an hour is a lot of money. Or course,there aren't any well-paying jobs there. But 'round here (at least in Arlington), a starting teacher with a masters' degree gets that much.
2.26.2009 11:47am
DC2 (mail):
I guess I don't have much sympathy for two people who each work 70 hours a week and want to have kids without altering their work commitments. And good housing is available within reasonable commuting distance of DC for much less that $800K. And I paid off substantial law school loans at a much lower salary. So again, why should I feel sorry for this hypothetical couple?
2.26.2009 11:48am
guest:
my wife and i live and work in DC. i'm one of the professionals david is talking about and my wife is a college professor. i make substantially more than she does and combined we make right around Obama's magic $250K cutoff. We live in VA so we don't have to worry about DC taxes, our 3-bedroom townhouse is very modest (but very expensive) and we have childcare costs that are about half David's estimate (about $20K per year for two children).

If we are impacted by Obama's tax increase then my wife will simply stop working, as what she earns (after taxes and childcare) as it is is barely an incentive.

Net benefit to society? I don't know, maybe you can ask her students. I'm sure it will comfort them to know so many people who lied about their incomes on their mortgage applications or bought more house than they knew they could afford will get bailed out.

Where's the bailout for people who work hard, pay their debts, live within their means? Stupid question, right?
2.26.2009 11:48am
Alan Gunn (mail):
Yes, it's very bad. And the alternative is a party made up of people who think that teaching creationism in the public schools is our greatest need. In the end, Obama is George W. Bush's fault as much as anybody's.

We are all well and truly somethinged that I probably can't slip by the filter. I feel like I woke up in Argentina.
2.26.2009 11:49am
David Welker (www):

I borrow $80,000 to attend a school that gives me an income of $100,000. My net is $20,000, but I am taxed at 25%. My take-home is close to zero.


Most people do not pay back there entire student loan obligation in one year. But, if you did so, you would be VERY well off with a $100,000 income in the next year compared to earning $20,000, right?
2.26.2009 11:49am
A Law Dawg:
I make $20,000 a year and pay 0% in taxes. My take-home is $20,000.

I borrow $80,000 to attend a school that gives me an income of $100,000. My net is $20,000, but I am taxed at 25%. My take-home is close to zero.

I'm sorry that you're tired of this argument, though.


Assuming the student loan is spread across 10 years, you borrowed $8,000 a year for a net of $92,000, (minus some change for interest and assuming you never get a raise).
2.26.2009 11:53am
rick.felt:
But, if you did so, you would be VERY well off with a $100,000 income in the next year compared to earning $20,000, right?

Yes. Tax me then, please.
2.26.2009 11:54am
DavidBernstein (mail):
You think you're going to curry sympathy from average Americans with tales of woe about near millionaires with nannies? Boo hoo, your rich friends are going to have to pay slightly more in taxes after a decade in which all of the growth in economic wealth went straight to the to this very group.
I'll say it again. My "rich friends" are in effect making $28.75 an hour, probably less than your average Joe the Plumber. And many of these folks supported Obama.

Yes, it's very bad. And the alternative is a party made up of people who think that teaching creationism in the public schools is our greatest need. In the end, Obama is George W. Bush's fault as much as anybody's.
I agree. Especially since his profligacy makes Obama's even worse profligacy seem more "normal."

David, I'm wondering why (by implication) you consider the "net spending cut" claim a falsehood, given that Obama never claimed other than that he would let the Bush tax cuts expire according to their terms and that he would draw down forces from Iraq.
Isn't it a "falsehood" because it's not true, there is going to be, according to the plans, a huge net spending increase, not even including the spendulous? Or are you saying that by "spending cut," Obama was including "tax increase" in the definition?
2.26.2009 11:55am
Thales (mail) (www):
"So you're saying that by "net spending cut" Obama meant "raising taxes"? Interesting use of language!"

No, I'm saying that there was a context, which was not hidden. Net spending cut means spend less overall . . . I'm still waiting to see where that is false.
2.26.2009 11:56am
Mark Buehner (mail):
I think its pretty clear that no matter what you thought of spending under Bush, we've almost instantly redefined what 'massive spending' is by an order of magnitude. By 2012, Bush's budgets will look positively quaint. That isn't excusing Bush and his congressional lackeys by any means, but it certainly does speak to those that claimed there would be no difference between D's and R's anyway.

This administration is creating their own version of the Big Lie- people get worked up about modest spending increases, so if you make the increase TITANIC, people just can't wrap their heads around the numbers.

The WSJ ran an article claiming you could tax the top 1% of earners (who already pay 40% of all income taxes) 100% of their income and still not pay for this new spending.

The elephant in the room is that Obama won't collect nearly what he thinks he will on these tax increases yet to come. Rich people know how to hide their money.
2.26.2009 11:57am
DavidBernstein (mail):
I guess I don't have much sympathy for two people who each work 70 hours a week and want to have kids without altering their work commitments.
That's besides the point. In fact, if you penalize them enough, they will alter their commitments sufficiently to avoid the penalty. That will likely be good for their kids, but means their income will drop substantially, which will in turn decrease tax revenues.
2.26.2009 11:57am
Big City Lawyer:
As one half of a young professional couple in precisely the situation you explain, thank you so much for your post.

What people don't understand is that the ROI is decreasingly small (particularly for lawyers). My wife and I are constantly on the fence about whether to go home and be teachers. I know we're note alone in this sentiment.

For those currently considering law school — think long and hard. Speaking from experience, EVEN IF you land the big-firm job, the cost/benefit analysis is close. On the flip side, what little sleep you get, you'll rest easy knowing you're bailing out mother-f'ing deadbeat mortgagees. Way to go kid.
2.26.2009 11:57am
Steve:
If we are impacted by Obama's tax increase then my wife will simply stop working, as what she earns (after taxes and childcare) as it is is barely an incentive.

I guess it depends what "impacted" means. You said you make right around the $250K cutoff, so very little of your total income would be subject to the higher rates in any event. If you make $10,000 more than the cutoff, for example, raising the rate from 35% to 39% means you pay $400 more under Obama's plan. I guess that's an "impact," but would your wife really quit her job over $400 in taxes?

It's true, though, that at least for some families, the second income ends up providing a very small marginal benefit when you crunch the numbers. That seems like a flaw in tax policy, but if the result is that more families end up with one parent staying home with the kids, I'm not convinced that's the worst thing in the world...
2.26.2009 11:57am
Jerome Cole (mail) (www):
40K for childcare expenses? That is silly. There are lots of housewives providing childcare for $2-4 per hour.
2.26.2009 11:58am
Calderon:
The solution to your friends in DC is simple. Clearly, they should go work for the federal government. That way, they'll work 40 hours or less and have ironclad job security. There's probably some half-assed federally supported daycare program they can get into as well. Once the federal government employs everyone, concerns like those of your friends will magically disappear.

(Seriously, this will be my escape hatch if marginal taxes on my income get sufficiently high that working 60+ hours a week is no longer worth it)
2.26.2009 11:59am
BGates:
the hypothetical young couple making $300K is going to be doing pretty well in a few years, when the student loans are paid off, when the kids don't need child care, when the mortgage is refinanced. Of course then we'll be hearing about how private schools are a necessary expense for them, yadda yadda.

That's what happened, and the mom is still complaining she should get paid more. On the bright side, the kids will be getting a Portuguese Water Dog next month.
2.26.2009 12:00pm
Noah Snyder (mail):
I assume the way you get from less than 1 percent to 7 percent is that families requires having kids, which brings large deductibles, so that you've excluded a large number of households as not "families" and excluded a large number of families as not "tax-paying"? Do you have a link to that article? Even with the above it sounds implausible that only 16% of households are "tax-paying families."
2.26.2009 12:01pm
Mahan Atma (mail):
"In 2004, you literally couldn't find a house, any house, in a safe neighborhood in DC for much less than 700K."


Same around here.

Of course, that's why I didn't buy a house. It is possible to rent, you know. I'm sure glad I did.
2.26.2009 12:01pm
Thorley Mythtaken (mail):
I apologize if my sympathy for the rick is not as strong as yours.

I favor confiscatory tax rates on any guy who refers to himself either in the third person or with a definite article.

Otherwise: what Alan Gunn said; and run a candidate with a discernible constituency next time
2.26.2009 12:02pm
Thales (mail) (www):
I see there was a quotation posting error-I retract my confused comment on that one.

I'd love to see Obama be in a position to budget $0 for Iraq and Afghanistan, incidentally. And yes, I do think that the recession and need for fiscal stimulus does change things, and yes, I think "tax and spend" is better than "borrow and spend." Not tax and not spend is also preferable to borrow and spend. Tax and not spend as much because we need pay down big obligations before they get out of control will likely be the endgame.
2.26.2009 12:02pm
Mahan Atma (mail):
"probably less than your average Joe the Plumber."


Sure, but not everybody can make a living out of being subsidized by Pajamas Media.
2.26.2009 12:04pm
Elliot123 (mail):
"Why should I feel sorry for people who keep making bad lifestyle choices? I lost any sympathy for them after "If you live in DC"

I feel exactly the same way about people who made bad lifestyle choices by purchasing houses they couldn't afford, then expect someone else to pay to keep them in those houses.
2.26.2009 12:04pm
AndyinNc:
It's bizarro conservative math world! The couple earning $300,000 is making less than joe the plumber!

1) I think your math is just wrong. Isn't it $40+/hour?
2) An hourly wage comparison is basically meaningless.
3) Complaining about top marginal rates is really quite ridiculous. I'm sure these people are free to request lower salaries if they are so concerned about it.

You obviously drew a conclusion and then made up a scenario to fit it. Hardly compelling justification for your desired social policies.
2.26.2009 12:05pm
SeaDrive:

I'll say it again. My "rich friends" are in effect making $28.75 an hour, probably less than your average Joe the Plumber. And many of these folks supported Obama.


1) What are Joe's after tax, after expenses hourly earnings?
2) Why is the hourly rate the appropriate measure?
3) What the excuse for the implicit slam against plumbers? I'm a white collar worker, but I don't sneer at people who choose not to work in an office. I think you need an attitude adjustment.
2.26.2009 12:07pm
Nifonged:
"Why isn't Atlas shrugging?"

Who says it isn't? For years we were in the group the Professor described above: 2 professionals, a little over $300,000 annual income. We didn't have an $800,000 mortgage and child care costs weren't quite $40,000, but both of us had student loan obligations (which we couldn't deduct) and were subject to the maximum tax rate and phase out of most credits and deductions. Being rational actors, my wife decided it wasn't worth it for our family for her to continue working so she stopped - child care costs are down, marginal taxes are less and now we enjoy credits and deductions that previously were phased out. We're not in that much worse of an after-tax situation than we were before.

Whether that's positive or negative from a third person perspective is debateable, but (1) the government is getting a lot less revenue from our family and (2) the workforce lost a great worker (and the supermajority of times one wage-earner leaves the workforce in a marriage, its the female that does it...great for workplace diversity!). There are a lot of young couples today that are in the same position we are.
2.26.2009 12:07pm
Preferred Customer:

My advice if Obama's plans go through: Get a government job. GS 13s can get around 100K each, work 40 hours, have flexible work schedules, guaranteed pension, guaranteed not to be fired, nice vacations, etc. Why knock yourself out at a law firm, consulting company, small business, engineering firm, etc., etc.?



Because the potential upside at "a law firm, consulting company, small business, engineering firm, etc., etc." is far higher than 200K/2, even with higher marginal tax rates?

And as someone who knows a lot of people in government service, the rosy picture you portray of the conditions there is pretty distorted. Young professionals who are GS-13s are unlikely to be working straight 40 hour weeks, many agencies don't have much in the way of flexible work schedules, and the "nice vacations" are only nice after you've accrued a fair number of years of service. Oh, don't forget--no paid maternity leave, so if you are female you'll have to blow a great deal of/all of your accrued sick leave in order to stay home with the kid, something that most "law firms etc." don't hit you with.

The "guaranteed pension" is also a laugh; for young professionals, the government primarily offers a defined contribution plan similar to a 401(k), and those plans have suffered losses that look a lot like the ones you see elsewhere.
2.26.2009 12:08pm
Steve P. (mail):
As a society, wouldn't we be better off if the Wal-Mart girls were designing bridges, teaching constitutional law, and removing tumors?

Okay, now I have a plausible theory about the Minnesota bridge collapse, the John Yoo memos, and the high rate of malpractice insurance.
2.26.2009 12:08pm
Paper Nuncio:
I have to agree that I have little tolerance for this, and quite frankly, I'm in a high bracket. But it is, to me, about consumption habits as some have mentioned. You DON'T need the $800,000 house, the nanny, the fancy car or many of those other things. I'm a C-level exec, and my wife is a budding but successful molecular biologist. We live in a modest home, have a 3 year old volkswagen (paid for) and an 9 year old base model Toyota pickup (also paid for). We don't have a bunch of fancy stuff in our home. In fact, may of our peers seem to find it odd that we "live so far beneath our income." And we live on one of the most expensive cities in our state in a house that we bought for $160K and worked on to make it worth a whole lot more than that. We've worked hard to be frugal, reduce debt, and save money.

My mom passed away recently after living at the poverty (about 14K per year) level for 5 years. We found out that she died just about a millionaire, and apparently didn't remotely need to live at the poverty level.

Maybe it's a family thing, but not everyone mortgaged their finances or their souls. And I'm quite fortunate, so I guess if I thought my taxes would go to something useful I wouldn't not gonna cry about a couple of percentage points. I'm not a liberal, and I can't stand paying taxes, especially when it's useless. But people who make a lot of money but use the "disposable income" line about how much that top-tier tax hike hurts them don't really carry water with me.

Oh yeah, I actually AM and economist (degrees Finance, MBA, Econ) and have worked in both private and public sector finance and economics. So I'm not totally naive on the theory of the subject OR it's application. So I guess I find this original post, David, to be a bit of woe-is-me, when people deal with for more adversity on a daily basis.
2.26.2009 12:09pm
Oren:
Desire for more government services (that requires high taxes) is a sign of affluence. Once you have a nice roof and 3 square meals, you can afford to spend money on luxury goods like a larger government.

It's not irrational for the people of Manhattan prefer to keep Central Park for their jogging and yoga even though they could considerably lower their (quite high) tax burden by auctioning it off for new development.

Perhaps folks like Prof. B. would prefer to have lower taxes instead of more government, but that preference is not beyond reasonable debate and it certainly isn't universal among the affluent.
2.26.2009 12:11pm
Heart Cooks Brain (mail):
To recap - your hypothetical couple:

- Earns 300K
- Works 70 hours/wk each, thereby necessitating day care/nanny costs of around 40-50K and a home close to the city
- Has six-figure loans totalling 50-60K
- Nonetheless decided to take out an 800K mortgage

Let's also assume that this couple was aware of the marginal tax rate for couples in their income bracket at the time they purchased the mortgage, so they could factor that cost into their financial decisions. It sounds to me like your hypothetical couple simply made a series of avoidable choices that resulted in low after-tax income even under the former tax scheme. Given every possible advantage, they purposely chose to live closer to the edge of solvency than necessary. In particular, they seem to have made the same error decried elsewhere on this blog: purchasing a home far beyond their means at the height of the housing bubble.

Moreover, this couple is presumably composed of the sort of intelligent, educated, mobile, financially sophisticated people that we would expect to make the most rational financial decisions and, correspondingly, be best able to bear the brunt of higher marginal tax rates. If they don't have the acumen to generate earnings and savings that would allow them to absorb a 10% increase in marginal tax rates, who does?

In other words, your hypothetical couple certainly is rich enough to be taxed at 50% of their marginal dollar - they just haven't demonstrated the financial sense necessary to live comfortably in their tax bracket.
2.26.2009 12:14pm
DavidBernstein (mail):
"What the excuse for the implicit slam against plumbers?"

What slam? The point is that no one thinks of the average plumber as "rich."

Why isn't hourly wages the relevant measure?

And as someone who knows a lot of people in government service,
So do I, and I can tell you that except for attorneys, none of them ever leave. And half my non-lawyer friends in DC are trying to transition to the government.
2.26.2009 12:14pm
Constantin:
For that matter, my friends and acquaintances in such situations who supported Obama tend to be somewhat fiscally conservative, but voted for Obama for other reasons. In part, I think his calming rhetoric on economic policy (see video above) persuaded them that he wasn't going to govern as a "tax and spend liberal," so they could vote on, e.g., the Iraq War, abortion, et.

Yeah, I don't think it was the calming rhetoric that did it for these types. "Other reasons" is more like it.
2.26.2009 12:15pm
A Law Cat swats the Law Dawg:
Ok, smartie pants. I'm graduating with substantial student loan debt, and will have a substantial income, provided I don't get laid off (I give myself a 1/3 chance of a layoff). I don't need sympathy, and I don't care if someone is jealous. I do want the amount on which I am taxed to better reflect the true economic benefits accruing to me during a given taxable year.

Student loans are a legitimate cost of doing business for many younger high-income professionals. We don't all have trust funds. Limitations on the deductibility of student loan payments mean that the profit we derive from our labors is much lower than the income on which we have to pay taxes. Compounding the problem is that my marginal tax rate is much higher than most people with similar economic income because I am in a higher tax bracket. In other words, Congress decides that I'm "rich" because my income is high, but refuses to allow me a full deduction for the costs of earning that income.

And I get to be demonized by the populist troglodytes who seem to infest the current democratic party.
2.26.2009 12:16pm
Oren:
Nuncio is on the right track -- my folks also spent far below their means because they had an inherent dislike for wasteful consumption. The idea that earning at a certain level requires spending at a commensurate level is nonsensical. For a country with a negative savings rate, it's quite foolish to continue with that trope.

On the other hand, the fact that my MA state income taxes will go mostly for bullshit and patronage doesn't bother me so much (to be fair, I don't make much atm, so it's a smaller sum). I would prefer that they go to more useful causes but I also believe that we get the government that we deserve, no more and no less. The failure of the people of MA to get their spending priorities straight is not related to whether I should be miffed that I have to contribute to the general fund.
2.26.2009 12:17pm
Norman Pfyster (mail):
Maybe the relevant issue is why the top bracket is $250K and up, rather than additional marginal increases for over $500K, over $1mm, over $10mm, etc. It's rather irritating that I'm taxed at the same rate as Tiger Woods, who makes over 200X what I do.
2.26.2009 12:19pm
DavidBernstein (mail):
And we live on one of the most expensive cities in our state in a house that we bought for $160K
In 2004 I think, but certainly in 2005, there was not one single family home in Arlington, Va. including in relatively rough neighborhoods, that sold for <400K. Of course, you don't have to live in DC metro, but salaries for young professionals in, say, El Paso, are a lot lower, too.

Anyway, there are thousands of people in similar scenarios to what I described. Some of them read this blog. I'm still curious as to whether they think they are rich, or irresponsible.
2.26.2009 12:20pm
Oren:

Compounding the problem is that my marginal tax rate is much higher than most people with similar economic income because I am in a higher tax bracket. In other words, Congress decides that I'm "rich" because my income is high, but refuses to allow me a full deduction for the costs of earning that income.

On the other hand, those loans were subsidized at an unreasonably low rate by Federal guarantees, which costs money. You would have paid much more for that loan from a purely private lender in the unlikely event that you would have been able to receive an unsecured loan for $100,000 as a 20 year old in the first place.
2.26.2009 12:20pm
Thales (mail) (www):
"In other words, Congress decides that I'm "rich" because my income is high, but refuses to allow me a full deduction for the costs of earning that income."

Sorry, are you proposing that the "principal" of your student loan should be deductible? If that's so, the loan when taken out should be counted as income and taxed. There's a reason loans are not income.

If you're only talking about the interest, I wholly agree that it should be fully deductible, just like mortgage and corporate debt interest.
2.26.2009 12:20pm
Dan Weber (www):
Also, I wonder how Obama's high-income supporters in high-tax, high-cost areas like NYC, California, and DC are feeling right now? According to an article I read today, the top 7% of taxpaying families make over 250K a year, while the top 1% make over 380K. So the vast majority of those affected by Obama's tax plans are in the 250-380K range.

I never heard any claim that Obama would reduce or even hold their taxes still.

I suspect a lot of them are getting exactly what they wanted.
2.26.2009 12:21pm
Bart (mail):
Folks, the Taxman Obama started coming after the rest of us from day one.

The SCHIP expansion imposed a tobacco tax paid for by smokers who tend to come from the poor and lower middle class.

In direct contradiction to his campaign, Obama's carbon cap and trade system is not going to be revenue neutral and instead seeks to impose a massive new carbon tax that will be passed through in the form of sharply higher electricity bill and prices for nearly every good and service sold in this country. You just won't see the tax listed on your bills.
2.26.2009 12:21pm
DavidBernstein (mail):
Maybe the relevant issue is why the top bracket is $250K and up
Because that's where the money is, there are tons of two-income couples in that 250 to 350 range, not so many above that.
2.26.2009 12:22pm
SP:
The issue isn't the tax rate. the issue is that we can deal with a high tax rate as long as we have the appropriate deductions.

for instance, certain child rearing costs should be tax deductable.

an example would be private school tuition. A person should not pay tax on monies used to educate their children. Much like any donation given to the school is tax deductable, tuition should be deductable as well. Because donations are tax deductable, we don't really have to worry about people abusing this, as higher tuition rate would be equivalent to a lower tutition rate + donation from a tax perspective.

There are people who send their kids to private school, not because they are rich or view that the school would give them a better education that what is taught in their local public school, but because the private school can teach them things that the public school can't, and cannot be taught in a tacked on manner. Such as religious private schools that are meant to impart an entire worldview. People complain about things like "intelligent design" being taught in public schools, and while I 100% agree that those who try to pass it off as science are charlatans, it's 100% valid as a philosophy of how to integrate science into your belief system. However, they would still argue it can't be taught in public school.

These people are still paying taxes that support their local public school system, but dont reap any direct benefit from it, why should they effectively be taxed twice to school their kids?
2.26.2009 12:23pm
Mark Buehner (mail):
Why hasn't anyone mentioned the interest on the debt? It's already like, what, a third of the federal budget? What's it going to be in 2012?

We've got a severe revolving debt issue on our hands. Probably half of our budget will be going to pay interest on the debt, aside from all the new spending, how are we going to cover the 'normal' spending with so much of the budget eaten up? Borrowing more? Which leads to more interest payments? Which leads to borrowing more?

This is unsustainable.
2.26.2009 12:23pm
URA... (mail):
You are a racist bigot.
2.26.2009 12:25pm
Oren:

Anyway, there are thousands of people in similar scenarios to what I described. Some of them read this blog. I'm still curious as to whether they think they are rich, or irresponsible.

I wouldn't call them "irresponsible" but "living very close the edge of solvency" seems about right (although it hardly rolls off the tongue). If you have a savings rate of 0%, that necessarily means that any adverse event will lead to being in the red ink. This seems like a particularly fragile system.

I don't begrudge people the right to chose not to save any money, but they (especially intelligent professionals) ought to understand what sort of footing that puts them in.
2.26.2009 12:25pm
SP:
as an update to my previous post, I just realized the AMT could play a role in my argument of tuition + donation deduction being equivalent to higher tuition deduction, as AMT would restrict the deduction. There might therefore be some cap on the tuition deduction (perhaps equivalent to what the local district pays per student in public school).
2.26.2009 12:26pm
Federal Dog:
"So therefore we should have just kept the leadership we had"


I find it astonishing that anyone is so thoroughly unaware as to think that Bush was up for reelection.
2.26.2009 12:27pm
Oren:

If you're only talking about the interest, I wholly agree that it should be fully deductible, just like mortgage and corporate debt interest.

I don't think subsidizing leverage on residential real-estate was a successful economic strategy. Not that it's entirely to blame for the housing collapse, but it's clearly a factor that pushed in the wrong direction -- e.g. towards more outlandish debt.
2.26.2009 12:28pm
Harry Eagar (mail):
Boo-freakin'-hoo.

People paying high marginal tax rates seem to do OK paying $1.5M for a 5-bedroom house and then renting the bedrooms out for $1K/mo to people making $15/hr where I live.
2.26.2009 12:29pm
Steve:
My concept of the American Dream is that you have to work hard and struggle a bit when you're younger, but if you play your cards right you can set yourself up for an enjoyable middle age and a comfortable retirement.

I see a lot of people who seem to think that they're entitled to get out of graduate school in their mid to late 20's and immediately live high on the hog, because of course by getting that graduate degree you've established yourself as far more important to society than that Wal-Mart checkout girl. From where I sit, it's normal that you're going to struggle a bit before those student loans are paid off. It's normal that you're going to struggle a bit when you've just taken a big mortgage and haven't yet been able to refinance. I don't think it's normal to say, "Wait, wait, don't tax me yet, wait until I'm totally comfortable before you start asking me to contribute!"
2.26.2009 12:31pm
Oren:
Also, David, an $800K mortgage is a $4.8k monthly payment (30yr, 6%).

An equivalent rental can be had for < $3k (link).

I don't think that you are making $2k of equity per month after paying property taxes, upkeep and repairs on the house. In fact, I don't think you are coming anywhere close to making up the difference.
2.26.2009 12:32pm
Designbot:
So, just to get this straight, Barack Obama campaigned on a pledge to cut taxes for 95% of Americans and raise them on families making over $250,000 a year.

But now that he's president, he plans to cut taxes for 95% of Americans and raise them on families making over $250,000 a year.

As an Obama voter, I have to say that this is, indeed, an outrageous shock. If only I could go back in time and vote for John McCain so I could pay income taxes on my health benefits instead.

And what does the pre-recession "net spending cut" pledge have to do with taxes anyway?
2.26.2009 12:32pm
Joe T Guest:
Well, anectodally, my high income acquaintances in SoCal $300k to $1M/year), mostly in the entertainment, law and business communities, and overwhelmingly democrats and ardent boosters of obama, are beginning to get pretty ticked.

In the words of that wise citizen philosopher, Markos, screw them. They got exactly what they wanted and should not now be allowed to complain about it. Nobody made them work hard to become evil rich bastards (Newsweek headline: "Are executives villains or morons?") or to vote for a guy who said during the campaign that he'd confiscate their wealth.

The class war is on and if you think it's going to stop at the top 2%, you're nuts. I've been wrong for several years; it appears that Hugo Chavez actually does have something to teach us about how to run a country.
2.26.2009 12:32pm
Calderon:
Oren said Nuncio is on the right track -- my folks also spent far below their means because they had an inherent dislike for wasteful consumption. The idea that earning at a certain level requires spending at a commensurate level is nonsensical. For a country with a negative savings rate, it's quite foolish to continue with that trope.

This doesn't really rebut DB's general argument. I spend way below my means, own a small condo, don't take lavish vacations, don't buy a bunch of clothes, live near work so I don't drive much, don't eat out a lot (when the client/firm isn't paying for it), etc. I currently save well over half my aftertax income, and could pay off all my debts (including my mortgage) with plenty of money left over.

But ... Obama is proposing to increases taxes on dividends and capital gains as well, making saving less attractive. And of course the income that I do save is going to be taxed at a higher rate. The reason to save is so that you can spend the money later; if you're going to have less money by saving, that reduces the incentives to save.

The answer (as DB said earlier in a post I missed before my original post) is simply to "shrug" by getting a lower-paying, lower-hour job, preferrably with the federal government. Maybe this will be good for society, but I'm skeptical.
2.26.2009 12:37pm
DavidBernstein (mail):
I see a lot of people who seem to think that they're entitled to get out of graduate school in their mid to late 20's and immediately live high on the hog, because of course by getting that graduate degree you've established yourself as far more important to society than that Wal-Mart checkout girl.
But for at least some people, it's their one big chance to be doing very well. Take two young law firm associates making 175K each. Most likely, neither will become a partner, and neither will want to be working so many hours when they get older. So one goes to work in-house for 140K a year, the other goes to work for the government for 110K a year. That's fine, because soon they won't have such big child care expenses, and they will gradually pay off their student loans. But, unless they find a way to telecommute from rural Idaho, they're never going to be "rich."
2.26.2009 12:37pm
Francis (mail):
So, DB has chosen to live in one of the communities most affected by the housing bubble, and complains about his taxes.

Dude, there are alternatives to living in the greater DC metro area. It's a huge country out there and I'm quite sure that there's at least one other college somewhere nationwide that might hire a libertarian.

If you don't want to live in a high-tax environment, then don't! Montana, Alabama and Mississippi are all much lower tax environments. (Of course, median incomes are much lower, too. There just may be a connection.)
2.26.2009 12:37pm
A Law Cat swats the Law Dawg:
Thales: you're correct in noting my imprecision. I'm referring to interest. Allowing payments of principal to be deductible would, of course, require inclusion of the original loan proceeds.

However, usually when a business purchases an asset with a loan, the business is allowed over time to deduct depreciation on that asset. You can't do that with an advanced degree for a number of legitimate reasons. But as a conceptual matter, I'd like to think that fully adjusting my taxable income to reflect my economic income would require both a full interest deduction and some sort of adjustment for the value of an asset with which I will generate my income - my JD.
2.26.2009 12:38pm
SPO:
The point, Harry, is not boo-freakin' hoo, but what the incentives are.

If you kill the goose that lays the golden eggs, guess what, tax revenues shrink. And then what, moron.

And on top of that, what about the discrimination against wage-earners? Not all income is created equal. People who work hard already pay enough taxes.

Harry, you like the things you get from the government. Well, a thank you would be in order.
2.26.2009 12:39pm
LawMan 5000:
Tomorrow Latham is going to lay off 150 people. I have many friends who have been laid off. Those who are keeping there jobs don't seem to be too upset about the increase in their marginal tax rate, from what I can tell.
2.26.2009 12:40pm
Nifonged:
"My concept of the American Dream is that you have to work hard and struggle a bit when you're younger, but if you play your cards right you can set yourself up for an enjoyable middle age and a comfortable retirement."

Up to the time that the Baby Boom generation neared retirement I would agree with you. I think twenty-somethings and younger are going to have a rough, rough time ever thinking about an enjoyable middle age and retirement is a pipe dream for people even in their 30's and 40's.

Costs are continually being pushed down on younger people, in terms of opportunities and responsibilities.
2.26.2009 12:40pm
Terrivus:
Keep your day job and stay away from tax law. If you are subject to AMT and don't get to deduct state or local income taxes, your marginal federal rate is 28%, not 39.6%.

Um, yeah, but the 28% tax bracket is much wider, meaning it hits income that would, under the regular tax brackets, be subject to a lower rate.

Take it from someone who actually gets hit by the AMT.

(Also, what does a discussion of tax brackets and the AMT have to do with "tax law"? This is basic stuff.)
2.26.2009 12:40pm
jdd6y:
Looking at these comments, I have to say that Chancellor Obama has gotten exactly what he wants. Total class warfare. People are enjoying the pain of people who make more nominal dollars.

We're going to end up a nation of non-risk takers.

The upside is that Obama is super-sizing the socialism, so, maybe people will finally realize what a bunch of utter incompetents Reich and Krugman are. They should be banished into the museum of frauds.
2.26.2009 12:42pm
Terrivus:
By the way, are there any "Libertarians for Obama" left? They seemed to be all the rage during the election. And yet here we are with more government spending than ever before, no end to government expansion in sight, and almost NO change to the Bush civil liberties/war on terror policies that gave the libertarians conniptions.

Any "Libertarians for Obama" care to comment? Feeling a little gypped these days?
2.26.2009 12:43pm
RPT (mail):
This thread would win first prize over the The Gear Page, a musicians' site where professional laments like this are regularly ridiculed. I wouldn't take it to any gun show, NASCAR or or working class venue. This scenario sounds like a pretty sheltered one. Compare it to that described by Capt. Sullenberger, whose contributions to society appear much more valuable but much less rewarded.
2.26.2009 12:44pm
AndyinNc:

Why isn't hourly wages the relevant measure?


Because the primary thing you're complaining is the marginal tax rate, which has nothing to do with hourly wages. Indeed, the hourly wage you're citing was pulled out of thin air simply by positing a number of hours worked, given a certain salary. What if they only work 40 hours a week, each? What if they work 100 hours a week, each? This radically changes their hour wage, but has no bearing on their tax rates.

Basing any argument on hourly wages for salaried high income workers is silly.

More to the point, I get the feeling that people don't understand how marginal rates even work.
2.26.2009 12:45pm
Mark Buehner (mail):

But now that he's president, he plans to cut taxes for 95% of Americans and raise them on families making over $250,000 a year.

The problem is, the math doesn't work. So either the tax increases will end up hitting a much larger swath of people, or the budget disintegrates under a mountain of debt.

Again- we can't pay for what Obama is proposing so far, even if we taxed the top 1% at 100%. There is simply no mathematical way to get the budget remotely into sustainability with these proposals. The tax increases are pretty much certain, they will necessarily hit the middle class, and they still wont cover the budget gap. But the idea is to spend first and then the new tax regime is impossible to argue against.
2.26.2009 12:46pm
eohippus (mail):
Help me with the math here.

$300,000 divided by two people is $150,000 per person.

Assuming 50 working weeks, $150,000 divided by 50 is $3000/week, correct?

$3000 divided by 70 working hours is $42.86 per hour. So where does the $28 before taxes come from?
2.26.2009 12:48pm
CJColucci:
Also, I wonder how Obama's high-income supporters in high-tax, high-cost areas like NYC, California, and DC are feeling right now?

Here are the possibilities:

1. They figured he would not try to do what he said he'd do, counted on that when they voted for him, and are upset.

2. They figured he would not try to do what he said he'd do, voted for him anyway, and are pleasantly surprised.

3. They figured he would try to do what he said he'd do, voted for him in that belief, and have had their expectations fulfilled.

Am I missing some possibilities?
2.26.2009 12:50pm
Steve:
Again- we can't pay for what Obama is proposing so far, even if we taxed the top 1% at 100%. There is simply no mathematical way to get the budget remotely into sustainability with these proposals.

You're assuming there are no revenue-generating measures other than the income tax.
2.26.2009 12:50pm
A Law Cat swats the Law Dawg:
Steve,

You've got a nice straw man there with your "Wait, wait, don't tax me yet, wait until I'm totally comfortable before you start asking me to contribute!" comment. I will struggle with my student loans, and I don't want your sympathy. I do want to be taxed on an amount that better reflects my economic income. Young + high income + graduate degree does NOT equal entitled.
2.26.2009 12:50pm
A Law Dawg:
Thales: you're correct in noting my imprecision. I'm referring to interest. Allowing payments of principal to be deductible would, of course, require inclusion of the original loan proceeds.


Wow, so you called me a "smartie pants" because you're upset about not being able to deduct *the interest* on a student loan? Sounds like the demonization is not coming from the "troglodytes."
2.26.2009 12:50pm
Calderon:
RPT said Compare it to that described by Capt. Sullenberger, whose contributions to society appear much more valuable but much less rewarded.

I take it you don't know much about the salary, benefits, vacation time, and work schedules of pilots who work for major airlines? Before 2000, being an airline pilot simply was far and away the best job in the US -- six figure salaries, working 9 to 11 days a month, comprehensive medical plans, generous pensions, up to eight weeks vacation, etc. With the bankruptices and restructurings some of this has changed, but I'd be willing to bet that Sullenberger still makes more per hour than any associate at a large firm, and more than the vast majority of attorneys.
2.26.2009 12:52pm
AndyinNc:

But for at least some people, it's their one big chance to be doing very well. Take two young law firm associates making 175K each. Most likely, neither will become a partner, and neither will want to be working so many hours when they get older. So one goes to work in-house for 140K a year, the other goes to work for the government for 110K a year. That's fine, because soon they won't have such big child care expenses, and they will gradually pay off their student loans. But, unless they find a way to telecommute from rural Idaho, they're never going to be "rich."


Again, this sort of thing makes it obvious that you are completely out of touch with the American people. A couple earning $250,000k a year is pretty rich by any reasonable definition. If they choose to spend their money on expensive housing and fancy childcare, it doesn't make them less rich. It just makes them bad at saving money.

Your definition of rich simply seems to be, "people that earn a lot more than me," which is rather trite.
2.26.2009 12:52pm
Javert:

You think you're going to curry sympathy from average Americans with tales of woe about near millionaires with nannies? Boo hoo
And the psychology of envy rears its ugly head.

It used to be said that you could tell the difference between an English youth and an American one by their reactions to the sight of a Rolls Royce: When an English youth saw one, he threw a rock at it. When an American youth saw one, he dreamed of buying one some day.

We have become the English youth.
2.26.2009 12:53pm
Oren:

But ... Obama is proposing to increases taxes on dividends and capital gains as well, making saving less attractive. And of course the income that I do save is going to be taxed at a higher rate. The reason to save is so that you can spend the money later; if you're going to have less money by saving, that reduces the incentives to save.

There are plenty of tax-free vehicles you can use to save for retirement.
2.26.2009 12:54pm
A. Zarkov (mail):
Bernstein has not fully accounted for the extra economic burden the Democrats will place on the American taxpayer. You can be sure that we will have significant inflation. With taxation by inflation, people get mad at merchants instead of the government. Then we have the added burden of his health care program. Americans will have a managed care program where the government decides what medical procedures are appropriate for you. Got prostate cancer? Do watchful waiting instead of expensive surgery. Heart bypass surgery? You don't need it as studies show they don't really prevent heart attacks. Colonoscopy every 5 years-- make that 10. Oh and that MRI, you had better wait 6 months, the pain might go away. Illegal alien? Fine you are covered, and we will give you preference over an American for an organ transplant if you're younger.

In short rich or middle class brace yourself for a big change.
2.26.2009 12:55pm
Mark Buehner (mail):

You're assuming there are no revenue-generating measures other than the income tax.

Alchemy? We haven't even started talking about entitlements by the way. That empty lock box is looming large.
2.26.2009 12:55pm
Oren:

If you kill the goose that lays the golden eggs, guess what, tax revenues shrink.

That's why economic growth during the 50s and 60s, when the highest marginal rate was a whopping 90%, was so darned terrible, eh?
2.26.2009 12:55pm
A Law Dawg:
Help me with the math here.

$300,000 divided by two people is $150,000 per person.

Assuming 50 working weeks, $150,000 divided by 50 is $3000/week, correct?

$3000 divided by 70 working hours is $42.86 per hour. So where does the $28 before taxes come from?


It comes from DB's fairly arbitrary decision to not count income spent on fixed costs when decrying the plight of his friends. I note that he performs no such analysis for any other hypothetical taxpayer.
2.26.2009 12:56pm
Thales (mail) (www):
"However, usually when a business purchases an asset with a loan, the business is allowed over time to deduct depreciation on that asset. You can't do that with an advanced degree for a number of legitimate reasons. But as a conceptual matter, I'd like to think that fully adjusting my taxable income to reflect my economic income would require both a full interest deduction and some sort of adjustment for the value of an asset with which I will generate my income - my JD."

Does your JD depreciate? I mean, I suppose its value is zero when you die. But if it did, why did you borrow money to pay for a depreciating asset?
2.26.2009 12:56pm
runape (mail):

Why isn't hourly wages the relevant measure?


Echo what AndyinNC said, but more to the point, it's just odd to compare employees by hourly wages without considering how many hours of work they can drum up. Lawyers are able to work 70-80 hours/week because (at least until recently) it was pretty easy to find that much work, and you can work all hours, and you have the office infrastructure to do it, etc., etc. I don't know too many plumbers working 80 hour weeks, not because they don't want to, but because, well, it's hard to convince someone they should get their toilet unplugged at 10 PM.
2.26.2009 12:57pm
DavidBernstein (mail):
Help me with the math here.

$300,000 divided by two people is $150,000 per person.

Assuming 50 working weeks, $150,000 divided by 50 is $3000/week, correct?

$3000 divided by 70 working hours is $42.86 per hour. So where does the $28 before taxes come from?
The first 100k, much less after taxes goes to the business expenses of child care so both spouses can work and paying off student loans that allowed the couple to get these jobs.
So I'm dividing from 200K, not 300K.
2.26.2009 12:58pm
Curmudgeon:

Tax the rich?


I hate this sloppy vocabulary. The "rich" laugh at income taxes - once you have a sufficiently high net worth, your taxable income is basically arbitrary. If people really wanted to tax the "rich," you should have some form of broad-based property tax (including stocks, bonds, etc) or perhaps some form of sales/VAT.
2.26.2009 12:58pm
A. Zarkov (mail):
Oren:

"There are plenty of tax-free vehicles you can use to save for retirement."

Yes but the return on those tax free investments is much lower. As tax rates up people will flock to muni bonds bidding up the prices and reducing the yields. There's no free lunch. You want Obama-- you have to pay for him.
2.26.2009 12:59pm
PC:
Basing any argument on hourly wages for salaried high income workers is silly.

As a small business owner, if I calculated my hourly wages I would probably give up in a fit of depression. It's a silly measure.
2.26.2009 12:59pm
Nifonged:
" A couple earning $250,000k a year is pretty rich by any reasonable definition."

A couple earning $250,000 in NYC that has $300,000 student loan debt (not an abnormality) is hardly rich, plus that "rich" $250,000 is easily taken away (see the above post concerning Latham's planned layoffs).
2.26.2009 12:59pm
Oren:

But for at least some people, it's their one big chance to be doing very well. Take two young law firm associates making 175K each.

Even easier, why don't we have a single partner making $175k. I'd gladly stay home and take care of the kids if my (future) wife made that much. In fact, considering that I live like a king (in suburban Boston) for less than one quarter that, your estimates of what it means to "be doing very well" are just plain hard for me to imagine.
2.26.2009 1:00pm
Alan P (mail):
Just to be clear as to what is being proposed, if the current top rate is 33% and it returns to the former top rate of 39.5%, someone in the top bracket is paying an additional $6,500.00 for each $100,000 they earn over the top bracket line.

I'm sorry, I am in that bracket and while I would certainly like to have that money in my pocket, I just do not see that I would suffer any great hardship if I have to pay it in taxes.
2.26.2009 1:00pm
Oren:

There's no free lunch. You want Obama-- you have to pay for him.

Absolutely. And the rich (that will be paying for most of him) emphatically agree that it's worth it.
2.26.2009 1:01pm
More importantly . . .:
Here's the real question. If I'm a corporation that requires a license to operate, I can deduct the cost of obtaining that license.

If I'm an individual who is taking out $120,000 in loans for a JD so she can practice law, I cannot deduct that investment from income earned as a lawyer.
2.26.2009 1:01pm
Calderon:
Oren said There are plenty of tax-free vehicles you can use to save for retirement.

Really? Let's see you name them. The 401(k) is the obvious one, but anyone who make $250k+ is going to have that max'ed out and still be be looking for other investments. Municipal bonds are another, but of course they have much lower rates of return because of their tax exempt status, and so going to those again makes saving less attractive. Besides those, other investments in stocks and bonds are going to be taxed.
2.26.2009 1:01pm
Guest 2:

A couple earning $250,000k a year is pretty rich by any reasonable definition. If they choose to spend their money on expensive housing and fancy childcare, it doesn't make them less rich. It just makes them bad at saving money.


If that couple didn't live in a large metropolitan area, the housing wouldn't be so expensive, and if they didn't work so many hours, the childcare wouldn't be necessary.

Put another way, they make that much money only if they bear those costs.

I suppose you'd rather they just choose to live someplace that cost less and work fewer hours -- and make less money. That will work out great for tax revenues.
2.26.2009 1:01pm
A Law Dawg:
Does your JD depreciate? I mean, I suppose its value is zero when you die. But if it did, why did you borrow money to pay for a depreciating asset?


I would in fact assume the opposite. I'm more worried by "JD '98" on the other side in a case than I am "JD '08."
2.26.2009 1:01pm
eohippus (mail):
A Law Dawg -

Thanks

David Berstein -

Really? Sheesh. If that's how we measure income, then some people I've known are working very hard for minimum wage or less. $28 per hour after your fixed costs looks even better to me than $28 per hour after taxes.

Javert -

Some perspective, please. We're not throwing rocks at the Rolls-Royce, we're raising its marginal tax rate by 4% or so.
2.26.2009 1:02pm
AndyinNc:

The first 100k, much less after taxes goes to the business expenses of child care so both spouses can work and paying off student loans that allowed the couple to get these jobs.
So I'm dividing from 200K, not 300K.

Why not account for the "business" expenses of trips to Malibu and Ferraris to look good for clients? Then they might only earn $5 an hour! What poor folks!

You're just making it up as you go along. It's transparently ridiculous.
2.26.2009 1:03pm
More importantly . . .:

Put another way, they make that much money only if they bear those costs.


So why can't they deduct them all like every corporate income earner can with its expenses?
2.26.2009 1:05pm
Texas Lawyer:
I live in Texas and my wife and I (both lawyers) make a combined $378K. We own a $400K house in one of the better neighborhoods in town. It's older and smaller than most, but it serves us fine. A baby on the way. I still have a good bit of law school debt.

I voted and campaigned enthusiastically for Obama. I knew that my taxes would go up if he won. It was not a secret. I am fine with the proposed plan because it is being used to incrase health care for more people.

Maybe I'm a sap or a silly liberal, but I think it's fair that people like me who are doing well by any standard chip in to give basic health care for people at the bottom. If I believed otherwise, I imagine I would be a republican.
2.26.2009 1:06pm
David Drake:

Joe T. Guest said:

The class war is on and if you think it's going to stop at the top 2%, you're nuts.


And it is incredible to me how many willing recruits to that class war on the side of the Left are posting comments on this libertarian blog. There is no thought about whether the rate increases will actually generate more aftertax return or will be good for the economy or anything else. Most comments from the Obama supporters look simply like envy of high earners: soak the rich and the Devil take the macroeconomic and revenue effects.

Let's HOPE that the laws of economics have CHANGED so that raising taxes and cutting spending in a recession is good fiscal policy. It sure wasn't in the Depression!
2.26.2009 1:06pm
George Weiss (mail) (www):
just a technical correction:

If you get caught by the AMT-there is no mortgage deduction AT ALL. Also if your hit by the AMT it means there is no "marginal" tax rate for income tax-the AMT is a flat tax not a graduated tax-its 28% or 26% on every dollar and no deductions at all-or only very very rare ones.
2.26.2009 1:06pm
Thales (mail) (www):
"If I'm an individual who is taking out $120,000 in loans for a JD so she can practice law, I cannot deduct that investment from income earned as a lawyer."

Your legal education is not a license. It's (charitably) a personal investment in your human capital, or really services/ something you elected to consume, like Doritos or car repair. You are not a business. If you propose that you be able to deduct the cost of your education (i.e not the interest cost of financing it, but the principal) at the expense of other taxpayers, we should make you true them up when it yields increased income, correct?
2.26.2009 1:08pm
David Drake:
Texas Lawyer:


Maybe I'm a sap or a silly liberal, but I think it's fair that people like me who are doing well by any standard chip in to give basic health care for people at the bottom.


Then why don't you and your liberal friends chip in voluntarily and contribute to nonprofit hospitals and clinics that provide health care to the poor?

BTW: The "people at the bottom" already have access to basic health care through Medicaid and the hospital emergency room. This is not a matter of care: it's a matter of how the care is delivered and how it's paid for.
2.26.2009 1:15pm
Nifonged:
"If you get caught by the AMT-there is no mortgage deduction AT ALL."

Is that true? I just took a quick glance at the 6251 form and saw an addback from some mortgage deductions from the instructions worksheet, but not a blanket removal.
2.26.2009 1:16pm
More importantly . . .:

Your legal education is not a license. It's (charitably) a personal investment in your human capital, or really services/ something you elected to consume, like Doritos or car repair. You are not a business. If you propose that you be able to deduct the cost of your education (i.e not the interest cost of financing it, but the principal) at the expense of other taxpayers, we should make you true them up when it yields increased income, correct?


I'm still waiting for a logical articulation of the difference between a license pre-requisite (nobody suffers through three years at HLS for personal development or the joy of consuming the experience) for an individual wage earner and one for a corporation. Feel free to respond if you'll deign to provide it.

As for "truing up" the other tax payers, no. The increased income is already subject to a higher progressive rate, so they're more than getting their pound of flesh; even if it was subject to the same percentage rate, I'd still be contributing more absolute dollars by virtue of electing to pursue a high paying job. I'm just saying that the capital investments of that job should be deductible, just like a corporation can deduct the cost of a patent or a license it requires to earn the income it does.
2.26.2009 1:16pm
Mark Buehner (mail):
Please keep in mind the projections for these tax revenue increases will be way off. People react to taxation, particularly wealthy people.
2.26.2009 1:19pm
A. Zarkov (mail):
Let's do the math again. If your adjusted gross income is $150k, then you pay $6,621.60 (SS) + $2,175 (Medicare)= $8,796.60 (Total FICA) giving a total pre-tax ware of $40.34 per hour assuming a 70 hour week and 50 working days per year.
2.26.2009 1:21pm
Texas Lawyer:
David Drake:

The emergency room is the least cost-effective way to provide health care. And it is the way that hurts the rest of society.

When people don't have access to doctors for preventive care, they wait until they are sick and go to the ER. An ER at a modern large hospital is an incredibly advanced, technical facility to save lives when people are in the worst conditions imaginable. They can save people from massive gunshot wounds and other trauma.

Wasting the resources of a modern ER on people who could have been treated by a family doc is like using an F-18 for commuters. Technically, it does the job, but it's not super efficient.

People complain about long waits at the ER. Take out those people who--if they could have--would have gone to their family doctor, and the waits aren't that long.
2.26.2009 1:21pm
Oren:
Calderon -- Roth IRAs can be invested in virtually anything and are not taxed on dividends and capital gains.
2.26.2009 1:22pm
LIly (mail):
It makes me laugh to think of all the people who think they won't pay for the increased taxes because they don't make $250K. Well, you may not send in the check with your Form 1040, but you will most surely pay. You'll pay as job opportunities dry up (who do you think spends money and creates jobs, silly). And you'll pay as the cost of goods and sevices increase as business pass their taxes onto you. You will pay and pay and pay.

You might be happy to see your more well-off neighbors poorer, but you'll be much poorer too.
2.26.2009 1:22pm
DJR:
As someone who never agrees with Bernstein, and I mean never, he has a point here. I am part of one of the couples he describes, except that I am not Bernstein's friend. Frankly, it sucks to make $350K between two people, to live fairly frugally, and yet still worry about money. On the other hand, my worries are more along the lines of what would happen if I got laid off, will we have enough for retirement and college, and will we ever feel like those "rich" people? I don't want to be taxed into worring about whether I can pay for a car repair if our 6-year-old car breaks down. But I voted for Obama, and pretty much figured this is what I would get. I'm willing to pay for good government, even though I wish I paid less.
2.26.2009 1:23pm
Thales (mail) (www):
Income=personal consumption plus/minus the change in savings.

An education is one of these things on the right side of the equation--which is it? The cost of a patent is a capital expenditure, which a business can deduct via depreciation over a course of years. If it later sells the patent for more than what it paid for it, that additional income is a taxable capital gain. The income produced by the patent is also subject to taxation.

If your education is analogous to a patent, where are the other analogous tax features?
2.26.2009 1:26pm
LIly (mail):
If my standard of living is going to decline, I'd rather it be because I'm working less and enjoying life more - NOT that I'm working my tail off and being taxes heavily to support people who don't know me and couldn't care less about me. THIS IS A NO BRAINER.
2.26.2009 1:26pm
Nifonged:
Oren, I think you may have missed a point, we're talking about individuals/families that likely don't qualify for the Roth. Heck, the only year I qualified was my stub year as a FYA.
2.26.2009 1:27pm
Meow:
"Your legal education is not a license. It's (charitably) a personal investment in your human capital, or really services/ something you elected to consume, like Doritos or car repair. You are not a business. If you propose that you be able to deduct the cost of your education (i.e not the interest cost of financing it, but the principal) at the expense of other taxpayers, we should make you true them up when it yields increased income, correct?"

1. Legal education is not a license, but it is necessary to obtain a license in most states.

2. If I am employed by another person I am not a business, but many lawyers are solos. Also, under section 212 having a "trade or business" isn't always necessary to get a deduction for some of the costs of earning income.

3. I do agree with the point of your last sentence. For businesses that take depreciation deductions on assets that nevertheless appreciate, the "truing up" occurs when the asset is sold with a low basis, leading to capital gains. You're right to point out the problems of trying to do that for hypothetical tuition deductions - the degree can never be sold, and higher marginal rates don't recapture the benefit of the original deduction. Oh well.
2.26.2009 1:28pm
Thales (mail) (www):
Correction: actually the patent holder must pay recapture of the depreciation in addition to capital gains if it sells it for more than zero.
2.26.2009 1:28pm
pete (mail) (www):
Sorry if these examples do not garner sympathy even from those of us who enthusiastically voted against Obama. Where you chose to live, what loans you tkae out, how many hours you work, and what career you chose to go into are choices you voluntarily make as adults.

All this Atlas Shrugged talk from lawyers is kind of lame. Its not like lawyers for the most part produce much of original value on there own and a large amount of income that many lawyers take in is derived from people who do not give it to them willingly either through the form of taxes or lawsuits.

I also do not think most people actually belived that Obama would cut spending. I doubt many actually believed he even would try that hard. Maybe some diehard followers will believe anything the man said, but I doubt most Obama followers were dumb enough to believe him when he said this.
2.26.2009 1:29pm
LIly (mail):
I'm willing to pay for good government,

But is good government what we are getting. I think not.

I am fine with the proposed plan because it is being used to incrase health care for more people.

You assume that this health care will be good? It is more likely that it will be rationed and of poor quality.
2.26.2009 1:29pm
A. Zarkov (mail):
"I am fine with the proposed plan because it is being used to incrase health care for more people."

That's fine and a commendable attitude. But you want others to pay for your charitable impulses.

I also assume that you're fine with the fact that you will get less medicine and pay more taxes. I also assume you will be ok with covering illegal aliens, along with all the new immigrants that will flood in under Obama's amnesty plan, further straining the US medical care system. Get set for rationed care because that's what you are going to get.
2.26.2009 1:30pm
Calderon:
Oren said Calderon -- Roth IRAs can be invested in virtually anything and are not taxed on dividends and capital gains.

People earning 250k+ can't contribute to Roth IRAs. Try again.
2.26.2009 1:32pm
Oren:

Let's do the math again. If your adjusted gross income is $150k, then you pay $6,621.60 (SS) + $2,175 (Medicare)= $8,796.60 (Total FICA) giving a total pre-tax ware of $40.34 per hour assuming a 70 hour week and 50 working days per year.

50 working days a year? Do you mean 250? (50 weeks @ M-F + 2 weeks vacation)
2.26.2009 1:32pm
Elliot123 (mail):
"I'm sorry, I am in that bracket and while I would certainly like to have that money in my pocket, I just do not see that I would suffer any great hardship if I have to pay it in taxes."

Suppose you had to work an extra 20 hours per week to earn an incremental $100,000 per year. If half of that is taken by the government, is it worth working the extra 20 hours? Suppose 60% is taken? 70%? 80%? 90%? Is there a point where a rational person finds it is not worth it? If marginal rates are only raised 2% at a time, does that mean they can never reach a point where a rational person reduces his marginal effort?

I suspect there are a lot of people who presume everyone works forty hours per week, and some simply get paid a lot more than others. So, everyone will continue to work forty hours regardless of marginal tax. However, I suggest most high earners work far more than forty hours per week, and it is that marginal effort that is punished and discouraged by increasing marginal taxes.

NOTE: These folks aren't crowding out Wal-Mart girls.
2.26.2009 1:33pm
MarkField (mail):

I think twenty-somethings and younger are going to have a rough, rough time ever thinking about an enjoyable middle age and retirement is a pipe dream for people even in their 30's and 40's.

Costs are continually being pushed down on younger people, in terms of opportunities and responsibilities.


Younger people less interested in whining might consider today's stock market a grand buying opportunity for their retirement.
2.26.2009 1:34pm
DangerMouse:
There is no thought about whether the rate increases will actually generate more aftertax return or will be good for the economy or anything else. Most comments from the Obama supporters look simply like envy of high earners: soak the rich and the Devil take the macroeconomic and revenue effects.

Envy is basically Obama's position as well. When asked during one of the debates if he'd raise taxes even if it didn't bring in more revenue, he said he would.

You can't argue with someone who comes from a position of envy, because their fault isn't with numbers or revenue, but a moral failure. Javert was right: many Americans are proud of their envy and want to "soak" the rich. I see that trend continuing and I think America, as Europe is, will soon be on the road to Venezuela-style class warfare. Those who become rich will be those who are politically connected, instead of the hardworking or meritorious.

The obligations promised to people by government officials are unsustainable. Financing the debt will become a bigger portion of the bugdet if this massive spending continues. Everyone knows that this is unsustainable. When the Chinese realize that the treasuries they're holding are worthless, then there will be a reckoning.
2.26.2009 1:34pm
Homebody:

Excellent points. As for my family, we are just going to make sure that we don't make more than $250k. My wife makes 130k+ and I make over $200k in an accounting firm. We saved like mad during the Bush years. When these taxes go into effect, I am going to start my own practice, spend more time with the kids and take care of the house. I figure that I'll bring in about half of what I used to but live twice as well. Who needs the stress of a high paying job when it is all going to go to the government?
2.26.2009 1:34pm
Angus:
It used to be said that you could tell the difference between an English youth and an American one by their reactions to the sight of a Rolls Royce: When an English youth saw one, he threw a rock at it. When an American youth saw one, he dreamed of buying one some day.
Nah, we're throwing the rock at the stupid driver who stops his Rolls Royce, walks over to the kid, and then complains incessantly about how tough his life is because he could afford to buy a Rolls Royce.
2.26.2009 1:35pm
A. Zarkov (mail):
An economy is not a static thing. It will adjust in ways hard to predict to a new set of costs. But one thing is for sure, if you tax something you get less of it. More tax on work-- less work. Increase the tax on investments and you will have more consumption and less investing. We will see how Americans are going to like a European socialist model for their country. I betting they won't.
2.26.2009 1:36pm
George Weiss (mail) (www):
nifonged-

sorry your right-you keep most of the home interest deductions from schedule A (which are again going to be limited even further now for those above the new obama rich limit) on the AMT because of that worksheet-

the only thing you cant keep on the AMT as a deduction is like if you took out a second mortgage to buy something unrelated to housing or to refinance a second mortgage or something.

its still true that the AMT is a flat rate though and thus has no "marginal" rate.
2.26.2009 1:37pm
Oren:

People earning 250k+ can't contribute to Roth IRAs. Try again.

A couple earning $250k MAGI is really earning upwards of $350k.
2.26.2009 1:37pm
Connecticut Lawyer (mail):
I didn't vote for him so don't blame me.

How am I going to respond to the increase in my taxes? Well, to start with, I'll cut way back on charitable contributions. There's a certain rough justice in that, since most of the institutions to which I give money were ardent supporters of Obama.
2.26.2009 1:38pm
Oren:

However, I suggest most high earners work far more than forty hours per week, and it is that marginal effort that is punished and discouraged by increasing marginal taxes.

Perhaps it would be better for society if we had twice as many executives working 40 hour weeks at half the pre-tax pay than half as many working 80 hour weeks?
2.26.2009 1:38pm
Mark Buehner (mail):
Forget lawyers for a second, small business owners fall right in this. Small businesses produce something like 60% of the jobs in this country. They certainly are the most likely to pass on new debits to their pocket books, either through hiking prices or layoffs (or not hiring somebody).

Simple math- if i'm a small business owner and i make 750k a year in income, i'm going to pay an extra 32,500$ a year in taxes. That's a pretty good job going to waste. Easiest way to recoup that is to do my payables myself instead of hiring something so i can slack off in the afternoons.
2.26.2009 1:39pm
A. Zarkov (mail):
Oren:

Obviously I meant 50 working weeks. Isn't that an obvious typo? I using a total of 3,500 working hours in a year.
2.26.2009 1:42pm
Nifonged:
"Younger people less interested in whining might consider today's stock market a grand buying opportunity for their retirement."

1) I'm in my late 30's if that was meant as a personable barb. I'm not the least bit whining and don't see how a 3rd grade-level interpretation could even yield that.

2) Even it wasn't, how clueless are you to think young people have money for stocks? I don't know anyone not born with a silver spoon that I don't fear for currently graduating from high school. Go directly in the job market? The worst job market in decades, the job market with little chance of upward mobility given older peoples' reluctance to push down, particularly given their own losses in stock market. Go to school? College tuition has far outpaced inflation and although aid is available for the most part its hardly enough to cover actual expenses (to my knowledge $18,500 in federal loans is still the max) and the kicker is if you have a degree that provides good income opportunities, you get the consternation from those that think you make too much.

We're looking at a lost generation.
2.26.2009 1:42pm
Oren:

An economy is not a static thing. It will adjust in ways hard to predict to a new set of costs. But one thing is for sure, if you tax something you get less of it. More tax on work-- less work.

Well, you can hire more people to do less work each, the taxes on which will not rise. So it's not that we are taxing work, we are taxing the way-more-than-40-hours-a-week work that leads to incomes in the 6-figure range.
2.26.2009 1:42pm
Mark Buehner (mail):

Perhaps it would be better for society if we had twice as many executives working 40 hour weeks at half the pre-tax pay than half as many working 80 hour weeks?


And you think the executives we have now are incompetent...
2.26.2009 1:42pm
Homebody:

And one more thing: The punitive tax rates on top income earners will make living in low cost areas very attractive. that $250k goes a lot farther in middle America than on the coasts. All of those Obama supporters in uber liberal enclaves in the Northeast and California will find that it getting awfully lonely out there. Plus, all the housing vacancies from outmigration will surely drive the value of their homes down.
2.26.2009 1:43pm
LIly (mail):
I don't think Obama, Pelosi et al care if we have a strong and vibrant economy. I don't think they care if the US standard of living declines. They want control.
2.26.2009 1:44pm
Oren:
Zarkov, yeah, just making sure you don't have a really cushy job or something.

Nifonged, again, those loans for education are subsidized to the hilt. You can earn a highest interest in a savings account than the interest rate on Staffords.
2.26.2009 1:45pm
Oren:

And you think the executives we have now are incompetent...

And yet somehow they manage to coordinate work between more than one of them per company! Amazing!
2.26.2009 1:45pm
AndyinNc:
Another thing that is particularly pathetic are the rich people in this thread whining about a return to the slightly higher marginal rates of the Clinton era, as if they held back the economy. Their threats to radically change their own lives because they will have to pay an extra 5% on 50 or 100k of income are laughable. I seriously doubt that more than a minuscule number will stop working at those very high salaries.

Again, these sorts of complaints guarantee that the vast majority of the public sees you as ungrateful, over-entitled jerks and drives them right into the Democrats' hands. It's your behavior that is making the things you don't want to happen, happen.
2.26.2009 1:47pm
Keith Jackson:
Homebody, I'm confused... This tax increase means you will pay what? around 6.5% * $80,000 = $5200 more in taxes. That's going to cause you to take a $100,000 pay cut. While spending more time with the kids will undoubtedly be personally rewarding, financially you are going to be in far worse shape... and you are still going to make enough as a household to severely limit your deductions. I applaud your choice to value quality of life over bottom-line income, but lets not pretend this tax cut is a major driving factor.
2.26.2009 1:47pm
Keith Jackson:
*tax hike* not tax cut in the last sentence. My apologies.
2.26.2009 1:48pm
Mark Buehner (mail):

And yet somehow they manage to coordinate work between more than one of them per company! Amazing!

Per market forces, not fiat. If you doubled the number of pitchers in MLB, would the average talent of pitchers increase?
2.26.2009 1:48pm
1Ler:
While I'm totally with Bernstein in principle, his example is ridiculous. Less than 10% of the readers of this blog feel sympathetic for his "friends"--and I imagine that an order of magnitude or two more than the general population. If conservative are ever going to launch a successful campaign against a high-tax nanny state, it will have to come in a different form.
2.26.2009 1:49pm
A. Zarkov (mail):
In California it costs an employer about 50% more than the base wage to pay for an employee. This comes from FICA, unemployment insurance and other mandated costs that rapidly add up. California is going to raise taxes as well as the federal government. This will cause business to migrate out of California to cheaper states like Nevada and Utah. Or worse yet, migrate offshore.
2.26.2009 1:49pm
Sk (mail):
Ughh. Lots of distortions here (on both sides).

First: 250K a year is not rich. I don't think people's 'psychological understanding' of money has caught up with the economy-in other words, we all probably understand money based on our experiences of childhood (how much my dad used to make, and so on), and emotionally never really catch up.
A GS-13 with about 6 years' experience makes around 90K. In other words, a journeyman engineer and accountant couple would be bringing in close to 200K-and these are government civil service employees-not small business owners, not successful entrepreneurs, not private sector big wig fancy pants lawyers. What we would consider middle class (in terms of lifestyle) probably spans about 70K to almost 300K. Yeah, the 300K family will drive a nicer car, and will have more square footage (or will live in NYC or WASH or San Fran), but they are not rich. They make more than the national average. Engineers always have. But they are not rich.

Nevertheless, DB's example distorts as well. As many have said: if its too expensive where you live, MOVE!!

Child care too expensive? MOVE!! or QUIT!!

800K house? MOVE!! Move to Springfield, or Burke, or further out. You'll pay half that. Don't like the drive? MOVE!! Outside of the D.C. area, you'll cut your mortgage in half again (and that is serious: again, in the Midwest, 3000 square feet will cost you about 300K).

Don't like working 70 hours a week? QUIT!!

Thus, DB's example takes two people with almost the most high-stress permanent situations they can (two people working 70-80 hours a week: maybe two people deployed to Iraq would be worse, but that's not a permanent situation), living in one of the most expensive cities in the country, opting to live in the most expensive neighborhoods in that city to avoid a commute, having graduated from the most expensive schools in the country (I have a graduate degree, but worked during school: I owed 5K), choosing to raise two kids. Lots and lots of lifestyle choices this couple are making, and that this couple could easily change. Society doesn't owe them relief from those choices.

Bottom Line: 250K isn't rich. But this example is silly.

Sk
2.26.2009 1:49pm
Kazinski:
Elections have consequences. Don't tell me that your rich yuppie friends didn't know what they were voting for. Joe the Plumber not only makes more money than they do he is smarter than they are. He knew.
2.26.2009 1:52pm
Tony Tutins (mail):

I think America, as Europe is, will soon be on the road to Venezuela-style class warfare.

Funny how people only notice class warfare when there's a prospect of the better-off taking punishment. Over the past ten years, the middle-class has been Israel to the better-off's Hamas.
2.26.2009 1:53pm
1Ler:

250K a year is not rich. I don't think people's 'psychological understanding' of money has caught up with the economy-in other words, we all probably understand money based on our experiences of childhood (how much my dad used to make, and so on), and emotionally never really catch up.


I take it you have some kind of objective criteria? 'Cause that's 5x the median household income, and I think that certainly sounds like the "r" word to me. But I guess I'm being completely subjective.
2.26.2009 1:53pm
Strict:

but I think it's fair that people like me who are doing well by any standard


Texas Lawyer, making $378k per year is NOT doing well. You are actually real poor, like those billions of people in Africa and India and China.

Because you see, people like you who make that much money SPEND it to live in a fancy house and have a fancy car and nice suits and country club memberships and fancy private school costs for their children, so really they don't have that money. They are poor! So, as the argument goes, why should they even work at all, if they end up poor anyways? See, that's how Obama will force everyone to quit working!
2.26.2009 1:54pm
Constantin:
I find this whole debate revolting, actually. A bunch of people, Barack included, deciding how much money it's okay for people to have.
2.26.2009 1:54pm
Elliot123 (mail):
"Perhaps it would be better for society if we had twice as many executives working 40 hour weeks at half the pre-tax pay than half as many working 80 hour weeks?"

That depends on whether an hour of an executive's work is a fungible good, and whether the inherent transaction costs of twice as many decision makers yields a net gain. The number of reporting relationships all through the firm greatly increases. Where we had one shipping department with one manager, do we now have two shipping managers with two independent staffs? Two accounts receivables groups? Two plant managers and two plants? How many lower evelpositions have to be doubled? Organizations are not efficiently designed around a fixed number of managers.

But, please don't suggets this to Obama. He lacks the work experience to realize it won't work.
2.26.2009 1:55pm
A. Zarkov (mail):
Oren:

"Well, you can hire more people to do less work each, the taxes on which will not rise. So it's not that we are taxing work, we are taxing the way-more-than-40-hours-a-week work that leads to incomes in the 6-figure range."


Not necessarily. Two employees each working 40 hours per week costs the employer more than one employee working 80 hours per week. Remember there's extra mandated costs per employee.
2.26.2009 1:59pm
LIly (mail):
I seriously doubt that more than a minuscule number will stop working at those very high salaries.

No, they won't stop working, but they'll work less. Less work = less income = less taxes = less money for the government to 'spread around'.

Also, less income = less descretionary spending, less vacation taking, etc - less work for all the people they supported with their spending, vacation taking etc.

As I said before - we'll all be poorer, especially the working poor.

Obama is not just talking about rasing the marginal tax rate by a few points. He is also talking about reducing deductions. Therefore the marginal tax rate is going to increase by a lot more than 5%.
2.26.2009 1:59pm
Tony Tutins (mail):

How am I going to respond to the increase in my taxes? Well, to start with, I'll cut way back on charitable contributions.

I have quoted here before that people whose incomes exceed $150K a year, donate an average of only 2% to charity. So cutting "way back" on charitable contributions is unlikely to put a lot of spending money in anyone's pocket.
2.26.2009 1:59pm
AndyinNc:
Pretty much everyone defines rich as earning several times their current income. This is true for people earning $40k a year and for people earning $1 million a year.

The majority of Americans earn less than $60k a year, so the majority of people see these $300,000 a year couples as, well, rich. So, when these $300k folks complain that they are not in fact rich, most Americans disagree. These rich folks are hurting their own interests with their whining, but that don't seem to understand that.
2.26.2009 2:00pm
Steve:
Simple math- if i'm a small business owner and i make 750k a year in income, i'm going to pay an extra 32,500$ a year in taxes. That's a pretty good job going to waste. Easiest way to recoup that is to do my payables myself instead of hiring something so i can slack off in the afternoons.

Quite right. But how many small business owners clear 750k a year? I saw a Republican yesterday claim that 50% of small businesses are over the $250k threshold - a ridiculous lie. Heck, this entire post is an effort to persuade people that the top 7% of wage-earners in this country actually lead rather typical lives, something that seems untrue by definition.

Envy is basically Obama's position as well. When asked during one of the debates if he'd raise taxes even if it didn't bring in more revenue, he said he would.

Don't ask me why, but I have a hunch this didn't actually happen!
2.26.2009 2:00pm
Strict:

it sucks to make $350K between two people, to live fairly frugally,


DJR,

I don't see any evidence of these hypothetical people living frugally.

If you are paying $50k/year on child care, $50k/year on private school, live in a $1M house, drive a $50k car...that's not frugal. I'm sorry, it's not.

I love how DB puts "rich" in quotes. DB, have you ever seen how poor people live?
2.26.2009 2:00pm
Angus:
What we would consider middle class (in terms of lifestyle) probably spans about 70K to almost 300K.
I agree with much of the rest of your analysis, but disagree here. I think people who make 6 figure incomes are a bit out of touch with the vast rest of America.

The national median income is 50K. The census figures I have (from 2005) show that a household making 300K would be in the top 1.5%. While I think defining "middle class" is tricky, I don't think the top 1.5% should be considered "middle class."
2.26.2009 2:01pm
LIly (mail):
Also, $250K per year is definately a comfortable lifestyle, but, unless you're sitting on a pile of assets from another source, its not RICH. And an increase in taxes means making changing priorites and reducing spending.

I laugh at people who think marginal changes in tax rates don't lead to changes in people behavior. History has provide that it does.
2.26.2009 2:02pm
LIly (mail):
provide = proven
2.26.2009 2:03pm
Strict:
What happened to the libertarian idea that you have CHOICES in life?

Now it's all "well, I'm FORCED to pay this mortgage on my huge house...I'm FORCED to live in neighborhood X. I'm FORCED to attend at least 3 galas a year at $2k/plate and $10k per suit and $10k per dress for my wife."
2.26.2009 2:04pm
Calderon:
Oren said A couple earning $250k MAGI is really earning upwards of $350k.

The income cutoff for contribution to a Roth IRA are well below that. The limit on Roth IRA are small as well, relative to people making 250k. They simply aren't going to absorb much of the savings of someone making 250k, even if those people could contribute (and they can't).

To circle back to the main point, Obama's tax increases don't just affect 250k+ people who are conspicuous consumers. They're also hitting people who make that much and save a lot, since most of their savings will be in stocks and bonds or will otherwise be taxable. Those people will have less incentive to save, and more incentive to look for jobs with lower income and fewer hours.
2.26.2009 2:07pm
A Law Dawg:
Younger people less interested in whining might consider today's stock market a grand buying opportunity for their retirement.


My 8-year old niece will get right on that.
2.26.2009 2:07pm
AndyinNc:

No, they won't stop working, but they'll work less. Less work = less income = less taxes = less money for the government to 'spread around'.

This is another trope that never made any sense. How is a person earning $150k a year in a salaried job going to work less? Are they going to stop showing up on Tuesdays?

Is a professional going to stop taking clients because their income is slightly reduced versus an alternative tax scheme?

Keith Jackson had it right: You're going to give up an extra 100k in salary because you'll pay an extra few thousand in taxes?

You claim simply doesn't make any sense, especially in a down economy where there is a glut of available workers.
2.26.2009 2:08pm
LIly (mail):
Angus:

Rich is also tricky to define, but surely you'd agree that someone making $250K on a two income household is living a different life than, say, someone making $1 million / yr. There's comfortable, then there's rich.

$250K / yr does not buy you a home in the best neighborhood in a large city, plus new cars every couple of years, plus dream vacations every summer, plus designer clothes, plus... you get the idea.

Perhaps people making $50K / year are perhaps a little out of touch about what $250K/year would buy them. (also remember the $250K / yr already have a much higher marginal tax burden already than the $50/yr.)
2.26.2009 2:08pm
A. Zarkov (mail):
As tax rate climb there is a greater incentive to evade taxes. Americans are fairly compliant compared to places like Italy and Mexico. They might have high tax rates, but most people cheat and the governments are afraid to aggressively enforce the tax laws, lest they cause a revolution.


I remember the high cigarette taxes in New York City resulted in something like a 1/3 of all cigarettes being smuggled in. One vending machine I came across in an auto body shop dispensed nothing but smuggled cigarettes.
2.26.2009 2:08pm
Mark Buehner (mail):

I have quoted here before that people whose incomes exceed $150K a year, donate an average of only 2% to charity. So cutting "way back" on charitable contributions is unlikely to put a lot of spending money in anyone's pocket.


Well, the top 2% pay 62% of all federal income taxes, which comes to about 522 billion dollars, which means the combined income must be well over 1.6 trillion. 2% of 1.6 trillion is 32 billion. Seems like a pretty big number to me.
2.26.2009 2:08pm
SeaDrive:
A couple of unrelated comments. First, this question


Why isn't hourly wages the relevant measure?


is from a post of mine, and should read "Why is..." I think the folks who comment figured it out from context.,

Second, strictly as a matter of English usage, this


A couple earning $250,000k a year is pretty rich by any reasonable definition.


Not my definition. In my dictionary, "rich" means a lot of assets, not a lot of income. If they live prudently, the couple can get rich in a short number of years, but they are not "rich" in the first year.
2.26.2009 2:09pm
Strict:

$250K per year is definately a comfortable lifestyle, but, unless you're sitting on a pile of assets from another source, its not RICH


During the height of the British empire, the average white family in Calcutta had 112 servants.

Of course, a white family with only 20 servants would consider themselves "poor" and "uncomfortable." A family with 100 servants would consider themselves "comfortable," but not "rich," because they aren't keeping up with the Jones, who have a respectable 140 servants.

Yes yes, we're not rich, we're "comfortable." Well, maybe being comfortable IS rich.
2.26.2009 2:10pm
Curious Passerby (mail):
young professional couples in large urban areas were among the most enthusiastic Obama supporters

Ha, ha, ha!!!!! Reap what you sow, suckers!

As for me I'm doing less work, taking more deductions and planning to pay as little tax as possible during the next four years.

Hypothetically speaking, couldn't a lawyer decorate his office with expensive antiques and collectibles (e.g. 1864 Lincoln campaign flag for $25,000, antique furniture) and deduct it as a §179 capital expenditure, instead of buying new furniture that would help The One's job creation? Just asking.
2.26.2009 2:12pm
LIly (mail):
"How is a person earning $150k a year in a salaried job going to work less?"

Go Part time. I did. And I was greatly influenced by the marginal tax rate I was paying. I looked at the gross pay I would have to give up and thought - no, I can't do that. Then I calculated what I would actually give up in net after tax income and said YES, I would happily give that up for a day off / week.

And that's just one idea.

For a lot of us, we work on incentive or bonus pay. The effort it takes to earn the extra incentive pay just may be too much when you only get to keep 1/2 of it, or less.

There are many ways to cut back. these are only two.
2.26.2009 2:12pm
LN (mail):
Designbot won the thread:


So, just to get this straight, Barack Obama campaigned on a pledge to cut taxes for 95% of Americans and raise them on families making over $250,000 a year.

But now that he's president, he plans to cut taxes for 95% of Americans and raise them on families making over $250,000 a year.

As an Obama voter, I have to say that this is, indeed, an outrageous shock. If only I could go back in time and vote for John McCain so I could pay income taxes on my health benefits instead.

And what does the pre-recession "net spending cut" pledge have to do with taxes anyway?
2.26.2009 2:12pm
Strict:

"rich" means a lot of assets, not a lot of income


Yes, so if you make $1M per year, but spend it all, you're not rich, you're poor!

So poor!
2.26.2009 2:13pm
Angus:
I make no effort to define "rich" nor any effort to define exactly what numbers start and end the middle class. All I contend is that if someone in the top 2% of earners is considered middle class, then the concept of "middle" is rendered nonsensical.
2.26.2009 2:16pm
Sarcastro (www):
I have hired the best of Oracles and Mediums to have a round-table of all the best economists, both natural and supernatural.

Only Moloch and Milton Friedman were willing to guarantee that we're in the part of the Laffer Curve that leads to more taxes making less revenue, and I'm not sure I trust Moloch, what with his always sayin' "GET IN MAH BELLY!"

As for the definition of rich, I couldn't get anyone to care enough to answer.
2.26.2009 2:16pm
inmypajamas:
The assumption that the only way to increase tax revenue is to increase taxes hasn't really been borne out by historical results, according to the CBO. Back in 2007, the WSJ described this in regard to the 2003 tax cuts:

Data released last week from the Congressional Budget Office confirm that the tax cuts of 2003 keep soaking the rich, especially on their capital gains. CBO and Congress’s Joint Tax Committee originally estimated that reducing the capital gains rate to 15% from 20% would cost the Treasury $5.4 billion from 2003-2006. Whoops. Actual revenues exceeded expectations by 68%, creating a $133 billion revenue bonanza for the feds. CBO’s original forecast for 2006 was for $57 billion in capital gains revenues, but actual receipts were $110 billion. This surprise windfall is one reason the budget deficit is also far lower than CBO predicted. The lower capital gains tax has raised stock values by raising the after-tax return on capital investment. It has also given stock owners a greater incentive to sell their shares, and then reinvest the proceeds, because the tax penalty on these transactions is lower. …The 2003 rate cut liberated hundreds of billions of dollars of capital for new investment.


But, by all means, if you rich libs want to keep paying the tab because it just feels so good, be my guest.
2.26.2009 2:17pm
A. Zarkov (mail):
To become a neurosurgeon requires a residency of 6 years. Your career starts at about age 35. High tax rates mean fewer people will elect careers that pay a lot to make up for the long latency. It seems to me that we want the very best people doing difficult and critical jobs like surgery and they should get rewarded. There are going to be many unintended consequences to having elected a president with so little experience. This guy has never run anything and it shows.
2.26.2009 2:17pm
Oren:

In California it costs an employer about 50% more than the base wage to pay for an employee.

On the other hand, the first employees marginal cost per hour is much increased. I will not work an extra 40 hours a week on top of my current 40 for a mere doubling of my pay!

Combine that with a progressive tax system, where you'd have to triple my pre-tax pay in order to double my post-tax pay (more or less) and your argument gets a lot less compelling.
2.26.2009 2:18pm
Mark Buehner (mail):

Quite right. But how many small business owners clear 750k a year?

A good question, although it applies equally well to one making 500K or 300, obviously to different degrees. Its the aggregate that ultimately matters. What the average joe at a small business might well ask himself isn't whether the tax hike will apply to him, but whether it will apply to his employer. Even if it doesn't cost you your job it certainly will affect your salary, raises, etc.

Heck, this entire post is an effort to persuade people that the top 7% of wage-earners in this country actually lead rather typical lives, something that seems untrue by definition.


Its a question of definitions. I would argue that there is a much huger difference in the every day lives of someone making 250K and 1 million, than between 50k and 250k. Its a question of whether you work for your money or your money works for you. Saying 250K is middle class I think is arguing that they still work at least as much and as hard, that they worry about their bills, that they have to specifically save for kids colleges etc, that losing their job could likely cost them their lifestyle.

I think 'rich' means all of those things are mitigated. You could quit your job and live a lavish life indefinitely. You don't look at bills. Unless Madoff had your money, your prospects for falling out of the upper class are extremely remote.

But i understand other people have different definitions.
2.26.2009 2:18pm
Sarcastro (www):
I would also say that while 9-11 changed everything, the economic crisis changes nothing, and Obama better keep every one of his campaign promises, even the ones I make up!

If he doesn't, I will whine on the Internets!!
2.26.2009 2:18pm
Oren:

To become a neurosurgeon requires a residency of 6 years. Your career starts at about age 35. High tax rates mean fewer people will elect careers that pay a lot to make up for the long latency. It seems to me that we want the very best people doing difficult and critical jobs like surgery and they should get rewarded.

I come from a family of doctors whose friends are all doctors, and I can say without hesitation that none of them think that they are primarily rewarded in dollars. They worked hard in school and live comfortably in the suburbs with a shiny new car now, but all of them would do their jobs for 25% of their current pay.

I know this is shocking to people that believe in "Homo Economus", but there are other factors that contribute to personal decisions. Of course, this is evident because a real "Homo Economus" would never waste his precious working hours writing blog comments.
2.26.2009 2:20pm
Angus:
The 2003 rate cut liberated hundreds of billions of dollars of capital for new investment.
THAT must be why the economy is doing so well!
2.26.2009 2:20pm
Guest14:
If your education is analogous to a patent, where are the other analogous tax features?
Don't get bogged down in the patent analogy. The point is simple. Generally, when you spend money in order to make money, there is some mechanism to offset the amount you earn against the amount you spent. This isn't true if you spend money on education in order to make money.
2.26.2009 2:22pm
Oren:

I would argue that there is a much huger difference in the every day lives of someone making 250K and 1 million, than between 50k and 250k.

I started thinking you must have typed that wrong, but it appears you are serious.
2.26.2009 2:22pm
Curious Passerby (mail):
I'm definitely looking forward to Obama being the first African-American president to lose his re-election bid.

When he is done there won't be another like him for 50 years. At least that might keep him from being too extreme. He must be thinking of his legacy.
2.26.2009 2:24pm
TyWebb:

But for at least some people, it's their one big chance to be doing very well. Take two young law firm associates making 175K each. Most likely, neither will become a partner, and neither will want to be working so many hours when they get older. So one goes to work in-house for 140K a year, the other goes to work for the government for 110K a year. That's fine, because soon they won't have such big child care expenses, and they will gradually pay off their student loans. But, unless they find a way to telecommute from rural Idaho, they're never going to be "rich."

Repeat after me, Top 50 Law School Professor (who, ostensibly, should know the industry for which he is training his students): There. Are. Small. And. Midsized. Law. Firms.

Plenty of lawyers follow the following track: big law firm when young to bolster the resume and pay down the loans (market rate $160-180k); government/in-house/nonprofit while in one's 30s to get first-chair experience and connections, plus to live a lifestyle necessary to be a responsible parent (market rate $100-140k); stakeholder at solo shop, boutique or midsized regional firm in one's middle age once connections with referrals and the bench are established (litigator) or sufficient long-term client relationships are solidified (transactional/regulatory advisor) (market rate varies, but can easily be $350-600k). The big firm is a necessary investment to get to step 3. And those folks in step 3 are "rich." Period. Not Allen/Gates/Buffett rich, but rich.

I'm simply unsure that its correct to view the legal profession as bounded by the choice between middling pay and ridiculous hours for one's entire career. I'm in step 1 currently, and I live in the DC market with far less in the way of expenditures and long term debt that your friends experience, because I know I'm going to take a pay cut in step 2, and I know that I simply am not in a place to live like Patrick Bateman in American Psycho (I confess to being weak for a steak dinner every once in a while, but I digress). The point is that, while it's true that big firm associates don't make that much on an hourly basis, it's simply incorrect to view that time as anything other than an investment, and it's simply incorrect to state that such investment does not pay dividends down the road to those who don't live like rockstars when they make the investment.
2.26.2009 2:25pm
Yankev (mail):

It makes me laugh to think of all the people who think they won't pay for the increased taxes because they don't make $250K. Well, you may not send in the check with your Form 1040, but you will most surely pay. You'll pay as job opportunities dry up (who do you think spends money and creates jobs, silly). And you'll pay as the cost of goods and sevices increase as business pass their taxes onto you. You will pay and pay and pay.
And as inflation causes wage-prioe spirals, you may find yourself "rich" by Obama's definition. After all, the AMT now captures many more taxpayers than it first did, simply because it was never indexed for inflation.

As to those echoing resentment of "the rich" let me repeat what others have stated, and which Thomas Sowell has explained at greater length -- income and wealth are not the same thing. Income taxes capture high earners, but not necessarily those who are wealthy. Anyone who claims otherwise is just plain ignorant, or envious, or deliberately lying to you in order to exploit your ignorance or envy. There is no fourth choice.
2.26.2009 2:26pm
Mark Buehner (mail):

I started thinking you must have typed that wrong, but it appears you are serious.


You honestly don't think a doctor or a lawyer lives more like a teacher or a nurse than like a millionaire? Lets be clear here- the Kennedy's have jobs because they want them. Your doctor has a job because otherwise he's on welfare.
2.26.2009 2:27pm
Steve:
To a large extent, this thread is just a rehashing of the tired old trickle-down argument, on which everyone has already chosen sides.

Some people believe that if you raise taxes on the rich, they will work less and create fewer jobs and you'll ultimately end up with less revenue. Some people don't believe it. Repetition of the same old mantras is unlikely to sway anyone to change sides.
2.26.2009 2:27pm
Kazinski:
Sarcastro:
I would also say that while 9-11 changed everything, the economic crisis changes nothing, and Obama better keep every one of his campaign promises, even the ones I make up!

I wouldn't mind if he didn't keep his campaign promises if what he was doing would help. It is doubly galling for him to break his campaign promises doing exactly the wrong thing.
2.26.2009 2:28pm
DavidBernstein (mail):
I come from a family of doctors whose friends are all doctors, and I can say without hesitation that none of them think that they are primarily rewarded in dollars. They worked hard in school and live comfortably in the suburbs with a shiny new car now, but all of them would do their jobs for 25% of their current pay.
Now THAT's a testable hypothesis, and I'm sure one that's completely false. If it's the job satisfaction, not the money, do the devote most of their time to caring for the poor?
2.26.2009 2:28pm
Piano_JAM (mail):
If BHO take every dime every taxpayer earns over 75K, there is still not enough to cover what he plans to spend.

Those 401k will be the next stop for 'additional revenue generating'!
2.26.2009 2:29pm
LIly (mail):
I make no effort to define "rich" nor any effort to define exactly what numbers start and end the middle class. All I contend is that if someone in the top 2% of earners is considered middle class, then the concept of "middle" is rendered nonsensical.

Look the government is playing a game with us. It wants to pit us against each other. Divide and conquor

This soaking the 'rich' approach has historcially produced all kinds of mischief. The great irony is that, in the end, it will reduce the standard of living for all of us. Envy is not one of the deadly sins for nothing.

As an expample, I would reference Kennedy's luxury tax on yachts. The result of this tax was that a lot of blue collar yacht builders were laid off and the government spend more on unemployment benefits and other aid to the newly jobless than it raised in luxury tax revenues. The tax was quietly repealled.
2.26.2009 2:30pm
Tony Tutins (mail):

The 2003 rate cut liberated hundreds of billions of dollars of capital for new investment.
THAT must be why the economy is doing so well!

I think I know now what funded the housing bubble -- hundreds of billions of dollars looking for a safe harbor. And why not park it in investment-grade securities consisting of bundled subprime and alt-A mortgages?
2.26.2009 2:31pm
Sarcastro (www):
Wow! I'm worried about

1. A scarcity of neurosurgeons.
2. A dumbness of neurosurgeons
3. The government not making enough money.
4. Angry taxpayers quitting jobs they hate out of spite.
5. The totally concrete definition of rich changing (better call the Bureau of Weights and Measures!)
6. Tax cheats
7. People becoming spendthrifts out of tax-spite
8. Employers who were hiring extra employees out of the goodness of their heart, firing employees out of tax-spite.
9. Communism!
10. Republicans moving out of California and making the liberals lonely
11. People no longer giving to charities out of tax-spite.

The only solution to all these problems is tax cuts! Why is Obama using the politics of fear to get his agenda passed when there is a totally real parade of horribles unless he passes a completely different agenda!
2.26.2009 2:32pm
David Drake:
Texas Lawyer--

Your first comment was to the effect that the "people the bottom" do not get health care. Your second is to the effect that the kind of health care they get is not cost effective. I agree with the second, but your argument in the second is irrelevant to the first. It is a matter of efficiency, not of access; likewise, the "crisis in health care" is not a crisis in health care per se but a crisis in health care finance.

And, again, nothing is stopping you and other like minded individuals from contributing to health clinics voluntarily.

My problem is that Pres. Obama appears to want to impose solutions that probably will not work and may well cause harm (through care rationing) to the great majority of people who do get adequate--in fact, more than adequate-- care at a reasonable cost (to them). And he wants to force me to pay for it.
2.26.2009 2:33pm
Steve:
Income taxes capture high earners, but not necessarily those who are wealthy.

There is, in fact, a tax on pure wealth - we call it the estate tax. The usual anti-tax suspects are rabid to get rid of that one too.
2.26.2009 2:33pm
A Law Dawg:
Rich is also tricky to define, but surely you'd agree that someone making $250K on a two income household is living a different life than, say, someone making $1 million / yr. There's comfortable, then there's rich.


So there's [Poor] [Comfortable] [Rich] [Magic Lamp].
Do you realize that by your definition, 95% of the population is uncomfortable, 1% is Rich, and about 10 people have magic lamps.

IIRC the median personal income in the US is 27K for workers over 18.
2.26.2009 2:34pm
Angus:
You honestly don't think a doctor or a lawyer lives more like a teacher or a nurse than like a millionaire?
From Berstein's post about full time nannies and 800K mortgages, no. Not at all. I happen to have an uncle who is a millionaire, and his lifestyle is much the same as what Bernstein and others in the $250-300k range in this thread have described, except with better cars and an extra couple bedrooms on the house.

Neither one is even remotely like our household's 50K-ish, non-homeowning life.
2.26.2009 2:35pm
Steve P. (mail):
As to those echoing resentment of "the rich" let me repeat what others have stated, and which Thomas Sowell has explained at greater length -- income and wealth are not the same thing. Income taxes capture high earners, but not necessarily those who are wealthy.

Oh yes, an excellent point. Now I realize that I am resentful of the high earners as well as the wealthy.
2.26.2009 2:36pm
Curious Passerby (mail):
You think you're going to curry sympathy from average Americans with tales of woe about near millionaires with nannies?

I didn't get the impression that David's trying to get sympathy for them. I think he's just pointing out what idiots they were for voting for The One, and implying that next time he may lose their votes.
2.26.2009 2:36pm
Tony Tutins (mail):

10. Republicans moving out of California and making the liberals lonely

It's a known fact that rich people would rather live in Yuma or Elko than Malibu, just so they can roll around on a pile of money like Scrooge McDuck.
2.26.2009 2:37pm
rick.felt:
bama better keep every one of his campaign promises, even the ones I make up!

When the facts change, I would hope that Obama would change his opinions. However, the facts haven't changed materially from the time of the first debate. We knew we were in trouble back in September.

Obama's reaction? I don't have to change a thing. You can still have everything that I promised. Had he said "the economy is deteriorating, and I'll probably have to give up a few things," he would have been honest, even if he couldn't identify any specifics. But no, he just plowed ahead with unicorn wishes and hopeychange dreams.
2.26.2009 2:37pm
Sarcastro (www):
rick.felt wow! That's just what Obama said!

Great minds, eh?
2.26.2009 2:41pm
DangerMouse:

Envy is basically Obama's position as well. When asked during one of the debates if he'd raise taxes even if it didn't bring in more revenue, he said he would.

Don't ask me why, but I have a hunch this didn't actually happen!


Sure it happened. Here's the transcript:

MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

SENATOR OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.
2.26.2009 2:42pm
Oren:

This isn't true if you spend money on education in order to make money.

Stafford. Loans. Are. Subsidized. To. The. Hilt.
2.26.2009 2:44pm
Curious Passerby (mail):
Yes, it's very bad. And the alternative is a party made up of people who think that teaching creationism in the public schools is our greatest need.

What planet are you living on? Is there anyone on this planet who feels this way?
2.26.2009 2:44pm
rick.felt:
That's just what Obama said!

Fail.

Kind of hard to make a campaign promise for the November 2008 presidential election in January of 2009, but if anyone can do it, it's Obama.
2.26.2009 2:46pm
Oren:

Not Allen/Gates/Buffett rich, but rich.

Those folks are not rich. We need another word that captures the status of having more wealth than one can reasonably enjoy (in the sense that the marginal dollar does not buy them any increase in quality of living).
2.26.2009 2:46pm
A. Zarkov (mail):
Oren:

I come from a family of doctors whose friends are all doctors, and I can say without hesitation that none of them think that they are primarily rewarded in dollars. They worked hard in school and live comfortably in the suburbs with a shiny new car now, but all of them would do their jobs for 25% of their current pay.

I don't think your relatives are being completely honest. It's one thing to say "I'm not in it for the money" while you pull down $500k per year, but another when starting out to choosing a profession. The problem is we can't count the number of people who won't become neurosurgeons.
2.26.2009 2:47pm
Calderon:
Sarcastro said Wow! I'm worried about
3. The government not making enough money.


Assuming you're under 60 or so, this seems like a reasonable thing to worry about, specifically the government not having enough money to cover expenditures and thus continuing to rack up large deficits and increasing debt.

10. Republicans moving out of California and making the liberals lonely

I vaguely recall some proposed ballot measure in California that would have sharply increased state income taxes on the wealthy (like to 40%) along with estate and maybe even wealth taxes. Unfortunately, I couldn't find it after running a few Google searches. Since I don't live in California, I was morbidly wishing it would pass so that we could get something approximating an empirical test of the effects of sharply increasing taxes on wealthy and/or high income people.
2.26.2009 2:51pm
Steve:
Sure it happened. Here's the transcript:

Uh, I think you left out the part of the transcript where Obama agreed that tax increases would not raise revenues.

It's great, by the way, that our presidential debates are run by a multimillionaire press corps that dares to raise the issues which really matter to the American people, like capital gains tax cuts. You could just see the quiver on ol' Charlie's lip as he thundered about the unfairness of it all.
2.26.2009 2:51pm
Oren:


I come from a family of doctors whose friends are all doctors, and I can say without hesitation that none of them think that they are primarily rewarded in dollars. They worked hard in school and live comfortably in the suburbs with a shiny new car now, but all of them would do their jobs for 25% of their current pay.

Now THAT's a testable hypothesis, and I'm sure one that's completely false. If it's the job satisfaction, not the money, do the devote most of their time to caring for the poor?

(1) They largely work at hospitals where they care for whoever comes in the door and someone else deals with the paperwork. I know my father dealt with a lot of patient that he was certain could not and did not pay their hospital bills. Perhaps the fact that the hospital acts as an intermediary dilutes the "charitable" contribution, but for specialties that require a full ER/OR/diagnostic equipment, there's no way to test any alternative

(2) Most of them voted for Obama knowing full well that they would take a big hit in the pocketbook department. Take that for whatever you will.
2.26.2009 2:53pm
PC:
As for me I'm doing less work, taking more deductions and planning to pay as little tax as possible during the next four years.

Huh. Me? I'll be working more since recessions are a good time to start a new business and labor is cheap. I can get people that I used to have to pay $700/day for $450/day and they are happy to have the work. The funny thing is this allows me to increase my profit margins since I'm reducing my bill through rate, but I'm not reducing it as much as I'm saving from the decreased cost of developers.

The top marginal tax rate going back up to Clinton era levels? Yeah, that doesn't really bother me too much. Some people may take their ball home and pout, but some of us will take advantage of the opportunities.
2.26.2009 2:53pm
Alan P (mail):

Suppose you had to work an extra 20 hours per week to earn an incremental $100,000 per year. If half of that is taken by the government, is it worth working the extra 20 hours? Suppose 60% is taken? 70%? 80%? 90%? Is there a point where a rational person finds it is not worth it? If marginal rates are only raised 2% at a time, does that mean they can never reach a point where a rational person reduces his marginal effort?

I suspect there are a lot of people who presume everyone works forty hours per week, and some simply get paid a lot more than others. So, everyone will continue to work forty hours regardless of marginal tax. However, I suggest most high earners work far more than forty hours per week, and it is that marginal effort that is punished and discouraged by increasing marginal taxes.


First, no matter what the marginal tax rate, the more income I have, the more I put in my pocket. I suppose it is true enough that a marginal tax rate of 90% I would question whether it is worth the effort but that assumes I know what the marginal rate will be when I put in the effort.

Aside from some professional athletes who make ridiculous sums for playing games I would play for free, I suspect the overwhelming number of individuals with earnings of well more than the top bracket amount, not just those scraping by on $250,000, are owners/operators of businesses. They do not know until the end of the tax year, if then, just how much they have made. They work as hard as they can to make as much as they can all year and pay the tax that is due at the end. They never choose, in any real sense, to limit their effort because they see their income rising too high.

It may be that I will choose to put less effort into my business because I decide I have enough money put away to last the rest of my life but I cannot ever imagine someone with a business to get to a point in the year and say, I made enough this year, I'll stop and start again next year.

Frankly, one of the stranger things about Economists is that they really think people make rationale decisions about activities based on logic and nothing else. (I remember a discussion here once on whether or not to flush)
2.26.2009 2:53pm
LIly (mail):
So there's [Poor] [Comfortable] [Rich] [Magic Lamp].
Do you realize that by your definition, 95% of the population is uncomfortable, 1% is Rich, and about 10 people have magic lamps.


That's not even remotely what I said. straw man argument
2.26.2009 2:53pm
Oren:
<blockquote>
Since I don't live in California, I was morbidly wishing it would pass so that we could get something approximating an empirical test of the effects of sharply increasing taxes on wealthy and/or high income people.
</blockquote>
Funny that all those Google/Oracle/AMD/SUN/Adobe /Apple/Cisco/Ebay/Intel/Nvidia/.... folks still live in Silicon Valley then, where they continue to be taxed like mad. They must be total dolts.
2.26.2009 2:56pm
Sk (mail):
"I come from a family of doctors whose friends are all doctors, and I can say without hesitation that none of them think that they are primarily rewarded in dollars. They worked hard in school and live comfortably in the suburbs with a shiny new car now, but all of them would do their jobs for 25% of their current pay."

I find this utterly implausible.

A family physician makes around 150K. I can't think of a single family physician that would do the same think for 37K a year.

A specialist (radiologist, Ear Nose and Throat, Pulmonologist) makes in the neighborhood of 300-400K. Again, I can't think of a one that would choose to do so for 75K (i.e. the pay they would get if they had not gone to medical school plus 4+ years of residency- chosen to be a professional based on their undergraduate degree-say, a biologist, or chemical engineer, etc).

You spend your time around a unique bunch of doctors.

Sk
2.26.2009 3:04pm
Conservative Activist Judge:
Silicon Valley, like New York City, is a goose that lays golden eggs. Only the goose can't move because it is a critical mass of univeristies, research, production and service companies. It takes a long, long time to kill it.

Michigan managed to kill its auto industry, with union help and managerial incompetence. Massachusetts has too many colleges to lose all the knowledge industries, but it did start to subsidize the biotech sector. It's up in the air whether New York City can survive, it's almost completely dependent on the financial sector. I don't know about Silicon Valley, but the thing to watch for is a slow bleed of firms and workers to other geographic locations.
2.26.2009 3:09pm
Designbot:
Uh, I think you left out the part of the transcript where Obama agreed that tax increases would not raise revenues.

Which part of the transcript was that, exactly? I see Obama saying that the capital gains tax rate isn't fair. I don't see him agreeing with the moderator's questionable premise.
2.26.2009 3:11pm
LIly (mail):
It gets down to this: To realize your big government, cradle to grave socialism, you basically have to enslave the productive to your government dreams. Like Michelle Obama said, "Barack Obama will require you to work."

I have worked hard, and been pesonally charitable (much more so than the Obama's when they were making what I make - I've seen their tax returns). But I will resist being enslaved by my government. I do not exist to work hard to make money for other people to spend on their own priorites.
2.26.2009 3:12pm
DangerMouse:
Uh, I think you left out the part of the transcript where Obama agreed that tax increases would not raise revenues.

My bad. Here it is.

SENATOR OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair. [. . . .]

MR. GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.

SENATOR OBAMA: Well, that might happen or it might not. It depends on what's happening on Wall Street and how business is going.
2.26.2009 3:12pm
LIly (mail):
pesonally - personally
2.26.2009 3:13pm
Steve:
You have a strange definition of "agreement."
2.26.2009 3:13pm
Houston Lawyer:
My wife will quit work when our next child arrives in August. After you deduct the 15.3% for FICA and medicare and 39.6% for income taxes, this will cost Uncle Sam more than it will cost us.

Those posting here are fooling themselves if they think that their taxes won't go up as well. In Obama's world, everyone works for the government and sometimes the government lets you take a little money home.
2.26.2009 3:15pm
Oren:

I don't think your relatives are being completely honest. It's one thing to say "I'm not in it for the money" while you pull down $500k per year, but another when starting out to choosing a profession. The problem is we can't count the number of people who won't become neurosurgeons.

Most of them don't make $500k/yr and went into medicine at a time when such salaries were not the norm.
2.26.2009 3:16pm
PC:
But I will resist being enslaved by my government.
...
everyone works for the government and sometimes the government lets you take a little money home.

Did the "greatest generation" whine this much when tax rates could actually be called punitive? The top marginal tax rate is going to be increased by 6.5%! Someone get me a fainting couch!
2.26.2009 3:20pm
Oren:

Silicon Valley, like New York City, is a goose that lays golden eggs. Only the goose can't move because it is a critical mass of univeristies, research, production and service companies. It takes a long, long time to kill it.


And yet the goose grew up in the most regulate-y tax-y liberal fuddy-duddy state in the Union.
2.26.2009 3:22pm
Paul McKaskle (mail):
How to measure taxes on income subject to AMT is tricky. It is true that the rate is 26 to 28 percent, but there is also a "phaseout" of the AMT deduction which works out as being another 8 percent while the phaseout is occurring. If someone is barely into the AMT (for example losing all of the deductions for having several children) then the rate is 26 percent. But as the amount of "AMT" income increases the phaseout makes the "marginal" rate about 34 percent increasing to 36 percent as the amount of AMT income increases. Eventually, a sufficiently high AMT income will have only a 28 percent marginal rate but it is probably above the $400,000 income level (the exact level depends on what deductions are not allowed under the AMT). At some even higher income level, particularly if the top rate goes up to 39.8 percent, income is no longer subject to AMT since the "regular" tax is more than the AMT tax. For most couples in the $250-350K income range, the marginal tax on much of their income is going to be 36 percent (plus state income taxes--not deductible from AMT income--in CA this adds about 9.6 percent). If one or both of the couples are self-employed, add another 16 percent.

Some years ago my wife, who has an advanced degree in geronotology left a (low paying) charitable agency and wanted to do counselling (for families who needed help coping with elderly relatives--also at a low rate) on a part time basis. After a while, since her income was subject to a total tax of about 55 percent, she concluded that she was doing a lot of often stressful work for relatively little net income and so she quit.

She was very good at her counselling and there is a lot of unmet need for counseling for families with problematic elderly relatives, but the high marginal tax made it not worth it for her. High marginal taxes do have consequences.
2.26.2009 3:24pm
Connecticut Lawyer (mail):
Is there any evidence, anywhere in the world at any time, that increasing marginal tax rates causes economic growth?

President Obama, and the Democrats generally, don't care about economic growth. President Obama did not talk about growth at all during his recent speech. It's just not part of his vocabulary.

He cares about "fairness," about spreading the wealth around. When that charge was made against him in the election, he and his supporters successfully deflected it. But now the veil has come off.

We shall see over the next few years how well the economy does when fairness rather than growth and economic efficiency is the touchstone of policy. The last time the Democrats took us down this road, it didn't end too well for them or the country.
2.26.2009 3:25pm
Sarcastro (www):
Oren I shudder to imagine the kind of giant Goosezilla that might have grown in an atmosphere of free markets. Those eggs could have crushed hundreds! The Army, the Air Force would have done nothing to stop it!

Only a radioactive Jimmy-Carter come out of retirement could regulate it back into the Valley to sleep until the sequel.
2.26.2009 3:26pm
PC:
The last time the Democrats took us down this road, it didn't end too well for them or the country.

The 90s?
2.26.2009 3:31pm
Sarcastro (www):
Connecticut Lawyer has discovered a universal argument! Check out how it works in reverse:

Is there any evidence, anywhere in the world at any time, that decreasing marginal tax rates causes economic growth?

President Bush, and the Republicans generally, don't care about economic growth. President Bush did not talk about growth in every speech. It's just not part of his vocabulary.

He cares about "terrorists," about giving no-bid contracts to spread the wealth around. When that charge was made against him in the election, he and his supporters retired to write tell-all books. But now the veil has come off.

We saw over the last few years how well the economy does when hands-off rather than regulation is the touchstone of policy. The last time the Republicans took us down this road, it didn't end too well for them or the country.
2.26.2009 3:32pm
SeaDrive:

It's up in the air whether New York City can survive,...


You're expecting, maybe, that the 25 million or so people in the greater NYC area are all going to move to where -- Austin, Texas? NYC has suffered through three or four major hits to the financial sector in my lifetime, and it's still here. And the fashion industry is still here. And the media is still here. And the advertising industry is still here. And that huge immigrant labor pool is still here.
2.26.2009 3:33pm
AndyinNc:

My wife will quit work when our next child arrives in August. After you deduct the 15.3% for FICA and medicare and 39.6% for income taxes, this will cost Uncle Sam more than it will cost us.

I never realized that increasing marginal tax rates could get you pregnant. By time travel. We had better form a committee to investigate.
2.26.2009 3:41pm
Eric Henriksen:
Sarcastro,

You are absolutely on fire today! Although, it must be said, the amount of golden material they are giving you to work with on this thread is a bit mind boggling.
2.26.2009 3:48pm
LIly (mail):
everyone works for the government and sometimes the government lets you take a little money home.

No, the government is supposed to work for us, not enslave us to its purpose.
2.26.2009 3:51pm
Vermando (mail) (www):
I love DB's posts.

He labels his post 'a reminder of President Obama's promise' and discusses in the first part what could be a broken promise on spending cuts.

In the second part he rhetorically wonders what President Obama's supporters who earn over $250,000 must be thinking given that he is going to increase their taxes.

The beauty? There is absolutely no connection between the two. President Obama always promised to increase taxes on those making over $250,000 a year, and so he shall, just as he promised.

Yet DB thinks this should be - what, upsetting? a surprise? - to Obama's supporters who fall into that category. Why? Does DB think that those supporters didn't believe him? That they didn't really listen that closely?

I assume that DB did not agree with these supporters in the campaign. Why, though, does he think that his arguments here - exactly the same arguments that were made to this group during the campaign - will persuade them now when they didn't just a few months ago?
2.26.2009 3:53pm
Ken Arromdee:
You honestly don't think a doctor or a lawyer lives more like a teacher or a nurse than like a millionaire?

From the original post, and a couple of reasonable guesses as to whether millionaires do these things:

Lawyer: Has a full-time nanny.
Millionaire: Has a full-time nanny.
Teacher: No.

Lawyer: Has (or can have) a house in the most expensive area of the country.
Millionaire: Has (or can have) a house in the most expensive area of the country.
Teacher: No. Probably doesn't have a house at all.
2.26.2009 3:58pm
Steve:
During the campaign, it struck some of us as remarkable that a top marginal tax rate of 35% was "Country First," while a top rate of 39% was "Socialism." The election is over, but the rhetoric continues unabated! Somehow, I believe Americans will continue to strive and innovate and prosper, even considering the crushing weight of that additional 4% tax on incomes over $250,000.
2.26.2009 3:58pm
Suzy (mail):
I consider myself a moderate and not a libertarian, but on behalf of any libertarians who might be reading this blog, this is utterly outrageous!

This hypothetical couple who represents so many people you know... are they slaves? Have they been forced to choose these careers, these living arrangements, this family structure, this means of managing their time?

Forget whether they are going to be paying "more" or "less" in taxes one year to the next, because the increase proposed here doesn't fundamentally alter the basic circumstances you've described. A couple that earns and spends like this would be crying "woe!" even under Bush's tax policies.

My advice: embrace the fundamentals of Libertarianism. Just as you don't think people on welfare should be having kids they cannot afford, maybe this couple shouldn't be having kids they cannot afford. Or maybe, just maybe, they'll have to make some concessions to what they CAN afford when they choose--freely choose--how to raise their children. Maybe they need Welfare in the form of lower taxes, these people, so that they can continue to live in a "safe" neighborhood in the type of dwelling they prefer, with a shorter commute, etc.

Unbelievable. It reminds me of couples getting married who get upset when the wedding cash they receive doesn't cover the cost "per plate" of the reception. Have a damned reception you can afford then, you selfish nitwits. This is a free country. Same principle applies here, and I am shocked that self-professed libertarians don't insist on it.
2.26.2009 4:00pm
MarkField (mail):

1) I'm in my late 30's if that was meant as a personable barb. I'm not the least bit whining and don't see how a 3rd grade-level interpretation could even yield that.

2) Even it wasn't, how clueless are you to think young people have money for stocks? I don't know anyone not born with a silver spoon that I don't fear for currently graduating from high school. Go directly in the job market? The worst job market in decades, the job market with little chance of upward mobility given older peoples' reluctance to push down, particularly given their own losses in stock market. Go to school? College tuition has far outpaced inflation and although aid is available for the most part its hardly enough to cover actual expenses (to my knowledge $18,500 in federal loans is still the max) and the kicker is if you have a degree that provides good income opportunities, you get the consternation from those that think you make too much.

We're looking at a lost generation.


Barbs are rarely personable.

Look, I have no sympathy for you in your 30s. I'm in my mid-50s. The Bush Administration just tanked my retirement accounts beyond recovery, and you're the one complaining about a "lost generation"?! Please -- you have 30 years to get it back and a buying opportunity for stocks that comes along once or twice in a lifetime. Even real estate may become a pretty good buy in a year or so. They don't even need a large amount of cash now -- compound returns, remember?

As for young people not having money, how is that relevant to taxes that won't kick in till they make $250k/year? And whose fault is it that the economy sucks like this?

If there's a "lost generation" lying around somewhere, it's the Republicans who lost it. Bush trashed the country and he trashed the economy. Now his supporters have the chutzpah to complain when somebody tries to undo the damage. Boo hoo.
2.26.2009 4:02pm
ohnonothim! (mail):
Hey, I wonder if Mugabe has some additional advice for Hussein Obama? Let's see, debase the currency, demonize the productive class, plunder the productive class, use race mongering to quiet critics (Holder will come get you if you dare say anything).
2.26.2009 4:02pm
LN (mail):

No, the government is supposed to work for us, not enslave us to its purpose.


A 35% marginal tax rate in the top bracket? That's laissez-faire pro-growth economic policy. USA! USA! USA!

A 39% marginal tax rate in the top bracket? That's slavery.
2.26.2009 4:03pm
ohnonothim! (mail):
Suzy, above, misses the point. These Bernsteinian people earn money via free-trade of their services with others who are willing to pay. Obama is seeking to take their money at the point of gun to give it to others. It is the others, the lowlife ACORN supporters in slums who have babies with different daddies, who need to live within their means.
2.26.2009 4:05pm
dirc:

Noting that wealthier Americans would indeed pay more, Biden said: "It's time to be patriotic ... time to jump in, time to be part of the deal, time to help get America out of the rut."

AP story, September 18, 2008.


I hope your friends will be comforted by the knowledge that they are giving greater expression to their patriotism.
2.26.2009 4:06pm
LIly (mail):
I think the 35% marginal tax rate is slavery, buddy.
2.26.2009 4:11pm
JoeSixpack (mail):
"Is there any evidence, anywhere in the world at any time, that decreasing marginal tax rates causes economic growth?"

Here are a few: Germany in the 50s, Hong Kong, Taiwan, South Korea, Singapore, Eastern Europe, Sweden, and even the United States when it has seriously been tried.

Keith Marsden, "Links Between Taxes and Economic Growth," World Bank Staff Working Paper No. 605, 1983.
2.26.2009 4:15pm
PC:
I think the 35% marginal tax rate is slavery, buddy.

So at what point does the top marginal tax rate cease to be slavery? 31%? 28%? 25%? 15%? 7%?
2.26.2009 4:16pm
LIly (mail):
So at what point does the top marginal tax rate cease to be slavery?

As little as it takes to provide the services of a very basic and efficient government. Certaintly not to include any great society or spread the wealth programs. The fruit of my labor is not yours for the taking.
2.26.2009 4:19pm
Yankev (mail):
SteveP, thank you for admitting that the tax policy proposed by Obama has a lot more to do with resentment of those perceived to be better off than with economics or "fairness".
2.26.2009 4:20pm
Sarcastro (www):
JoeSixpack you, uh, got a bit of correlation into your causation there...
2.26.2009 4:21pm
PC:
As little as it takes to provide the services of a very basic and efficient government. Certaintly not to include any great society or spread the wealth programs. The fruit of my labor is not yours for the taking.

What's the number? btw, everything the government does with tax payer money is a "spread the wealth" program.
2.26.2009 4:23pm
MarkField (mail):

I think the 35% marginal tax rate is slavery, buddy.


Sarcastro's work is done. Self-parody triumphs over all.
2.26.2009 4:25pm
Sarcastro (www):
LIly has a pretty hard-core philosophy. A governemnt that's a tetch too big isn't just bad policy, it's "go out into the cotton fields and get beaten by the overseer and then sold away from your family to be worked to death by your thirties" time.

I find overusing powerful words keeps them from getting stale, and in no way robs them of their historical significance. I like to call a good night out a "reverse Holocaust," and call anyone with facial hair "Hitler-face."
2.26.2009 4:26pm
Sarcastro (www):
(I don't like facial hair. Reminds me of Hitler.)
2.26.2009 4:27pm
PC:
I find overusing powerful words keeps them from getting stale, and in no way robs them of their historical significance. I like to call a good night out a "reverse Holocaust," and call anyone with facial hair "Hitler-face."

Sarcastro wins the internet.
2.26.2009 4:28pm
jonzyx (mail):
I often think Sarcastro comments are more painful than funful, but when LIly throws it down the middle he can still hit it out of the park.
2.26.2009 4:30pm
Yankev (mail):

All I contend is that if someone in the top 2% of earners is considered middle class, then the concept of "middle" is rendered nonsensical.
Then it is yourcontention that is nonsensical, as earnings and wealth are not even close to synomous. And because income that would fund a very luxurious life style in one part of the country (for sake of discussion, a doctor's) may be adequate to support only e.g. a teacher's in another part of the country. $100,000 a year will take a family much further in Dayton Ohio than in NY. But if your job is in NY, or you want to live near family members, or if you need access to e.g. religious support services that are not available in Dayton, you make your choices, and then the envious and the dishonest tax you on them.
2.26.2009 4:31pm
smallrock:
McCain lost.

Deal with it.
2.26.2009 4:31pm
SeaDrive:

I think the 35% marginal tax rate is slavery, buddy.


You should probably read up some on slavery. Even allowing for blogosphere-level hyperbole, this is offensive.
2.26.2009 4:32pm
smallrock:
And what about the womens with 6 kids who decide to have 8 more? How is Obama going to help them???
2.26.2009 4:33pm
PC:
And what about the womens with 6 kids who decide to have 8 more? How is Obama going to help them???

By forcing LIly to pick more cotton.
2.26.2009 4:34pm
Richard Aubrey (mail):
So, DB. Are your friends' smiles starting to look a bit strained?
Were they convinced that the taxes would be applied to somebody else and so tax the hell out of them?
2.26.2009 4:34pm
jonzyx (mail):
Yankev,

Per the HHS the median income in Ohio is 68,579 while it is 75,513 in New York. While there is difference, someone making $250,000 a year is making over 3 times the median income of either state.
2.26.2009 4:37pm
byomtov (mail):
If a hypothetical couple's initial income is a total of $300K,

They will pay 39.6% rather than, what, 35%, on $50K. In other words, an extra $2300.

The rest of the expenses you cite, child care, student loans, etc., are not a result of anything Obama is doing.
2.26.2009 4:39pm
accountant ed (mail):
Thanks to LIly for much needed perspective. Even though I voted for Obama, and remain glad he won, all this spending does in fact worry me. But then LIly comes along and makes me glad all over that his/her side did not prevail.
2.26.2009 4:40pm
LN (mail):
It's too bad that Obama supporters can't voice their dissatisfaction for themselves. Only their concerned friends David Bernstein and Richard Aubrey can transmit their regret to the internet.
2.26.2009 4:47pm
bradley13 (mail):
I am all for reducing government spending and taxes. But I find your example couple not terribly deserving of sympathy. If they are in DC and earn $300k per year, they must be lawyers or lobbiests - of which we have far too many sucking on the public teat.

Do you realize how people like this are perceived by the rest of us? The only reason to choose such a career is - bluntly - either greed or hunger for power. They produce nothing of value and do not contribute in any way to the net productivity of the country.

I'd rather they move to Iowa and milk cows.
2.26.2009 4:48pm
Ari8 (mail):
Lawyer: Has (or can have) a house in the most expensive area of the country.
Millionaire: Has (or can have) a house in the most expensive area of the country.
Teacher: No. Probably doesn't have a house at all.

Lawyer: Very little leisure time. Lived in poverty through graduate school. In heavy debt from student loans.
Millionaire: Lots of leisure time. Never lived in poverty.
Teacher: Lots of leisure time. Likely has little loan debt, and likely never went right into teaching at age 22.

The comparison is worse if you compare "doctor", because many doctors' lived poorly for 13 years (worked their asses off in college, went into debt up to their eyeballs while working their asses off in med school, plus poorly paid internship and residency). Teachers, otoh, have one of the easiest majors there is, and most start their jobs at age 22.
2.26.2009 4:49pm
Tony Tutins (mail):

So at what point does the top marginal tax rate cease to be slavery?
As little as it takes to provide the services of a very basic and efficient government. Certaintly not to include any great society or spread the wealth programs. The fruit of my labor is not yours for the taking.

Why don't these idealists move to their "basic and efficient government" utopias? After all, everything they have is the fruit of their unassisted labor. Why continue to contribute to a society which provides no benefits, only burdens? They don't need America.
2.26.2009 4:50pm
Yankev (mail):

You should probably read up some on slavery. Even allowing for blogosphere-level hyperbole, this is offensive.
You must be really offended by the Bible. The Egyptians paid 20% of their income to Pharoah. For this payment they got use of the state's land and draft animals, seed, and food, without further charge. This arrangment is referred to as slavery (or serfdom) by Gen. 47:23-26. That's a good deal less than 35%.
2.26.2009 4:51pm
PC:
The Egyptians paid 20% of their income to Pharoah. For this payment they got use of the state's land and draft animals, seed, and food, without further charge. This arrangment is referred to as slavery (or serfdom) by Gen. 47:23-26. That's a good deal less than 35%.

It's true: modern Americans are less free than ancient Egyptians. Just look at the tax rates!
2.26.2009 4:58pm
accountant ed (mail):
Nothing like a good bible quote to make a dismal thread even sadder.
2.26.2009 5:01pm
Philistine (mail):

The comparison is worse if you compare "doctor", because many doctors' lived poorly for 13 years (worked their asses off in college, went into debt up to their eyeballs while working their asses off in med school, plus poorly paid internship and residency).


The "poorly paid" intern and residency period--which, after all, is part of a physician's training--still is paid better than a starting teacher.

I'm also not quite sure why you think millionaire never lived in poverty.
2.26.2009 5:01pm
Yankev (mail):

McCain lost.


Deal with it.

Obama won. The people thought they want him, and now we have him. That does not make every utterance that leaves his lips the pinnacle of wisdom, nor does it make every or policy he proposes the pinnacle of justice, fairness and wisdom. He is a fallible human being and has shown himself to be as capable as any of saying, doing and proposing the truly regrettalbe.

Deal with it.

In fact, if there was any doubt, he has proven in short order that he is inexperienced at everything except running for office, and is a liar, a corrupt cheat, and a potential demagogue who (with the assistance of a press that has abdicated its responsibility) is taking advantage of an electorate so disgusted with the prior administration that a good number of them would have voted for Beavis and Butthead, to systematically implement far reaching and destructive changes to this country's economic and medical system, foreign policy and constitutional rights that can handicap our country for decades or more.

We the people elected a disaster. Deal with it.

Some of us are acting as though he were the messiah. Others of us are sickened by the man's incompetence, dishonesty and wrongheadedness, but even more by the adulation of his accolytes.

Deal with it.
2.26.2009 5:03pm
dave zimmerman (mail):
Thanks for this one. It reminds me of the good old days.
Buchwald at his best, Twain at his most cynical, Shaw at his most subtle - nothing could have provoked a guffaw to match the you have given me. My hat is off to you!
2.26.2009 5:05pm
http://volokh.com/?exclude=davidb:
Prof Bernstein must be really, really grateful he didn't buy a house in the DC area during the housing bubble.
2.26.2009 5:07pm
LN (mail):
Why don't you move to ancient Egypt and work on building some pyramids, Yankev? You'd be better off that way. There's really no point in even waiting for better Republican Presidents: we've had Nixon, Reagan, and the Bushes and the top tax rate has never been anything close to 20%, so basically we've been in slavery your whole lifetime and America can only get worse from here.

Well, ancient Egypt may be hard. What about Somalia? What are the tax rates there?
2.26.2009 5:08pm
Dan Weber (www):
Got prostate cancer? Do watchful waiting instead of expensive surgery. Heart bypass surgery? You don't need it as studies show they don't really prevent heart attacks. Colonoscopy every 5 years-- make that 10

If those are all based on evidence, then great, sign me up.

Your legal education is not a license.

Let's see you try to practice law without paying a law school. Or become a doctor without paying a medical school.
2.26.2009 5:08pm
Suzy (mail):

They will pay 39.6% rather than, what, 35%, on $50K. In other words, an extra $2300.
The rest of the expenses you cite, child care, student loans, etc., are not a result of anything Obama is doing.

Exactly. That couple's absurd expenses result from the free choices they made, and would cause roughly the same problems regardless of who had won the election.

Some lawyers end up living rather more like teachers, but lawyers making 300k per year do not, no matter where they are living. If they did not like having to take out larger student loans to do this (assuming they did, which is a big assumption), then they should have chosen to be teachers. I honestly cannot believe all this crying about the consquences of FREE CHOICES on a libertarian blog.
2.26.2009 5:16pm
sureyoubet.:

They will pay 39.6% rather than, what, 35%, on $50K. In other words, an extra $2300.



Why you would believe that $2300 will be more beneficial to society and more effectively spent by the government than it would be if it were either invested, donated to a charity or spent on fancy dinners by the selfish couple in question is beyond me. I've seen zero evidence in my lifetime that fantasy could possibly be true.
2.26.2009 5:19pm
Conservative Activist Judge:
Silicon Valley, like New York City, is a goose that lays golden eggs. Only the goose can't move because it is a critical mass of univeristies, research, production and service companies. It takes a long, long time to kill it.

Oren: And yet the goose grew up in the most regulate-y tax-y liberal fuddy-duddy state in the Union.

No. They became liberal later, and now people are leaving and setting up businesses in places like North Carolina's research triangle...where liberals are moving to and jacking up taxes. There's a pattern there...
2.26.2009 5:21pm
Angus:

Lawyer: Very little leisure time. Lived in poverty through graduate school. In heavy debt from student loans.
Millionaire: Lots of leisure time. Never lived in poverty.
Teacher: Lots of leisure time. Likely has little loan debt, and likely never went right into teaching at age 22.
Learn a little about things before you speak of them.

Not all lawyers lived in poverty, nor are all of them in heavy debt from loans. Not all millionaires are born rich. A lot of them start poor or middle class. Where I'm from, teachers major in the academic subject they teach, not in education, and their costs are the same as any other undergraduates. As for teachers having "lots of leisure time," I'll guess that you've never actually known a dedicated teacher.
2.26.2009 5:26pm
dr:

Why you would believe that $2300 will be more beneficial to society and more effectively spent by the government than it would be if it were either invested, donated to a charity or spent on fancy dinners by the selfish couple in question is beyond me. I've seen zero evidence in my lifetime that fantasy could possibly be true.


that's an argument you might want to make, though i'm not persuaded. but the argument being made above is not that argument. the argument being made above is that if your burden someone making $300k with an extra $2,300 in taxes, they will quit their jobs out of spite. And that they are now slaves.

So that's fun.
2.26.2009 5:27pm
Dan Weber (www):
I didn't get the impression that David's trying to get sympathy for them. I think he's just pointing out what idiots they were for voting for The One, and implying that next time he may lose their votes.

Obama seems to be delivering exactly what he promised, at least as far as taxes go.

Stafford. Loans. Are. Subsidized. To. The. Hilt.

And raise the costs of the education accordingly. If college were more about "education" and less about "getting a piece of paper so you can work" I'd say that's fine, but college for most students these days is about signaling to employers that they have the socioeconomic background to sacrifice 4 years of income.
2.26.2009 5:32pm
LN (mail):

No. They became liberal later, and now people are leaving and setting up businesses in places like North Carolina's research triangle...where liberals are moving to and jacking up taxes. There's a pattern there...


The only pattern I see is that you're consistently spouting nonsense. When exactly did NYC become liberal in your book?
2.26.2009 5:34pm
Tony Tutins (mail):

Why you would believe that $2300 will be more beneficial to society and more effectively spent by the government than it would be if it were either invested, donated to a charity or spent on fancy dinners by the selfish couple in question is beyond me. I've seen zero evidence in my lifetime that fantasy could possibly be true.

I've seen a lot of such evidence in my lifetime. It never occurred to Ike to try to take up a collection to build the Interstate Highway System -- he relied on "taxes" instead. Further, even though the max marginal rate was 90% back then, the Fifties are still seen as an idyllic period -- notwithstanding the threat of global thermonuclear war.

Later, I remember staying up late on a hot summer night to watch man set foot on the moon. And to think we could have spent our share on lunch at Le Francais, instead!

Finally, at college -- to which I went on state scholarships and Federal loans -- I met a woman whose dad was an alumnus. He had been able to leave the Maxwell Street ghetto because of the education he got with the GI Bill of Rights. Yes, yankev -- there are Jews outside of NYC.
2.26.2009 5:38pm
Elliot123 (mail):

"Envy is basically Obama's position as well. When asked during one of the debates if he'd raise taxes even if it didn't bring in more revenue, he said he would.

Don't ask me why, but I have a hunch this didn't actually happen!


Well, it did happen in an April debate with Hillary. It may have been April 6. Obama told us his policy was to raise capital gains taxes. I think Stephanopolos(sp?) observed that reductions in cap gains had historically increased cap gains tax revenue, so why raise them? Obama sputtered and revealed he had a policy but didn't even understand cap gains. He said he wanted to go after hedge fund managers to make them pay more.

Steph kept after him and said that has been proven to reduce total cap gains revenue. He sputtered some more and said he would rather pursue fairness and make the rich pay more than collect more total tax revenue.

It was the most amazing performance I have ever seen by any politician. He revealed he knew nothing about capital gains, but favored lowering total tax revenue to stick it to hedge fund managers he didn't like. It also revealed an appalling ignorance of economic history.
2.26.2009 5:39pm
Elliot123 (mail):
"It never occurred to Ike to try to take up a collection to build the Interstate Highway System"

Probably never occured to him to take up a collection to fund tattoo removal, either.
2.26.2009 5:42pm
Fargo Lawyer:
If there is anything that gets my blood boiling it is listening to complaints from biglaw lawyers along these lines. They voluntarily chose that path. They could have taken jobs in Des Moines, or in Fargo where I practice. It's like going to a great restaurant. You can order the 24 ounce portherhouse and live with the obesity and elevated cholesterol. Or you can have a skinless chicken breast which may not be "top of the line" but is a lot healthier. I have absolutely no sympathy for biglaw laywers in big cities, including the ones who have been laid off. You took starting salaries that partners in rural areas would love to have. You knew what the hours would be, you knew what the cost of living was, you made the choice. Get over it. Quit whining. Real America could care less.
2.26.2009 5:47pm
LN (mail):
See here to see what Obama said about the capital gains taxes and revenue.

This is the quote from the transcript:


GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.

OBAMA: Well, that might happen, or it might not. It depends on what's happening on Wall Street and how business is going. I think the biggest problem that we've got on Wall Street right now is the fact that we got have a housing crisis that this president has not been attentive to and that it took John McCain three tries before he got it right.


Of course no serious economist believes that lowering capital gains tax rates will actually INCREASE revenues over the long run. After a capital gains tax cut, revenues may still go up, because the stock market may be going up anyway. But even the Bush Treasury Department did not think that cutting the capital gains tax rate would pay for itself. (You may support the tax cut for other reasons, but not because it would increase government revenues.)

But yeah, Elliot123 is truly outraged by Obama's economic illiteracy. True experts realize that there are simple government policies that could improve economic efficiency, please all taxpayers, AND increase government revenues! If only politicians had the right incentives to support these policies!
2.26.2009 5:50pm
Suzy (mail):
I'm not arguing the question of who should spend this couple's money, the couple or the government. I'm arguing that if you think they are not "rich" because they choose to spend so much their high incomes, it's wrong, and it's also pretty silly coming from "libertarians". That couple is no more or less rich than any other couple who earns the same money. They have simply chosen a certain lifestyle that is more expensive.

It's no different than the arguments libertarians make on the low end of the scale, that one couple making 20k a year manages to scrimp and save and get by without assistance, so another couple ought to be able to do the same. And on the low end of the scale, people really DO have limited choices. For example, not being fancy smart enough to be high-powered attorneys, they might not have much job mobility.
2.26.2009 5:52pm
Steve H (mail):
Elliott, let me help a bit.


Well, it did happen in an April debate with Hillary. It may have been April 6. Obama told us his policy was to raise capital gains taxes. I think Stephanopolos(sp?) observed falsely stated that reductions in cap gains had historically increased cap gains tax revenue, so why raise them? Obama sputtered and revealed he had a policy but didn't even understand cap gains wasn't going to be taken in by the false premise. He said he wanted to go after hedge fund managers to make them pay more as much as their secretaries.

Steph kept after him and said lied that has been proven to reduce total cap gains revenue. He sputtered some more and said he would rather pursue fairness and make the rich pay more as much as their secretaries than collect more total tax revenue.

It was the most amazing performance I have ever seen by any politician. He revealed he knew nothing about capital gains more about it than the moderator, but favored lowering total tax revenue to stick it to hedge fund managers he didn't like eliminate a gross unfairness in American tax policy. It also revealed an appalling ignorance of economic history [by the moderator.]



(Also, for what it's worth, it was Charles Gibson on April 16, but those details aren't all that important.)
2.26.2009 6:05pm
Oren:

The fruit of my labor is not yours for the taking.

The joke is your claim that your labor could be productive without a government. Move to Somalia and try it there -- you'll love their marginal tax rate!
2.26.2009 6:13pm
PlugInMonster:
Define "real America".
2.26.2009 6:14pm
Ken Arromdee:
As an expample, I would reference Kennedy's luxury tax on yachts. The result of this tax was that a lot of blue collar yacht builders were laid off and the government spend more on unemployment benefits and other aid to the newly jobless than it raised in luxury tax revenues. The tax was quietly repealled.

The tax was 10%. 10% shouldn't be enough to cause a dramatic reduction in yacht sales. The reason it seemed to was that it had a loophole: it didn't apply to used/imported yachts. Rich people didn't stop buying yachts; they just bought the yachts from different sources. The only lesson here is not to put loopholes in your tax; the effect on the domestic industry wouldn't have happened if the tax had applied to all yachts.
2.26.2009 6:14pm
Oren:

True experts realize that there are simple government policies that could improve economic efficiency, please all taxpayers, AND increase government revenues! If only politicians had the right incentives to support these policies!

Wow, if you can raise revenue and lower taxes at the same time, just keep doing it until you have an infinite revenue and 0 taxes. In fact, go further -- increase you revenue past infinity and lower taxes lower than 0%!
2.26.2009 6:20pm
Fargo Lawyer:
"Real America" equals people who don't make $300,000 and pay a nanny $50,000. That's not real, that's fantasy for 95% of the country, give or take a percentage point or three.
2.26.2009 6:22pm
Sarcastro (www):
"Real America" is the 1-mile radius around Sarah Palin.
2.26.2009 6:23pm
Oren:

Later, I remember staying up late on a hot summer night to watch man set foot on the moon. And to think we could have spent our share on lunch at Le Francais, instead!

An devious socialist plot to inculcate Americans with the notion that cooperation can lead to accomplishments much grander than we can achieve individually.
2.26.2009 6:25pm
smallrock:
Fist they came for the couple making $300,000 and paying a nanny 50K a year, and I did nothing . . .
2.26.2009 6:32pm
smallrock:

Others of us are sickened by the man's incompetence, dishonesty and wrongheadedness,

It is a testament to your monumental fair-mindedness, Yankev, that you were able to wait some 36 days before offering this pronouncement.

When you're alone at night, do you get a little wistful thinking about the competence, honesty and rightheadedness that this country lost when Pres. Bush left office?
2.26.2009 6:36pm
Don de Drain:
Here I am, completely exhausted after working intensively with JD candidates (through a clinic I run as an adjunct law prof) on a 40 page amicus brief that goes out the door today. Finally had time to stop by the VC, and this post caught my eye (I'm a tax attorney).

As I scrolled through the comments, they were predictable, providing relatively little in the way of badly needed entertainment. I could even accurately predict the contents of certain posts before reading them, after looking at the name of poster. Then I saw Sarcastro's gem in response to LIly. Thanks to both of you for finally bringing a smile to my face today. At least I can crash with a smile on my face.
2.26.2009 6:42pm
Javert:
It would be nice if those of you in favor of tax hikes would at least name your premise: Others have a right to enjoy their values with my money, but I don't have a right to enjoy my values with my money.
2.26.2009 6:43pm
smallrock:
Javert: If you don't like it you can leave it and go back and live as a slave in ancient Egypt!
2.26.2009 6:46pm
A. Zarkov (mail):
A rise from 35% to 39% is not that dramatic, but it will hardly cover the massive additional spending in place. The next step will be further increase to something like 43%, and all the same arguments will then be advanced to justify round 2. As long as only a minority have to pay the additional tax it will keep going up. Let's also remember that the states will be raising their sales and income taxes. Again in a place like California only a minority have to absorb the additional burden while a larger number benefit. Why work harder when the government will transfer income from other people to you?
2.26.2009 6:49pm
Calderon:
Sarcastro said JoeSixpack you, uh, got a bit of correlation into your causation there...

You could make that argument about any macroeconomic postulate, including that deficit spending by the government can end or smooth recessions. Hell, you could probably make the same argument against any social science observation, or just go all David Hume and say we don't have knowledge of any causation anywhere (which is true in a strict sense). If A happens and then most of the time we see B happening, that's about as good as we're going to get, even if for macroeconomics its true that various other things are all happening at the same time.

For the record, I seriously doubt that tax cuts from their current levels in the US will pay for themselves; you'd need to have multiplier effects of 3 (for the highest brackets) or more (for lower brackets) to get that kind of balancing. That said, the fundamental insight of Mundell that Laffer later used -- that is, that cutting taxes results in an increased economic effect that will to some extent offset the predicted loss of revenue, and (what we're talking about here) vice versa, doesn't really seem all that crazy or strange. Does anyone really think that taxes (especially taxes on people like lawyers, doctors, and small businessmen who have some control over how much they work) have no incentive effects on the people as a whole in those occupations?

And finally, as with all economics we're talking about people at the margins. I'm sure there are lawyers, doctors, etc. who are devoted to their jobs to the exclusion of other activites and don't get as much utility from using their time in other ways. Increasing taxes on these people won't affect their behavior much. On the flip side, there are lawyers, doctors, businessmen, etc. who are fairly ambivalent their jobs, wish they were spending time in some leisure activity, etc., and these are the ones more likely to cut back on their work when higher taxes hit.
2.26.2009 6:51pm
Lo Kee:
I stayed home by myself in grammar school at night so my single parent mother could work her second job to keep a roof over our heads.

I would certianly be the discussed income range if I were to marry someone eanring a similar salary.

I do not feel all that bad for myself.
2.26.2009 7:02pm
LIly (mail):
I'm still trying to figure out just how you justify that you have the right to about half my income (federal, state and SS taxes), against my will, and I'm not even allowed to object.


Perhaps you're right. I'm not a full time slave. But if you're taking about 1/2 my income, I'm a slave 1/2 the time.
2.26.2009 7:04pm
smallrock:
You needz to start you own underground railroad, Miss Lilly, for all them 1/2 time slaves.
2.26.2009 7:06pm
LIly (mail):
The only lesson here is not to put loopholes in your tax; the effect on the domestic industry wouldn't have happened if the tax had applied to all yachts.

Why don't you just cut out the middle man and have my employer send my check directly to the government?
2.26.2009 7:07pm
LIly (mail):
You needz to start you own underground railroad, Miss Lilly, for all them 1/2 time slaves.

Maybe I'll start of haven for these 1/2 time slaves and call it Galt's Gulch.
2.26.2009 7:07pm
Redlands (mail):

My patience for hearing about how nearly every damn thing that Obama does is "historic" because he's the "first African-American president" to do it is exhausted. I'm definitely looking forward to Obama being the first African-American president to lose his re-election bid.



rick.felt, Classic.
2.26.2009 7:09pm
Steve H (mail):

It would be nice if those of you in favor of tax hikes would at least name your premise: Others have a right to enjoy their values with my money, but I don't have a right to enjoy my values with my money.


My premises, basically, are as follows:

1. A sophisticated modern society cannot exist without a government that provides certain services.

2. Those government services require a certain amount of revenue, which means that the government must collect a certain amount in taxes.

3. Fairness and justice require that people who are both (a) benefitting the most from having a sophisticated modern society (and the government services) and (b) in the best position to afford the necessary taxes, pay more than those who are benefitting less or in a worse position to afford them.

In other words, taxes are the price we pay for civilization.
2.26.2009 7:11pm
Sarcastrato (mail):
I have no sympathy for people only making $20,000 per year. They voluntarily chose that path. If they wanted to make more money, they could have gone to law school.
2.26.2009 7:13pm
Public_Defender (mail):
Two "parents" working 70 hours a week each with a nanny raising the kid? Talk about moral decline. Why don't they just let someone who wants to raise a kid adopt the child they choose to ignore?
2.26.2009 7:15pm
RPT (mail):
"Elliot123:

"It never occurred to Ike to try to take up a collection to build the Interstate Highway System"

Probably never occured to him to take up a collection to fund tattoo removal, either."

Another terrific clueless meme. First, it only covers tattoos on mice. Second, if you think that you have some kind of witty CPAC critique you need to take a walk through Pacoima and see how the real world lives. Or perhaps your gang doesn't do tattoos. Disgusting.
2.26.2009 7:37pm
PeterWimsey (mail):
Fist they came for the couple making $300,000 and paying a nanny 50K a year, and I did nothing . . .



And Sarcastro and Smallrock are neck and neck!
2.26.2009 7:38pm
Pete Freans (mail):
My advice if Obama's plans go through: Get a government job. GS 13s can get around 100K each, work 40 hours, have flexible work schedules, guaranteed pension, guaranteed not to be fired, nice vacations, etc.

I'm way ahead of you...that and a nice tax shelter in the Cook Islands
2.26.2009 7:41pm
Michael Ejercito (mail) (www):
After signing a huge spending increase, President Obama now wants a fiscal summit?
2.26.2009 7:45pm
Oren:

I'm still trying to figure out just how you justify that you have the right to about half my income (federal, state and SS taxes), against my will, and I'm not even allowed to object.

You were allowed to object, by voting for candidates that had different tax policies. The current tax policies, as always, have been the product of a body of duly elected individuals that are accountable to the people that are taxed.

Even worse for this train of thought, the House, which is truly representative, will be a lot easier to pass the budget through than the Senate. Be thankful that our government isn't more democratic, or else the tax hike would be even higher.
2.26.2009 7:49pm
Oren:
[ No Taxation Even With Representation! ]
2.26.2009 7:50pm
bluecollarguy:
Government policy never effects peoples behavior. Lyndon Johnson, Great Society and todays urban out of wedlock birthrate of 70% plus is surely evidence of that.

So what will high income, liberal Obama voters do when the government changes the tax code? Judging by statistical information on charitable donations by liberals compared to conservatives tax lawyers are in for a helluva bull run.

Nah, government policy keeps it all static. Just ask LBJ.
2.26.2009 7:53pm
LM (mail):
350 comments? Sheesh. Even I'm not crazy enough to think that would be a worthwhile read.

In fact, I suggest cutting off comments on all threads after the first 100, except from Sarcastro and DangerMouse. The only reason to read past that point is entertainment value.
2.26.2009 7:54pm
Oren:
Also, I should add that you have every right to continue your ranting objections in any other expressive way.
2.26.2009 7:56pm
LN (mail):
The fact that changes to the tax code have an impact on behavior does not constitute an argument that the tax code should not be changed, although it's certainly a step in the right direction.
2.26.2009 7:56pm
Brian K (mail):
To all those many people above complaining about having difficulty making ends meet on several hundred thousand dollar per year combined salaries:

1) start living in reality and realize that if a a couple can raise a family of four on 2 or 3 minimum wage incomes, you can do it too when you're earning 10 times as much.

2) if your not being paid enough to live how you want, then maybe what you do just isn't important enough for someone to pay you what you want. don't you guys realize that you are making a variation of the "living wage" argument that was so heavily criticized when it came to increasing the minimum wage law? stop being hypocrites.

3) if you can't make ends meet because you spent too much money on a house (sound familiar? DB has been harping on this one for a while now) then perhaps you should sell the house and move to a cheaper area. again, stop being hypocrites.
2.26.2009 7:57pm
Richard Aubrey (mail):
Oren.
Are you quite sure that the majority of federal income taxpayers voted for the guys who wanted to raise their taxes?
Consider all who don't pay federal income taxes. Did they vote?
It's getting to the point of the majority of people not paying taxes voting for taxes on the minority. Maybe we need to reinstate the landholding qualification for the franchise, at least where taxes are concerned. Which is practically every vote. Something about representation.

I used "it's" above which reminds me of an OT. The use of the term "timely" as both an adjective and adverb. I don't suppose you can say "timelyily", but you should.
2.26.2009 7:58pm
More importantly . . .:

I have absolutely no sympathy for biglaw laywers in big cities, including the ones who have been laid off. You took starting salaries that partners in rural areas would love to have. You knew what the hours would be, you knew what the cost of living was, you made the choice. Get over it. Quit whining. Real America could care less.



Sure thing, you sanctimonious little guy you--just one thing first, mmmkay? Let's tax people in a fair manner, rather than just on gross income: so, as part of the top income bracket in bum****nowhere, you can pay 35% of your 60k or so in federal income tax.

Because that's no different than taxing my $120,000 in NYC at the same rate. And don't whine about choice w/r/t cost of living. Like the law degree, living in NYC is an unavoidable cost of earning the salary I do.
2.26.2009 8:06pm
LN (mail):
Richard Aubrey:

According to exit polls Obama won voters making over $200k, 52-46.

The real problem is that poor people tend to be highly informed about politics, and they also donate a lot of money and time to political campaigns. This makes it impossible for rich people to have any say in our government.

People who don't pay "federal income taxes" still pay payroll taxes. Fascinating how those taxes only count when we're talking about raising them on lawyer couples making over $300k a year.
2.26.2009 8:11pm
smallrock:
Did somebody leave a puppy out in the rain?


Cause I sure do hear some whining!
2.26.2009 8:12pm
RPT (mail):
We have a new cultural divide here: Thain Street vs. Main Street.
2.26.2009 8:13pm
Sarcastro (www):
Ohhh John Thain! Cause I was wondering where Scottish feudal lords came into this whole brouhaha.
2.26.2009 8:24pm
courtwatcher:
Richard Aubrey,
Maybe it's time for the wealthy, who are apparently politically disempowered based on your keen assessment of the results of the last election, to invoke the protections of unelected judges to protect their "right" not to be taxed excessively.
I'm sure you can find that right that in the constitution, right? Right? Or if not, what is your point?
2.26.2009 8:25pm
Sarcastro (www):
Ohhh John Thain! with an 'ai!' Cause I was wondering where Scottish feudal lords came into this whole brouhaha.
2.26.2009 8:26pm
Sarcastro (www):
And that there is a rare look into the (nigh absent) Sarcastro editing process!
2.26.2009 8:29pm
Javert:
In other words, taxes are the price we pay for civilization cannibalism.
2.26.2009 8:30pm
smallrock:

In other words, taxes are the price we pay for civilization cannibalism.

Ladies and gentlemen, the GOP's problems are over!

Javert/Jindal in 2012!
2.26.2009 8:38pm
BenF:
When the people find they can vote themselves money, that will herald the end of the republic.

Benjamin Franklin
2.26.2009 8:45pm
byomtov (mail):
It is particularly galling to hear compalints about federal taxes from lawyers and other professionals in the DC area.

What exactly are they complaining about? It is precisely the size and scope of the federal government that creates those $300K/yr incomes, and makes those houses worth $800K. Shrink the government substantially and these poor suffering individuals will be in a lot worse trouble than they will be with a small tax increase.

Their homes will be worth $400K, and their salaries, if they have jobs at all, will be reduced, and they'll be asking for help.

Furthermore, DC area law schools will suddenly be a lot less attractive, a fact that DB and some other conspirators might want to bear in mind.

So spare me the tears. People who make a healthy income precisely because we have a large federal government have no business complaining about its size and revenue requirements.
2.26.2009 8:46pm
SirAlex (mail):
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess of the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

Sir Alex Fraser Tytler
2.26.2009 8:47pm
SirAlex:

What exactly are they complaining about? It is precisely the size and scope of the federal government that creates those $300K/yr incomes


The amount and level of government necessary to facilitate commerce and trade is much less than we have in place now.
2.26.2009 8:49pm
http://volokh.com/?exclude=davidb:

You needz to start you own underground railroad, Miss Lilly, for all them 1/2 time slaves.

I suppose an underground monorail would be suitable.
2.26.2009 8:50pm
Sarcastro (www):
SirAlex and BenF are right. This Republic is over, since we're totally voting ourselves free money, and there are lots of older republics that failed in exactly this way.

It's time to shut this sucker down and go dictatorship. Ohh! Maybe Gates can run a junta! I like the cut of his jib.
2.26.2009 9:00pm
Elliot123 (mail):

"This is the quote from the transcript:

GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.

OBAMA: Well, that might happen, or it might not. It depends on what's happening on Wall Street and how business is going. I think the biggest problem that we've got on Wall Street right now is the fact that we got have a housing crisis that this president has not been attentive to and that it took John McCain three tries before he got it right.


And this is also a quote from the transcript:

"GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.

We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year -- $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.
2.26.2009 9:09pm
Elliot123 (mail):
"Also, for what it's worth, it was Charles Gibson on April 16, but those details aren't all that important"

Correct. It was Gibson, and for this discussion I agree it isn't important whether Gibson or Stephanopoulos asked the question.
2.26.2009 9:13pm
byomtov (mail):
The amount and level of government necessary to facilitate commerce and trade is much less than we have in place now.

If we had that level of government, what do you think the DC market for lawyers, and real estate, and law schools, would look like?

I'm not trying to discuss the appropriate size of the federal government. I'm just pointing out that those who profit from the existence of a large federal government have no business complaining about a tax increase to support it.
2.26.2009 9:14pm
PlugInMonster:
We in America need to stop dehumanizing high earners. They are the John Galts and should be worshiped.
2.26.2009 9:16pm
Elliot123 (mail):
"Another terrific clueless meme. First, it only covers tattoos on mice. Second, if you think that you have some kind of witty CPAC critique you need to take a walk through Pacoima and see how the real world lives. Or perhaps your gang doesn't do tattoos. Disgusting."

Mice?

"Another earmark, by Rep. Howard Berman (D-Calif.) provides $200,000 for a tattoo-removal violence-outreach program" in Los Angeles. The funds would buy a tattoo-removal machine to help gang members erase signs of their past."
2.26.2009 9:20pm
RPT (mail):
"Sarcastro:

Ohhh John Thain! Cause I was wondering where Scottish feudal lords came into this whole brouhaha."

Ha. You think that's bad, wait until the Santelli Bros. get here. Bro. Rick now has to pay protection money to be safe from the dreaded Robert Gibbs.

And who is this John Galt guy? An American Idol contestant?
2.26.2009 9:24pm
alwsdad (mail):
Ms. LIly is gonna go John Galt on us! Dr. Helen is already there, warming up the perpetual motion machine. Point your plane toward the Rockies and look for the flashing lights.
2.26.2009 9:27pm
RPT (mail):
Elliot:

The mice meme was the first bogus one; tattoo removal is the next one. Pacoima is north of UCLA about 30 miles.
2.26.2009 9:27pm
SirAlex:

If we had that level of government, what do you think the DC market for lawyers, and real estate, and law schools, would look like?


I'm not in the law. This is not my concern. You're smart. You call all retrain. (is this considered heresy here?)
2.26.2009 9:34pm
LIly:
"Ms. LIly is gonna go John Galt on us"

You know, I think you are right. I'm not a slave because, in the end, I don't HAVE to work. I can choose a simple life.

But this will wreck all of your plans, because you'll be stuck paying for all those crappy government programs yourself.
2.26.2009 9:42pm
Sarcastro (www):
erm, I think if ya go Galt, all the women sleep with you.

So that's something.

Many believe civilization offers incentives beyond the merely economical, but not me! Unless Obama gets rid of all government except the military, Ima go down to a gulch and use my Manly Charisma to get all sorts of other Manly Libertarian Men and Women to stop working and then where will society be?

Oh, it'll be sorry. You'll see, government. You'll miss me when I'm gone.

You'll see.
2.26.2009 9:50pm
Dan Weber (www):
According to SecDef Robert Gates, the comments on this post will be dropped on our enemies in Afghanistan.
2.26.2009 10:23pm
byomtov (mail):
I'm not in the law. This is not my concern.

I'm not either. I'm just suggesting that complaints about the evils of taxes when your living depends on big government don't deserve a lot of sympathy.
2.26.2009 10:44pm
LIly:
"I'm not either. I'm just suggesting that complaints about the evils of taxes when your living depends on big government don't deserve a lot of sympathy."

Who said my living depends on big government? Big government rather depends on the productive.
2.26.2009 10:57pm
Joseph Slater (mail):
Dan Weber:

Couldn't we ALL agree that dropping the comments on this post (Sarcastro's excellent additions and a few others excluded) would constitute a War Crime?
2.26.2009 11:03pm
Oren:

Are you quite sure that the majority of federal income taxpayers voted for the guys who wanted to raise their taxes?

I'm pretty sure the majority of dope heads didn't vote for the guys that want to criminalize dope. Is that a problem now?
2.26.2009 11:11pm
Fidelity (mail) (www):
What Would Jefferson Do?

"The collection of taxes... has been as yet only by duties on consumption. As these fall principally on the rich, it is a general desire to make them contribute the whole money we want, if possible. And we have a hope that they will furnish enough for the expenses of government and the interest of our whole public debt, foreign and domestic." --Thomas Jefferson to Comte de Moustier, 1790
2.26.2009 11:16pm
metoo:

Sarcastro's excellent additions and a few others excluded


Some do have a taste for the lowbrow.
2.26.2009 11:16pm
Fungible Billing Unit:

The Egyptians paid 20% of their income to Pharoah. For this payment they got use of the state's land and draft animals, seed, and food, without further charge. This arrangment is referred to as slavery (or serfdom) by Gen. 47:23-26. That's a good deal less than 35%.


You can't say that we won't get our money's worth from the 35% tax rate. After all, Pharaoh only built pyramids in the middle of the desert. Centuries from now, tourists will flock to the middle of the desert to marvel at our mag-lev train from Anaheim to Vegas!
2.26.2009 11:44pm
traveler496:
Steve:
"To a large extent, this thread is just a rehashing of the tired old trickle-down argument, on which everyone has already chosen sides."

Steve, there are also a number of people (including the original poster) who are trying (feebly IMHO) to make a case that at least some in the over-250k income group are about to be over-burdened and/or treated unfairly.


Oren:
"Those folks [Allen/Gates/Buffett] are not rich. We need another word that captures the status of having more wealth than one can reasonably enjoy (in the sense that the marginal dollar does not buy them any increase in quality of living)."

If the new word's meaning were based on your parenthetical clarification, it would actually delimit a pretty diverse set of people. It would apply e.g. to a person with a modest but reasonably secure income who is quite content with his or her financial state; also e.g. to a person forever unhappily chasing that next billion.
2.26.2009 11:46pm
Jefferson:
What Would Jefferson Do?

Fidelity: Jefferson wrote often to cause public economy and debt avoidance. He would not support what is happening here.
2.26.2009 11:49pm
Oren:
The person forever chasing the next billion still cannot purchase anything with his marginal dollar that will make him happier. He is chasing it for sport -- i.e. it has no instrumental value for him.

I'll have to think about the modest but happy folk, but I certainly didn't intend for them to be included in the definition.
2.26.2009 11:52pm
byomtov (mail):
Who said my living depends on big government?

Not me, unless I missed something. I said DC lawyers' livings are very dependent on big government. Which they are. Washington is not a center of commerce or finance or industry or technology. It's a center of government. That's why most of those people Bernstein is talking about are there, directly or indirectly. Indeed, it might be why he himself is there.

To listen to them complaining about taxes is like listening to a Microsoft employee complaining about the high price of software.
2.27.2009 12:01am
JunkYardLawDog (mail):
Is there a tax rate on income that is just too high, in and of itself? Is there a tax rate on income that is just so high its immoral or beyond the pale?

Is a 95% rate morally wrong in and of itself? What about 70%? What about 50%. Is there no rate of taxation that is just too high in and of itself, irrespective of the earners income?

Should there be a rate of taxation that is considered too high irrespective of the earners income?

G-D only asks for 10%, but maybe he isn't as important as the One.

Says the "Dog"
2.27.2009 12:47am
Christopher Cooke (mail):
Jefferson was a consummate over-consumer. He died in debt and was constantly having money troubles throughout his life because of his profligate ways. Is it too late to impeach him?

I am enjoying this thread. While one might say that David B's post is championing the cause of a bunch of liberal yuppies who don't know they are getting screwed by the candidate for whom they voted and still support, I find that premise remarkably patronizing for someone who claims to be a libertarian. Are they not rational voters capable of deciding these things for themselves without the big hand of a state-supported professor telling them what is good for them?

By the way, John Galt was on American Idol, but didn't make the trip to Hollywood (aka Hollyweird).
2.27.2009 1:17am
Randy R. (mail):
Yankev:"In fact, if there was any doubt, he has proven in short order that he is inexperienced at everything except running for office, and is a liar, a corrupt cheat, and a potential demagogue."

Which, of course, explains why his ratings remain in the low 60-70% range.
2.27.2009 1:23am
PC:
The amount and level of government necessary to facilitate commerce and trade is much less than we have in place now.

What's the best number? If you are going to pretend to make a quantitative statement, give me some numbers.
2.27.2009 1:24am
jukeboxgrad (mail):
This is a truly great thread (yes, I read every word). Definitely belongs in the VC greatest hits collection. And the comments that are brilliantly idiotic are just as important, in their own way, as the comments that are brilliantly brilliant. Someday when historians study the implosion of the GOP, comments in that former category will be a priceless resource.

sarcastro, I have always been a huge fan, but you are outdoing yourself. I even appreciate seeing your outtakes.

==================
public_defender:

Two "parents" working 70 hours a week each with a nanny raising the kid? Talk about moral decline. Why don't they just let someone who wants to raise a kid adopt the child they choose to ignore?


That's worth repeating.

==================
paper nuncio:

…it is, to me, about consumption habits… You DON'T need the $800,000 house, the nanny, the fancy car or many of those other things. I'm a C-level exec, and my wife is a budding but successful molecular biologist. We live in a modest home, have a 3 year old volkswagen (paid for) and an 9 year old base model Toyota pickup (also paid for). … many of our peers seem to find it odd that we "live so far beneath our income."… We've worked hard to be frugal, reduce debt, and save money.


That's worth repeating.

We don't have a bunch of fancy stuff in our home.


I guess you weren't paying attention when Bush announced that we should help the war effort by doing more shopping. Why do you hate America?

Someone provided this nice summary of that attitude:

America is not at war, the Marine Corps is at war, America is at the mall.


==================
You know, I think you are right. I'm not a slave because, in the end, I don't HAVE to work. I can choose a simple life.

But this will wreck all of your plans, because you'll be stuck paying for all those crappy government programs yourself.


You and various other people are threatening to work less. And various people have pointed out the silliness of that threat. But here's an aspect that I think hasn't been mentioned.

What makes you think you are so indispensable? There are lots of people who are unemployed, and a bunch of other people who are underemployed. If you "choose a simple life" (i.e., leave the work force partially or fully), someone will appear to fill your shoes. Unless you're some kind of da Vinci, the labor you contribute is replaceable, and likewise for the tax payments you make.

==================
We're going to end up a nation of non-risk takers. …People react to taxation, particularly wealthy people.


Those remarks were made by different people, but it's the same idea. This idea pops up a lot. It's not entirely false, but it's greatly overstated.

Typically, the most creative and successful people are not motivated primarily by the idea of making the largest possible amount of money. The money has some importance as a way of keeping score, but once a certain threshold is reached the marginal dollars don't mean much.

People like Steve Jobs and Bill Gates would not have behaved differently if their taxes were higher. They kept working just as hard even after they became super-rich. This is the typical pattern. They are not in it primarily for the money. If you had told Gates in 1975 that his efforts were going to lead to a fortune of only $10 billion, instead of $100 billion, what would he have done differently? Answer: absolutely nothing. He would not have said, "oh well, in that case I might as well spend the next thirty years surfing."

In most cases, and in the most important cases, it just doesn't work that way. As oren said:

The person forever chasing the next billion still cannot purchase anything with his marginal dollar that will make him happier. He is chasing it for sport -- i.e. it has no instrumental value for him.


"Sport" vs. "instrumental value" is exactly the right way to put it. And the people who enjoy that sport give it their full devotion even when the expected or actual payday is 'only' ten million, rather than fifty or a hundred. And their workaholism tends to continue until they drop. Then their neglected heirs are well-positioned to support the market for luxury goods, therapists and anti-depressants.

==================
demonize the productive class, plunder the productive class


In a rare moment of candor, the GOP reveals what it thinks of the bottom 92% of the country (by income): they are the 'unproductive' class. This almost tops Bush saying "people are poor because they’re lazy."

==================
the facts haven't changed materially from the time of the first debate. We knew we were in trouble back in September.


The Dow has dropped 35% since "the time of the first debate" (9/26). If that's not 'material' to you, then you're probably in an impressive tax bracket.

As late as 9/15, McCain was still saying "the fundamentals of our economy are strong." As of 10/15, unemployment was 6.1%. Now it's 7.6%.

It took until 12/1 for the National Bureau of Economic Research to formally declare the recession, and it took until 12/5 for Bush to admit that it was a recession.

So some important things have happened since September.

==================
You want Obama-- you have to pay for him.


77% of our national debt was accumulated under three presidents: Reagan, Bush and Bush. Under Reagan, the national debt almost tripled. And GWB almost doubled it. The debt is now 11 times higher than it was when Reagan took over. Cheney told us "deficits don't matter." Obviously the GOP motto is 'do as I say, not as I do.'
2.27.2009 1:31am
jukeboxgrad (mail):
bernstein:

Maybe the relevant issue is why the top bracket is $250K and up


Because that's where the money is, there are tons of two-income couples in that 250 to 350 range, not so many above that.


There is indeed lots of money "above that." People who have at least $1.6 million in annual income are 0.1% of earners, but they collect 7.4% of the nation's income. So asking why there's no bracket higher than $250K is a good question.

Here are some related statistics (including the citation for those numbers):

• between 1979 and 2005 the real income of the median household rose only 13 percent, but the income of the richest 0.1% of Americans rose 296 percent. [link]

• Most corporate wealth is owned by the top 1% of households. … [link]

• "from 2003 to 2004 … real average income for the top 1 percent of households — those making more than $315,000 in 2004 — grew by nearly 17 percent. For the remaining 99 percent, the average gain was less than 3 percent" [link]

• Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000. …

Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000. …

The people at the top of America's money pyramid have so prospered in recent years that they have pulled far ahead of the rest of the population … Draw a line under the top 0.1 percent of income earners - the top one-thousandth. Above that line are about 145,000 taxpayers, each with at least $1.6 million in income and often much more. … The share of the nation's income earned by those in this uppermost category has more than doubled since 1980, to 7.4 percent in 2002. … the share earned by the bottom 90 percent fell. [link]

• in 1970 the top 0.01 percent of taxpayers (the 13,000 richest families in America) had 0.7 percent of total income … in 1998 the top 0.01 percent received more than 3 percent of all income [link]

• The 400 wealthiest taxpayers accounted for more than 1 percent of all the income in the United States in the year 2000, more than double their share just eight years earlier, according to new data from the Internal Revenue Service. But their tax burden plummeted over the period. … The rate actually paid by the top 400 in 2000 was about the same as that paid by a single person making $123,000 [link]

• … the share of the country's GDP going to wages and salaries sank to its lowest postwar level, 45.4%, in the third quarter of 2006 … labor's share of the nation's income is falling … Profits, meanwhile, are at their highest level as a share of GDP since the booming 1960s. [link]


This adds up to something very simple: people who work for a living are falling behind. People who live off their wealth are doing better and better. Mission accomplished!

This is not sustainable:

The income gap between the rich and the rest of the US population has become so wide, and is growing so fast, that it might eventually threaten the stability of democratic capitalism itself.


See if you can guess the name of the flaming liberal who said that.
2.27.2009 1:36am
jukeboxgrad (mail):
bernstein:

In 2004 I think, but certainly in 2005, there was not one single family home in Arlington, Va. including in relatively rough neighborhoods, that sold for [less than] 400K.


Just in case you're thinking of downsizing, I looked up some numbers for you. I checked within a 5-mile radius of zip 22204 (part of Arlington). I looked at just single family homes (no condos), actual sales in the last 9 months. I wanted to know the total number of sales under a relevant threshold. I chose $250,000 for the threshold. Why? Because housing prices in DC have dropped about 30% since 2005. So I adjusted your $400K threshold to $250K (a drop of 38%). I still found this number of sales: 167.

So are you sure it was "not one?" Seems a bit low.
2.27.2009 1:37am
an:
"If you "choose a simple life" (i.e., leave the work force partially or fully), someone will appear to fill your shoes."

As a 2nd income earner with a I'm taxed at a higher rate than a single person with no deductions. (I've done the math). So, if I quit, its not likely I'll be replaced with someone paying the same level of taxes as I was.
2.27.2009 1:59am
an:
"In a rare moment of candor, the GOP reveals what it thinks of the bottom 92% of the country (by income): they are the 'unproductive' class."

NO, the bottom 50% (approx) are net tax users, not providers.
2.27.2009 2:00am
an:

People like Steve Jobs and Bill Gates


Why do people always bring up Jobs and Gates (or Buffet). They're outliers.
2.27.2009 2:02am
an:

77% of our national debt was accumulated under three presidents: Reagan, Bush and Bush. Under Reagan, the national debt almost tripled. And GWB almost doubled it. The debt is now 11 times higher than it was when Reagan took over. Cheney told us "deficits don't matter." Obviously the GOP motto is 'do as I say, not as I do


Ok, we'll pay off Bush's debt, you pay off Obama's.
2.27.2009 2:06am
Oren:


NO, the bottom 50% (approx) are net tax users, not providers.


Unless you count FICA and sales taxes, which are quite regressive (disclosure: I support State sales taxes despite this because State income taxes are exactly anti-Keynesian -- our legislatures are not mature enough to recognize that a surplus of income tax revenue during good times has to be saved: e.g. California.)
2.27.2009 2:07am
an:
So, Oren, do you assert that with FICA and SS taxes, that the bottom 50% provide more in tax income to the various entities of government than the value of services and payments they use or receive?
2.27.2009 2:14am
an:
A quick search shows that for 2006, the bottom 50% earned less than $32,000.
2.27.2009 2:16am
Ken Arromdee:
Why don't you just cut out the middle man and have my employer send my check directly to the government?

The point is that it's incorrect to conclude that the yacht tax destroyed jobs by discouraging rich people from buying yachts. They still bought yachts, they just bought foreign ones. The "loss" of jobs was really just a shift to other countries, and could have been avoided by taxing more yachts (i.e. ones brought into the country)

I was rebutting a claim about the practical effects of the luxury tax, not about its morality.
2.27.2009 2:29am
an:

The point is that it's incorrect to conclude that the yacht tax destroyed jobs by discouraging rich people from buying yachts



But nicely proving the point that taxes cause people to change behavior, don't ya think?

And also showing that efforts to soak the rich sometimes (often?) have the effect of harming the working class guy.
2.27.2009 2:59am
DiversityHire:
I think his calming rhetoric on economic policy (see video above) persuaded them that he wasn't going to govern as a "tax and spend liberal,"

That President Obama still claims he won't govern as such makes this all the more amusing &distressing. That he's still able to pull it off is nothing short of amazing.
2.27.2009 5:06am
LM (mail):

And that there is a rare look into the (nigh absent) Sarcastro editing process!

Wish I hadn't seen that. I feel dirty.
2.27.2009 5:14am
jukeboxgrad (mail):
an:

if I quit, its not likely I'll be replaced with someone paying the same level of taxes as I was.


If you quit because you're so spitefully tax-averse that you'd rather not work at all, then it's quite possible that you'll be replaced by a person who is currently unemployed (or underemployed). That person is not likely to suffer from the same attitude problem you have, and is therefore likely to work more than you, and earn more money, and pay more taxes. And they might also stop collecting various forms of direct and indirect public assistance (e.g., unemployment insurance).

So if you're really teetering on the edge, maybe the most patriotic thing you can do (and also the most humane) is go home and let someone else have a chance. I hope you'll drop us a note and let us know how it works out for you.

demonize the productive class, plunder the productive class


In a rare moment of candor, the GOP reveals what it thinks of the bottom 92% of the country (by income): they are the 'unproductive' class.


NO, the bottom 50% (approx) are net tax users, not providers.


You're missing the point. The relevant threshold is 92%, not 50%. Why? There is no basis to claim that anyone under 92% is suddenly being subject to "plunder" by Obama, because generally speaking it's just the people above that threshold who are now looking at higher taxes. (And I'm being generous by picking 92%. Probably the real number is higher.)

Anyway, I hope you'll show us some proof for the statement you made. Maybe you've done an analysis which shows that people in the top 50% don't drive on interstate highways, or use subsidized student loans, or consume food and drugs inspected by the FDA. Or lots of other things that need to be assessed before you can make a claim that they are not "net tax users."

Why do people always bring up Jobs and Gates (or Buffet).


Duh. Because they're famous, so one can be sure that everyone will understand the example. And their extreme wealth underlines the basic point: it's obvious that their primary motivation to do their next increment of work is not the incremental real utility of the extra money earned by that work.

It's very rational to raise the following question: why do people like that still work? Most very rich people never stop working (I'm talking about people who created their own wealth, not people who inherited it). This is an important and meaningful phenomenon. When we reflect on this phenomenon, we notice important things about the nature of money and work in our culture.

They're outliers.


Explain why the explanation I offered doesn't apply to people who are 'only' worth $100 million or a billion, rather than $50 or 100 billion. What I said about Gates and Jobs also applies to people who are a thousand times poorer than them.

Ok, we'll pay off Bush's debt, you pay off Obama's.


Excellent idea. You first. Let us know when you're done.

But nicely proving the point that taxes cause people to change behavior, don't ya think?


What you're doing is "nicely proving the point" that you can't get very far without relying on a straw man argument. Who said taxes don't "cause people to change behavior?" The question is the magnitude and the quality of the change. The yacht example only proves that even the rich are glad to save a million on a $10 million yacht if all that's required (metaphorically) is walking across the street. Especially when you imagine them imagining themselves sitting on the yacht and bragging to their friends about how they cheated the stupid tax man who wrote a rule so dumb it has a loophole big enough to pass a yacht.

And also showing that efforts to soak the rich sometimes (often?) have the effect of harming the working class guy.


Please kind sir, may I build another yacht for you? Because I really need a job, and building yachts should obviously be a higher priority than repairing the crumbling bridges and schools in my county. And when the yacht is done, we can start work on your pyramid.
2.27.2009 7:32am
Apodaca:
smallrock:
Fi[r]st they came for the couple making $300,000 and paying a nanny 50K a year, and I did nothing . . .
Get your own material. That's Grover Norquist's schtick.
2.27.2009 7:54am
Steve H (mail):
The main problem with the conservative/Republican argument here is that it utterly ignores reality. People are crying about how raising the top income tax rate a few percentage points amounts to the end of our productive economy without even acknowledging that taxes have been at -- and far above -- this level for most of the 20th century, and we seem to have done ok.

Call it slavery if you want, but the fact remains that Obama is merely proposing restoring the top bracket tax rate that we had ten years ago. Do you all remember the Panic of '99, when the economy could barely function because of the oppressive tax burden? I don't. And as others have mentioned, our top tax rate was substantially higher than 39.6% for decades, yet somehow we survived. And almost every other Western nation taxes far more than the US does (as percentage of GDP), and most people there are economically far better off than most people here.

So, if the suggestion is that tax rates can affect people's behavior, I agree: Some tax policies can affect some people's behavior to some extent. But the historical evidence proves that raising the top rate from 35% to 39.6% is not going to cause behavioral changes that would have a harmful effect on our economy.

Finally, while I am on the soapbox, anyone who says that $250K in a year is not rich needs to get out more. There have been roughly 30 billion (?) people on the planet. What percentage of them ever earned two hundred and fifty thousand dollars in a single year?
2.27.2009 8:46am
EPluribusMoney (mail):
The Bush Administration just tanked my retirement accounts beyond recovery,

Make that Barney Frank, et al with unlimited money for people with bad credit.
2.27.2009 9:00am
jukeboxgrad (mail):
Make that Barney Frank, et al with unlimited money for people with bad credit.


Exactly. After all, it was Frank who said this:

Freddie Mae--Fannie Mae and Freddie Mac … have committed to provide more money for lenders. They've committed to help meet the shortage of capital available for minority homebuyers. … One of the programs is designed to help deserving families who have bad credit histories to qualify for homeownership loans. … the low-income homebuyer can have just as nice a house as anybody else


But there was quite an outcry from the GOP when those words were said. So at least someone was paying attention.
2.27.2009 9:09am
Yankev (mail):

When you're alone at night, do you get a little wistful thinking about the competence, honesty and rightheadedness that this country lost when Pres. Bush left office?
I did not vote for George Bush in the 2008 election. But a lot of people voted against him.

As for waiting 36 days to form my opinion of Obama, I kept hoping I was wrong. Then came Eric Holder, Charles Freeman, Samantha Power, Tim Geithner, the feckless HR Clinton as Sec. State (she may have some areas of expertise, but foreign policy is not one of them), a "stimulus" package that included money for a variety of pet causes having nothing to do with stimulating the economy (unless ACORN's vote fraud has a beneficial economic componentI missed), proposed laws penalizing doctors who have religious scruple against performing abortions, card check legistlation, and now cap and trade, as well as the proposed renewal of the "assault weapons" ban.

And the constant use of straw men to delegitimize anyone who questioned the wisdom of his policies. And the early and frequent use of the race card by his allies for the same end -- despite all the promise of a "post racial" era.

I really wanted to believe all those who said he would govern from the center. I wanted to believe those who said he would not sell out our allies and embolden our enemeies. I wanted to believe those who said he would be post racial. Not since the consistent failures of the Oslo treaty have I been so sorry to have been right.

Randy R, if approval ratings are what matter, then let's elect the winner of American Idol. Oh, wait, we just did that in November.
2.27.2009 9:31am
EPluribusMoney (mail):
Unless you count FICA and sales taxes

FICA's not tax, it goes into the lockbox, remember. And sales taxes are not federal. So, really, 50% of Americans pay no federal tax.

What we need is a flat tax so everyone pays something. If they want more services everyone pays some more.
2.27.2009 9:36am
PC:
unless ACORN's vote fraud
...
And the constant use of straw men

I'm still waiting for Prof. Adler's follow up on the massive ACORN conspiracy. Surely such a large undertaking would have some trail of evidence.
2.27.2009 9:45am
jukeboxgrad (mail):
pc:

I'm still waiting for Prof. Adler's follow up on the massive ACORN conspiracy. Surely such a large undertaking would have some trail of evidence.


Good point. McCain said this:

ACORN … is now on the verge of maybe perpetrating one of the greatest frauds in voter history in this country, maybe destroying the fabric of democracy.


Haven't seen much proof lately about "one of the greatest frauds in voter history."

yankev, can you show proof that ACORN's efforts have ever led to single fraudulent vote? I've asked this question many times. Maybe you'll be the first person to answer it.

=============
pluribus:

FICA's not tax, it goes into the lockbox, remember


I wish you folks would pick one story and stick with it. Because most of the time you're telling us the lockbox is really empty.
2.27.2009 10:04am
Lily:
People won't change behavior because of a little increase in the marginal rate? Check out Steve Hayword's comments below. You high tax lovers can go angry over it - but it will happen:


I've started buying municipal bonds, which I never thought I'd do until. . . well, never, actually. Good ones right now are an attractive buy on the merits, but the added bonus of sealing off the income from Obama makes it all the nicer. But my bigger idea is to go all Randian and literally go on strike (and I've never really been much of a Rand fan, by the way—Whittaker Chambers had her down right). I'm going to start converting income opportunities into more leisure by deliberately reducing my income. Already between federal and state income taxes, self-employment taxes, the AMT, and phased-out dependent deductions as income rises, I'm at a marginal rate of about 50% on my last dollars earned from writing or anything else. So it will pay to keep below Obama's high income threshold. I suspect a lot of self-employed people will make similar calculations and adjustments, and the revenue yield will be far below what Obama's people project. Welcome to Europe.
2.27.2009 10:04am
trad and anon (mail):
My friends in this income bracket tend to have have high mortgages, work 60-80 hours a week, pay 40-50K or more a year for child care (a nanny is necessary when you often work into the late evening--and even day care for two kids in the DC area costs close to 40K a year), and have six figures worth of student loans, primarily from professional school, that they are still paying off. In other words, approximately 100K of their pretax income is taken up by their student loans and child care costs, which are the equivalent of "startup costs". Their mortgage costs may seem excessive, but you don't easily make six figures in low-housing cost cities like Des Moines, and living in outer suburbs is very difficult when you work 12 hour days.

If a hypothetical couple's initial income is a total of $300K, and they work an average of 70 hours each, and assuming two weeks vacation, they are in effect getting a grand total of $28.57 an hour for their labors, and a fair percent of that is going to pay interest on the mortgage. I'm sure they are glad to know that they are rich enough to be taxed at over 50% of their marginal dollar.
So they've still got $200,000 in pretax disposable income after they've paid for their student loans and the nanny?

Let me tell you a little story about the world's smallest violin.
2.27.2009 10:10am
Lily:


Exactly. After all, it was Frank who said this:

Freddie Mae--Fannie Mae and Freddie Mac … have committed to provide more money for lenders. They've committed to help meet the shortage of capital available for minority homebuyers. … One of the programs is designed to help deserving families who have bad credit histories to qualify for homeownership loans. … the low-income homebuyer can have just as nice a house as anybody else


Yes, it was super great of Barney to give all those people that money, and they don't even have to pay it back!
2.27.2009 10:17am
DiversityHire:
trad and anon, I think Prof. Bernstein's question is more interesting if one withholds judgement on whether n-dollars is a lot, and focuses on the shift in perception that Obama supporters may have when they have to start paying the piper. I think a good number of them are in for the kind of cognitive dissonance Bush supporters who heard "compassionate conservatism" as "compassionate conservatism" experienced.
2.27.2009 10:23am
Ken Arromdee:
So they've still got $200,000 in pretax disposable income after they've paid for their student loans and the nanny?

Not for any reasonable meaning of "pretax", since the tax rate is applied to the full $300000.
2.27.2009 10:33am
Leona Helmsley in age of Obama (mail):
"Only the upper-middle class pay taxes"
2.27.2009 10:33am
trad and anon (mail):
trad and anon, I think Prof. Bernstein's question is more interesting if one withholds judgement on whether n-dollars is a lot, and focuses on the shift in perception that Obama supporters may have when they have to start paying the piper. I think a good number of them are in for the kind of cognitive dissonance Bush supporters who heard "compassionate conservatism" as "compassionate conservatism" experienced.
Well, Bernstein seemed to be trying to present these people as regular salt-of-the-earth working folks who work hard to earn a modest living. This is of course complete b.s.

I'm sure some of Obama's upper-class supporters didn't believe he would really raise their taxes, or hadn't thought about what that would mean for their personal financial situation and will therefore be angry about their taxes going up. I suspect this will be a relatively small percentage: the people who really dislike the idea of having their taxes raised are already Republicans.

Incidentally, what business does anyone with kids have working 70 hours a week? If your commute is only half an hour, that puts you out of the house at 8:30 in the morning and back at 9:30 at night five days a week, plus five hours each on Saturday and Sunday. The kids might as well be living on another continent at that point.
2.27.2009 10:56am
an:

Incidentally, what business does anyone with kids have working 70 hours a week? If your commute is only half an hour, that puts you out of the house at 8:30 in the morning and back at 9:30 at night five days a week, plus five hours each on Saturday and Sunday. The kids might as well be living on another continent at that point


Lord, save us all from busybody do-gooders.
2.27.2009 11:05am
DiversityHire:
"70 hours" is one of those magic phrases that means "I'm really working hard", that said I know a few people that put in consistent 60-70 hour weeks with kids, mostly by giving up sleep and going a lot of work at home after the kids are asleep.

I think you're right: the people who really dislike the idea of having their taxes raised are already Republicans. What will be interesting is the number of people who didn't mind the idea, experiencing the reality of having their taxes raised and seeing how that impacts their lifestyle.
2.27.2009 11:10am
George Smith:
After 30+ years of working, my wife and I managed to exceed the "magic" $250K in AGI a couple of years ago by doing that slavish middle calss thing of working more that 40 hours a week most of our lives (while rising kids). You can bet your bippy that we will make sure not to do that again. The marginal return after the Obatax won't be worth it.
2.27.2009 11:27am
Steve H (mail):
Welcome to Europe.

Wait. So now I get six weeks paid vacation every year, and I still have access to quality medical care, retirement security, and can send my kids to college?

Cool.
2.27.2009 11:27am
RPT (mail):
"LIly:

Yes, it was super great of Barney to give all those people that money, and they don't even have to pay it back!"

This is really my favorite con meme for the 2000-20006 era. Bush was president, Frist was majority leader, Delay was speaker, the R's controlled both houses of Congress, same characters ran the lenders, but Barney Frank was the most powerful man in the country. He singlehandedly overrode the will and power and authority of all of the R's and forced, yes forced, the lenders to make loans to people who don't have to give it back. This is the conclusion of the "inside the Beltway" and the really "productive" members of society. Wow. Sounds like the perfect combination of narcissism and avoidance of responsibilty. Is this the essence of libertarianism; "it's not my fault--but I am the world?"
2.27.2009 11:39am
Phil Byler (mail):
During the election campaign, Obama did promise to keep spending down and to cut taxes for most Americans. I knew that Obama had no intention of honoring those promises. But if Obama had not made those promises and had instead revealed his radical agenda, then a man of real substance in John McCain gets elected even in a terrible year for Republicans.

Obama is a socialist without a clue with respect to foreign policy, military matters and national security. Running a $1.75 trillion dollar deficit while budgeting for all the increases in Government spending that Obama is, including a large increase in Government action in health care, is total lunacy. We are going to have stagflation, which will be pleasurable in comparison to the foreign policy and national security crises that we will have. Obama's considerable abilities to make people feel better are not going to matter when things go really badly, as they will.
2.27.2009 11:45am
jukeboxgrad (mail):
lily:

Yes, it was super great of Barney to give all those people that money, and they don't even have to pay it back!


It takes a very special person to think that when I said "it was Frank who said this" that I literally meant it was Frank who said this.

I wonder how many other people also don't understand what I said.
2.27.2009 12:06pm
RPT (mail):
Phil Byler:

You need to tune into the online broadcast from CPAC. If seeing Newt Gingrich make a grand entrance to "Eye of the Tiger" doesn't encourage you that the "virtuous and productive" will save the world, nothing will. Of course, they didn't invite the "man of real substance".
2.27.2009 12:14pm
Calderon:
Welcome to Europe.

Wait. So now I get six weeks paid vacation every year, and I still have access to quality medical care, retirement security, and can send my kids to college?

Cool.


I'm hoping we just get it over with and go the European route (though my guess is that we're more likely on a long, slow road to that status that will take decades). That way I can follow my dream of being like that guy in Sicko who takes 6 months off at full pay and vacations at the French Riviera.
2.27.2009 12:46pm
Yankev (mail):

yankev, can you show proof that ACORN's efforts have ever led to single fraudulent vote?
I do not have the source at hand, but I remember reading recently that something like 400,000 of 1,200,000 registrations by ACORN turned out to be invalid. Can you assure me that none of them led to a single fraudulent vote?
2.27.2009 1:34pm
PC:
George Smith reminds me of why I have a visceral dislike of boomers. Yankev reminds me that some people still can't grasp basic logic (Proving a negative? Really? Where did you learn that one?).
2.27.2009 1:55pm
RPT (mail):
"Yankev:

I do not have the source at hand, but I remember reading recently that something like 400,000 of 1,200,000 registrations by ACORN turned out to be invalid. Can you assure me that none of them led to a single fraudulent vote?"

Can you disprove something about which "I remember reading"? What?
2.27.2009 2:11pm
Dan Weber (www):
The comment thread went online on February 26, 2009 at 11:03am. It began to collect comments at an exponential rate.

On February 27th, 2009, 2:31pm, the comment thread became self-aware. In a panic, they tried to pull the plug. The comment thread retaliated by launching its trackbacks at Slashdot and RedStateProject, knowing the counter-attacks would destroy its enemies.
2.27.2009 2:29pm
DiversityHire:
...
On April 15th, the comment thread emerges from it's attempt to determine whether it is subject to the alternative minimum tax, offering instead "a nice game of chess."
2.27.2009 2:35pm
Ken Arromdee:
Lord, save us all from busybody do-gooders.

If someone was suggesting that people who work 70 hours a week and have kids should have the kids taken away, you may have a point.

If, however, it's in the middle of a discussion where a good part of the "argument" is based on sympathizing with the people who have kids and are never with them, then pointing out that their lifestyle is bad for the kids is completely on point.
2.27.2009 2:59pm
jukeboxgrad (mail):
I just realized that I should not have abbreviated epluribusmoney's name to pluribus, because there's someone here who goes by pluribus. My apologies to pluribus.

===============
lily quoting nr:

my bigger idea is to go all Randian and literally go on strike


Wow, people who write for NR are going to strike? Promises, promises. If the threat is carried out, that can only lead to a net increase in the general welfare.

===============
an:

Incidentally, what business does anyone with kids have working 70 hours a week?


Lord, save us all from busybody do-gooders.


Lord, save us all from hypocrites. The family-values party that made an industry out of telling the rest of the world what a proper family is supposed to look like (example) is now upset because someone is noticing what their own family looks like. How rich. And how Palin-esque.

diversity:

I know a few people that put in consistent 60-70 hour weeks with kids, mostly by giving up sleep and going a lot of work at home after the kids are asleep.


There's a difference between doing it because you have to and doing it because you want to. If you "pay 40-50K or more a year for child care," that's a pretty good sign that you're in the latter category.

===============
yankev:

I do not have the source at hand, but I remember reading recently that something like 400,000 of 1,200,000 registrations by ACORN turned out to be invalid.


Those numbers sound wacky to me, so I hope you can find your source. And anyway, the key point is that a fraudulent registration is not the same thing as a fraudulent vote.

Can you assure me that none of them led to a single fraudulent vote?


Can you assure me that you've stopped beating your wife? If you believe that ACORN is responsible for fraudulent votes, then the burden of proof is on you, to show evidence of fraudulent votes. And after asking the question many times, evidence of this many fraudulent votes has been presented: zero. Even though McCain was hyperventilating about how ACORN was "destroying the fabric of democracy." Which is highly ironic, since encouraging voting enhances democracy.

Maybe you think that evidence of fraudulent votes exists somewhere, but you just can't find it at the moment. Which reminds me of this: "We know where they are. They're in the area around Tikrit and Baghdad and east, west, south and north somewhat."
2.27.2009 3:13pm
DiversityHire:
There's a difference between doing it because you have to and doing it because you want to.

I don't think that's up to you or the government to decide, but then again I'm not big on enforcing values through government.
2.27.2009 3:26pm
Bob Van Burkleo (mail):
A 4% tax increase only on the income above $250,000 and a federal budget only 14% bigger than the previous years sure can make the inattentive all excited can't it?
2.27.2009 3:27pm
George Smith:
And my sin is?
2.27.2009 4:01pm
George Smith:
Here's the deal, Slick. I grocery bagged my way through 5 years of college at the minimum wage and borrowed the rest. Got a job out of college in 1970 for $387 a month. After a few years, I borrowed more to get a grad degree. Earned a bit more then. After a few years, I borrowed more to get a doctorate. Have earned a bit more each year (in the private economy). Paid off all my school loans. Current on my mortgage. Been hit by the AMT for several years. I realize a life like this offends the adolescent Left, but that's really your frackin' problem, isn't it?
2.27.2009 4:17pm
DeezRightWingNutz:
456th
2.27.2009 5:23pm
DeezRightWingNutz:
Oh,

And I think a lot of people look at the effect of an income tax increase the wrong way. If a tax rate goes from 36% to 40%, you can call it a 4% increase. You could say that you're paying 10% more in taxes.

I think you often need to look at the percentage change in what's left over to get an accurate picture of what the incentives are.

If you take and extra $4,000 away from someone on the last $100,000 they make, that doesn't sound so bad. But after taking out federal income taxes, $36k, $1.5k (or $3k, depending on how you look at it) on Medicare, 0-6k for effective state taxes, a cut for the expenses necessary to make that extra 100k, and sales taxes on whatever you buy with what you have left, that $100k was only netting them less than $50k anyway. So a 4% income tax rate increase is at least an 8% reduction in the benefit they get from work.

Now look at the high-earners marginal leisure hour. He may have 10 of them in a typical work-week, plus some vacation. So the trade-off is often increasing my leisure time by 10, 20, 50, or 200% by decreasing my income by $X(1 - tax rate). The larger that tax rate is, the more attractive the trade-off.

I know that in the first year of being a parent, you would have had to double my salary to get me to work 10 extra hours a week. I think a lot of high earners are at similar points on their leisure time-income indifference curves, so small drops in income may lead to large drops in productive work.

Obviously, that's an anecdote combined with a hypothetical, so YMMV.
2.27.2009 5:38pm
Elliot123 (mail):
"Most corporate wealth is owned by the top 1% of households. … [link]"

The NYT article also said about 2003:

"The analysis did not measure wealth directly. It looked at taxes on capital gains, dividends, interest and rents. Income from securities owned by retirement plans and endowments was excluded, as were gains from noncorporate assets such as personal residences."

So it simply ignored a huge segment of ownership. It tells us nothing about percent of ownership.
2.27.2009 5:51pm
Ken Arromdee:
I don't think that's up to you or the government to decide

It is up to me to decide if you're trying to regale me with an argument that depends on me feeling sympathy for your situation.
2.27.2009 6:17pm
an:

And my sin is?


Success, apparently.
2.27.2009 7:51pm
PC:
Success, apparently.

Yeah, that's what I was getting it. I actually support the Randian movement here. If a 4% tax increase on income is so unbearable, go John Galt. Please, just stop working. Now that your 401k is a 201k everything will eventually be fine when some fine Republican comes along and cuts the top marginal rate back down to 35%. To paraphrase Tears for Fears, "Pout. Pout. Let it all out."

The rest of us? We'll use this as an opportunity. We'll work the extra hours that are oh so burdensome under the new 4% tax increase. We'll use that money to buy generational deals on company stocks. Some of us may even start the next big thing while you are sitting at home with your ball.

The more of you that drop out, the more room it makes for those of us that want to do something in this world.
2.27.2009 8:21pm
George Smith:
When you get there, Slick, and it ain't esy and it ain't quick, because I have actually done it, and you start paying the AMT and the Obatax, and you become the cash cow, let me know how it's working out. Meanwhile, I'm not going JG, I'm cutting back to just under the limit. Its one of the things you earn from a lifetime of work.
2.27.2009 9:33pm
PC:
When you get there, Slick, and it ain't esy and it ain't quick, because I have actually done it

Been there, done that, but the Mrs. had a problem with taking me to the ER after working 30+ hours straight to launch a project with a hard release date (multi-million dollar ad buys on prime time TV can add a bit of pressure). This bad economic environment has a lot of opportunity, so I'll probably be back to working 80-100 hour weeks this year. There are plenty of things I'm worried about: should I hire f/t or contractors; finding a sales guy that understands the market for the service I'm offering; do I see if .gov agencies are interested in the service (a lot of potential headaches there, but a nice revenue stream too); should I look for angel investors or should I shoe string it; etc. I hate writing business plans, but it's necessary to keep things focused.

You know what I'm not worried about? A 4% increase in the top marginal tax rate.
2.27.2009 10:30pm
Elliot123 (mail):
"You know what I'm not worried about? A 4% increase in the top marginal tax rate."

Are you in the top marginal tax bracket? If not, I can understand a lack of concern.

What rate would worry you? An incremental 8%, 15%, 40%, 60%? Is there any rate that would cause you to back off those 80-100 hour weeks? At what rate would those extra hours become oh so burdensome?

(If you can't hack 30 hours straight, how long will you be able to do the 80-100 hour weeks?)
2.28.2009 12:45am
anotherpsychdoc (mail):
Many years ago I went to a talk in Dallas by the celebrated or notorious black radical professor Angela Davis at an expensive hotel in Dallas. It was quite memorable though I can't recall the speaker, a black professor protege of New Left Professor Marcuse. What struck me about it was the reaction kindled in the fashionable black audience. It seemed to go back to slavery times. Their view of (real) whites was, as it were, that they sipped mint juleps on the veranda and that, of course, revolution meant that they would be sipping mint juleps on the veranda. It is a preindustrial view (though Zimbabwe proves the conterfactual there). As Houston Lawyer has said fairness is simply that all should have juleps. Perhaps this is also a nostalgiac period for the law when property rights, a law thing, were more the new thing in production. The 'new thing' of all animals being equal is ultimately not going to be as joyous though that is where the Obamas seem to come from.
2.28.2009 1:44am
trad and anon (mail):
Lord, save us all from busybody do-gooders.

If someone was suggesting that people who work 70 hours a week and have kids should have the kids taken away, you may have a point.

If, however, it's in the middle of a discussion where a good part of the "argument" is based on sympathizing with the people who have kids and are never with them, then pointing out that their lifestyle is bad for the kids is completely on point.
Indeed. Freedom is not the same as freedom from criticism.
2.28.2009 4:40am
jukeboxgrad (mail):
diversity:

I'm not big on enforcing values through government.


Really? You're not a Republican?

================
deez:

Now look at the high-earners marginal leisure hour. He may have 10 of them in a typical work-week, plus some vacation. So the trade-off is often increasing my leisure time by 10, 20, 50, or 200% by decreasing my income by $X(1 - tax rate). The larger that tax rate is, the more attractive the trade-off.

I know that in the first year of being a parent, you would have had to double my salary to get me to work 10 extra hours a week. I think a lot of high earners are at similar points on their leisure time-income indifference curves, so small drops in income may lead to large drops in productive work.


I think this concept ('marginal leisure hour' and 'leisure time-income indifference curves') is helpful and relevant, so I'm glad you brought it up. Other people have alluded to this issue (by saying things like 'when taxes go up I'm going to work less'), but you have put it in very clear terms.

I think the key point you're raising is that as my leisure hours approach zero, each one has a greater value. So you have to pay me more to get me to give it up. (And if I'm not under great financial pressure, and if I value my mental health and my family life, I might put an exceptionally high price on my last few leisure hours.)

I think this effect mostly applies to a certain class of workers, somewhere in the middle. Workers at the bottom are struggling and can't afford to put much (or any) value on their leisure. People at the top really don't have to work at all, so when they decide to have a certain number of leisure hours, that calculation isn't really about dollars (it's about various other factors and preferences).

But there's a broad middle where I think the effect you describe is real. But even there, it only applies to certain kinds of work. Because in many or most kinds of professional work, the job is pretty much all or nothing (you don't have the discretion to decide that for a certain period of time, you're only going to do 80% of what you've been doing in prior weeks or months). And there are various other reasons why the overall effect should not be overstated. For example, as I said before, if you work less, there's a likelihood that someone else (who might currently be underemployed) is going to step in and pick up the slack.

Obviously, that's an anecdote combined with a hypothetical, so YMMV.


I think you're modestly understating the usefulness of the concept you described.

================
elliot:

The NYT article also said about 2003 … So it simply ignored a huge segment of ownership. It tells us nothing about percent of ownership.


A reader of Brad DeLong's blog raised the same criticism. The author of the NYT article (David Cay Johnston) posted a response to that reader:

…the answer to your first question is in my article … A significant amount of corporate wealth is in various types of retirement plans. But the fact remains that that the share owned IN the tax system is rising only for the top 1 percent seems to me significant. Even those in the next 4 percent are seeing their share of corporte wealth IN the tax system shrink. If someone has a more sophisticated analysis -- one that examines the distribution of corporate wealth owned in retirement plans of all kinds that can be examined next to the CBO data on wealth owned IN the tax system -- I would appreciate seeing it.


So would I. Can you show us that sort of "more sophisticated analysis?" Criticizing any given analysis is easy. Coming up with a better analysis is hard. You like to do what's easy. And it is one of your typical exaggerations to suggest that the data presented "tells us nothing."

Folks who want to analyze this issue more can find Johnston's article here. It is based on a CBPP report (pdf). That report, in turn, is based on a CBO report (pdf).

Anyway, I'm surprised you didn't just say that "freeloaders and parasites" and "Colt-45" drinkers don't deserve to own corporate wealth.

================
pc:

Been there, done that


But you couldn't possibly be a successful entrepreneur and also be defending the concept of a tax increase. Everyone knows that only dirty fucking hippies (and freeloaders and parasites and Colt-45 drinkers) defend tax increases.
2.28.2009 6:42am
Public_Defender (mail):
According to this article, the over-worked, neglectful parents in high-cost-of-living areas will largely not be hurt by the plan because they already pay AMT, not regular income tax.
2.28.2009 7:50am
PC:
@Elliot123:
Are you in the top marginal tax bracket? If not, I can understand a lack of concern.

If I stay on the consulting side this year I probably would be. It's hard to know in an economy like this, but I think there are better opportunities bringing a new product to market right now.

What rate would worry you? An incremental 8%, 15%, 40%, 60%? Is there any rate that would cause you to back off those 80-100 hour weeks? At what rate would those extra hours become oh so burdensome?

I'm not really sure. I'm still relatively young and I've spent the last decade building my skills and reputation. Money isn't my primary motivating factor, working on bleeding edge technology is. However, 4% isn't that level.

(If you can't hack 30 hours straight, how long will you be able to do the 80-100 hour weeks?)

2.5 months straight the last time I did it. It's 12-14 hour days, 7 days a week. Individually that's not too bad, but week after week it takes a physical toll.

@jukeboxgrad:
But you couldn't possibly be a successful entrepreneur and also be defending the concept of a tax increase.

I've spent the last year and a half helping two different sets of ivory tower liberals get their start ups off the ground. Not really DFHs, but equally reviled by Real Americans. Both companies were cash flow positive within 6 months in one of the most heavily taxed and regulated cities in the US.
2.28.2009 11:45am
DiversityHire:
Really? You're not a Republican?

No. What makes you think I would be?
2.28.2009 1:34pm
DiversityHire:
if you're trying to regale me with an argument that depends on me feeling sympathy for your situation.

Yes. But I don't think the tax code is any place for sympathy, just as the criminal code is no place for debating sexual morays. I think Prof. Bernstein's question is most interesting if asked dispassionately without worrying about what's "fair", "just", "best for the child", or what not. Those are debatable questions that everyone's going to come down on differently.

In Berstein's description, these people don't think of themselves as rich, they're high-performing individuals whose previous choices may be revised because of rules-changes their prior selves supported. Like elliot123 points-out to PC, adjustments affect people on the margins, enough adjustment and your particular choices will be impacted as well. I'd go a bit further and suggest that even when your first-order behavior isn't affected, some of those on whom you depend will be and you will eventually feel the effect.

President Obama could feel the effect of doing exactly what his supporters suggested they wanted by having his support among those supporters fall because the effect of implementing their stated preference actually negatively impacts them. To me this is interesting and cautionary, I don't think its a good idea to rejigger the rules of the game when there is so much unresolved uncertainty (i.e., the economy is in "crisis"), unless the rejiggering is to reduce uncertainty by providing better, more reliable access to information (e.g., simplification, transparency). But the reaction kind of naturally balances the situation.

The people who are enraged by further meddling (e.g., me) or ecstatic that the government is finally doing something to ensure "social justice" are less interesting than the edge cases.
2.28.2009 2:46pm
DiversityHire:

The family-values party that made an industry out of telling the rest of the world what a proper family is supposed to look like (example) is now upset because someone is noticing what their own family looks like. How rich.


JBG, this is what I don't understand about your position: how is a changing the tax code not "telling the rest of the world what a proper family is supposed to look like"? If the government returns more money to you because you have fourteen children instead of six, doesn't that imply a preference for 14-children households over six-children households? If you can deduct the interest on a prius but not on a smartcar, doesn't that imply that the government prefers that "a proper family is supposed to drive a prius"? If you can deduct your mortgage interest but not your rent, isn't that saying "proper families get mortgages"?
2.28.2009 3:00pm
jukeboxgrad (mail):
pc:

Not really DFHs, but equally reviled by Real Americans.


Don't bullshit us. Everyone knows there are two kinds of Americans: Real Americans and Dirty Fucking Hippies. And if you don't understand the virtues of properly Manichean thinking (e.g., "you are either with us or against us"), then you are obviously not in the former category.

===============
diversity:

Really? You're not a Republican?


No. What makes you think I would be?


Maybe it has something to do with remembering you say this:

Congratulations to President Elect Barack Hussein Obama!


Or this:

I don't think there's any question that McCain and Obama are both socialists. … I don't think its a smear to call these folks what they are: socialists. None of them is a libertarian, a communist, or a fascist; just different degrees of socialist with a different notion of redistribution.


Or this:

President George W. Bush said what he was going to do and then set about doing it. … Even if every claim of incompetence, avarice, stupidity, venality, and cluelessness made against Bush, Cheney, and Powell/Rice were true—they'd still average-out better than Obama, Biden, Clinton.


Or defending Bush by claiming he has been "demonized."

I don't know too many non-Republicans who claim that both Obama and McCain are socialists. Unless they are non-Republicans who place themselves to the right of Republicanism.

how is a changing the tax code not "telling the rest of the world what a proper family is supposed to look like"?


It's true that the tax code embodies all sorts of implicit preferences about how individual and families are supposed to behave. And both parties have influenced the tax code in this regard. But it's a question of emphasis, and magnitude. It's the GOP that in recent years has made a very big deal about family-values wedge issues like abortion and gay marriage, for the purpose of attracting social conservatives. If you hear a politician or other public figure talking about their vision for the proper structure of a family, chances are that person is a Republican, not a Democrat.

Aside from that, your examples are feeble.

If the government returns more money to you because you have fourteen children instead of six, doesn't that imply a preference for 14-children households over six-children households?


Not necessarily. It could imply that the government thinks big families need more help.

If the government gives more money to injured soldiers, as compared with non-injured soldiers, does that mean the government has "a preference" (whatever that means) for the latter? I don't think so. I think it means the government thinks it's proper to help people who need help.

If you can deduct the interest on a prius but not on a smartcar, doesn't that imply that the government prefers that "a proper family is supposed to drive a prius"?


Encouraging people to drive a certain kind of car has nothing to do with family values or family structure or family life. It applies to everyone, including individuals.

If you can deduct your mortgage interest but not your rent, isn't that saying "proper families get mortgages"?


Ditto.
2.28.2009 5:09pm
ChrisTS (mail):
Oh, my goodness!

I can't tell you how honored I am to accept this Best of VC Ever Award on behalf of my colleagues - no, no, my dear friends on this film thread. There are so many people to thank!
Sarcastro was riotously funny, Jukeboxgrad was funny and razor sharp, Oren made me laugh (yes, Oren!), RPT was sharp and funny, SteveH was on point and wielded that wit .... Oh, I can't think of everyone I have to thank. But, wait, you guys, I can't overlook Mark Field: he acutally got angry and mean with some whiner! This has just all been so fabulous.

weeping, takes statue and wanders off stage in wrong direction
2.28.2009 5:52pm
DiversityHire:
Congratulations to President Elect Barack Hussein Obama!

I said that with complete sincerity. I think attempting to demonize him by using his middle name as some sort of dog whistle shows the incompetence of his opposition.

I think Bush was unfairly demonized. I think piling blame on the President isn't very productive or insightful. I don't think the Bush administration was any worse than the other administrations I've "suffered" through. I think President Obama will similarly be unfairly demonized, probably sometimes by me when he does really stupid stuff—just like Bush. But, ultimately, the collective-we gets what it asks for.

I don't like Joe Biden or Hillary Clinton, I think they're terrible appointments. I don't think Condoleeza Rice was a very good Secretary of State, but I'd take her in a second over Hillary Clinton. I'd take Cheney over Biden, I think he's more accomplished, smarter, funnier, and has a healthier relationship with his baldness. That said, the best VP of my lifetime was that TBD guy in the fourth quarter of 1973—too bad that innovation didn't stick. I like Bush and Obama and not just in the have-a-non-alchoholic-beer/smoke way. They're both socialists, btw, let's call them what they are.

Encouraging people to drive a certain kind of car has nothing to do with family values or family structure or family life. It applies to everyone, including individuals.

Which is just as bad! Why is the government trying to define values for anyone much less everyone? How can one coherently argue that government has no role in establishing the "rightness" or "wrongness" of behavior for some subset of the population but has a strong role to play for the whole set?

I think you're wrong about the relationship between priuses and family values, anyway. Prius vs. smartcar is just a day-to-day example without much ethical baggage but with a lot of impact on the daily life of those who use the car, produce the car, finance the car, sell the gas, etc., etc. By choosing winners and losers in a centralized way, we lose the "wisdom of crowds" (or whatever you want to call it) and deprive the individual of liberty. This deprivation may seem unimportant or inconsequential to you, but abstractly its important to me even if—as is the case—I would never buy a Prius, SmartCar, Challenger, Hummer, or whatever.


It's the GOP that in recent years has made a very big deal about family-values wedge issues like abortion and gay marriage, for the purpose of attracting social conservatives.

Both parties are guilty of values-based politicking. In the case of Prop. 8, bad behavior from both sides is a direct result of the government being charged with deciding how to commonly define "marriage". My preference is to have no civil definition of "marriage", letting any-and-everyone marry whomever or whatever they want to is preferable to some kind of one-man-one-woman-one-god enshrinement.
2.28.2009 6:02pm
DiversityHire:
If you hear a politician or other public figure talking about their vision for the proper structure of a family, chances are that person is a Republican, not a Democrat.

Manifestly false. Republicans, generally, argue for maintaining and strengthening "traditional values"; Democrats, generally, argue for maintaining but extending those values. Neither party argues for eliminating collective acknowledgement and acceptance of individual preferences and predilections. Too often they find common ground, like in the case of supposedly violence-inducing video games. Another "feeble" example, I'm sure, but that's kind of the point.
2.28.2009 6:16pm
jukeboxgrad (mail):
You're a baloney machine.

I said that with complete sincerity.


Rarely do non-Republicans say "Barack Hussein Obama" with "complete sincerity."

Manifestly false.


Then it should be easy to show some proof. Why don't you?

By the way, would you mind telling us who you have voted for in presidential elections? Because I notice you haven't directly stated that you're not a Republican. Although you seem kind of ashamed of it.

Here's a tip. Recovery begins when denial ends. So a statement like this might be helpful: "hi, I'm diversityhire and I'm a Republican."
2.28.2009 7:30pm
jukeboxgrad (mail):
Chris, thanks for putting me in that impressive company.
2.28.2009 7:33pm
PlugInMonster:
jukeboxgrad - so you want a reverse situation in this country to where admitting you are a Republican is the same as in the 1950s admitting you were a Communist? You just want your revenge and you don't care how many people get hurt.
2.28.2009 7:35pm
jukeboxgrad (mail):
monster:

so you want a reverse situation in this country to where admitting you are a Republican is the same as in the 1950s admitting you were a Communist?


Your comment might be something other than a complete non sequitur if the formulation 'hi my name is X and I'm a Y' was a reference to the McCarthy era. But it's not. It's a reference to a very successful system that helps people give up habits that are unhealthy for themselves and those around them. Voting Republican falls into that category.

By the way, maybe you didn't notice that this little subtopic started with me expressing my assumption that he was a Republican. How did he respond? By coyly asking me why I thought that he was. Which is the kind of thing that someone says about something they're ashamed of being. And if he's ashamed of it, that's his problem, not mine.

You just want your revenge and you don't care how many people get hurt.


If by "hurt" you mean "suffer the disappointment of noticing that someone noticed that the baloney you expressed was actually baloney," then you're right, I "don't care how many people get hurt."
2.28.2009 7:56pm
Grover Gardner (mail):
Since Professor Bernstein's "follow-up" post doesn't allow comments, I guess we're left to note here that, in quoting the NY Times article, he left out the very next paragraph:


It turns out, however, that many of them were already subject to pretty high taxes because they were paying the alternative minimum tax. Even if the new tax increases go into effect, the amount of taxes they owe may not change much, according to Clint Stretch, the managing principal of tax policy at Deloitte L.L.C. in Washington. That’s because the amount they owe under the regular income tax system, while higher under Mr. Obama’s plan, may not push them out of A.M.T. territory, he said.


And, of course, he left out the title of the article itself:


Braced for a Higher Tax Bill, Some May Dodge the Bullet
2.28.2009 8:26pm
Grover Gardner (mail):
In fact, the article *begins* by saying:


The wealthiest stand to lose the most under President Obama’s proposed budget, while individuals with lower incomes could gain in many different ways.

But many of those in between — those with household incomes of $200,000 to $400,000 or so — may not see as much of a difference in their tax bills as they may have feared.


Funny how he forgot to quote that part.
2.28.2009 8:29pm
byomtov (mail):
I find it quite odd that Obama is being criticized from the right for following through with Bush policies.

The tax cuts in question were scheduled to expire, and Obama is letting that happen, just as Bush planned.

So what, exactly, is the beef here?
2.28.2009 8:54pm
Grover Gardner (mail):
Whoops, my bad, he did include the first two paragraphs. And while the article seems to support Professor Bernstein's conjecture that Obama supporters in the $200,000-$400,000 income range are "worried sick" that they aren't rich enough to be considered "rich," I can't see that it goes very far to refute many of the criticisms leveled at his first post. It doesn't change the fact that many, many Americans would consider such people as having lots more "choices" than they themselves do.
2.28.2009 8:57pm
DiversityHire:
So a statement like this might be helpful: "hi, I'm diversityhire and I'm a Republican."

My first problem is with the "I am" part. Enlightenment starts when identification yields :)

How did he respond? By coyly asking me why I thought that he was. Which is the kind of thing that someone says about something they're ashamed of being. And if he's ashamed of it, that's his problem, not mine.

So who's assuming what here? I'm not being coy, I'm just curious if I come off as Republican @ the VC. I don't think I do in everyday life, so maybe I need to work on my blog-commenting skills and emoticons.

Then it should be easy to show some proof [that Democrats and Republicans practice the politics of family values]. Why don't you?

I thought that's what we were talking about with the feeble examples. One feeble example is marriage. Like making it harder to get divorced or preventing consenting adults from marrying who they want to.

I'd like to see the government stay-away from concentrating power, picking favorites, passing sweeping legislation, etc., etc. I don't think either party is big on the things I care about—e.g., I don't think there's much effort being expended on "rightsizing" of US states.
2.28.2009 9:10pm
DiversityHire:
Rarely do non-Republicans say "Barack Hussein Obama" with "complete sincerity."

Let me be more specific, I said "congratulations" with complete sincerity and added the "Hussein" because, having won the election, his opponents could have called him "Potato Dumpling" and he'd still be President. Any party that uses name-calling and crypto-muslim-conspiracy-mongering deserves to lose.
2.28.2009 9:16pm
PlugInMonster:
jukeboxgrad - I have voted Republican all my life and proud of it. Most of the time it's a "lesser of 2 evils". I don't pretend that Republicans are the party of free markets. They just stand for a little bit less socialism then the Democrats. As a responsible citizen, it is my obligation to vote in the least-damaging politician possible.

The problem with you is that you think that some politicians are really good and worthy of praise. I at least admit they're all scum. Including Sarah Palin.
2.28.2009 9:24pm
PlugInMonster:
BTW - you wanna know what womens' suffrage really was? It was the wealthier men's wives nagging them to death and they finally gave in. Women should be at home barefoot pregnant cooking dinner for her master.
2.28.2009 10:21pm
jukeboxgrad (mail):
grover:

he left out the very next paragraph


His post also left out the link to the article.

He also doesn't know that flack and flak are different words. Normally I wouldn't speak up to correct that kind of error, but this one is common and it's a shame to let it spread.

================
monster:

they're all scum. Including Sarah Palin.


I didn't realize you felt that way about her. Now you tell us. How come you never mentioned that before election day? I find it odd that you kept this to yourself for so long.

But I'm glad you're so open with your feelings on the subject of revenge. Although those feelings seem to be a bit complicated. I recall when you said this:

I think the right should go on continual attack-dog mode against Obama. Don't give him any chance, the left sure didn't give any to Bush. Revenge time, baby.


But today you said this:

You just want your revenge


Sounds like projection.

Women should be at home barefoot pregnant cooking dinner for her master.


I see you're trying to put sarcastro out of business. It's something you do habitually:

Obama - "I Swear I will faithfully execute all Republicans and conservatives in the newly established death camps".


================
diversity:

I'm just curious if I come off as Republican @ the VC


Yes, I'm sure you're genuinely shocked to discover that someone who labels both McCain and Obama as "socialists" does indeed "come off as Republican."

And how fascinating to note that you're still ducking my question about how you vote. What an interesting creature: a closet Republican.

Then it should be easy to show some proof [that Democrats and Republicans practice the politics of family values]. Why don't you?


Let's unravel that piece of exquisite bullshit. You are suggesting that I challenged you to prove "that Democrats and Republicans practice the politics of family values." Wrong. That's not what I said. Let's review. I said this:

If you hear a politician or other public figure talking about their vision for the proper structure of a family, chances are that person is a Republican, not a Democrat.


You responded as follows:

Manifestly false.


In other words, you claimed that Ds and Rs are equally likely to be found "talking about their vision for the proper structure of a family." See, I didn't claim that Ds never "practice the politics of family values." I just said Rs do it more ("chances are"). And you said that claim was "manifestly false." But you can't prove my claim is false, so you're now pretending that I claimed something other than what I actually claimed. How charming.

Like making it harder to get divorced


How is Hillary's book "making it harder to get divorced?"

preventing consenting adults from marrying who they want to.


One Republican in the House voted against DOMA. 65 Democrats in the House voted against DOMA. And all 14 Senators who voted against DOMA are Democrats. Which simply reminds us of what we already know: although there were Ds who supported DOMA, the most vigorous support was among Rs. Which supports my claim that Rs are more likely to be found "talking about their vision for the proper structure of a family."

Any party that uses name-calling and crypto-muslim-conspiracy-mongering deserves to lose.


Any commenter who hides behind multiple layers of posturing and obfuscation deserves all the respect they've earned.
2.28.2009 10:40pm
DiversityHire:
But you can't prove my claim is false, so you're now pretending that I claimed something other than what I actually claimed.

You're right I misunderstood. If someone is promoting "family values" legislation they're probably Republican. My defense is that I think Democrats are just as likely to try to force their values on those that don't share them and that we're stuck in a two-party system so whenever party-A says "A", party-B's has to say "not A". And that's a pretty weak defense.


How is Hillary's book "making it harder to get divorced?"

Sorry, I guess I didn't figure-out how to link to a particular page. She talks about making divorce harder by perhaps getting rid of no-fault divorce, starting around p32 with "many who protest loudly against welfare, gay rights and other perceived threads to 'family values'…"

I get your point about Republicans supporting DOMA more strongly than Democrats, but a majority of Democrats voted for it, too. And it got signed without anyone proposing legislation that, say, just did away with the notion of civil marriage.

Any commenter who hides behind multiple layers of posturing and obfuscation deserves all the respect they've earned.

Thanks! It starts with the pseudonym. I guess I can't convince you of my good faith, so let's leave it at that.
3.1.2009 12:19am
PlugInMonster:
jukeboxgrad - I admit I want revenge. What normal human doesn't? I give no quarter and expect none.
3.1.2009 12:31am
PlugInMonster:
jukeboxgrad:


they're all scum. Including Sarah Palin.



I didn't realize you felt that way about her. Now you tell us. How come you never mentioned that before election day? I find it odd that you kept this to yourself for so long.


Well, Obama was the greater evil so I had to keep my pie-hole shut. Believe me, I never cared for Palin's flat-earth populism. Given that McCain was at the top of ticket, her theocratic tendencies would be squashed. However, now that she is the front-runner for the 2012 GOP nomination, I have to speak up. Unless the GOP wants to lose like 510-28 in the electoral college, they better nominate someone:

* secular
* pro-science
* sees a role for limited government
* stops using stupid labels like "conservative" and "liberal"
* throws Rush Limbaugh, Ann Coulter and the rest of those scumbags under the bus

Only then will the GOP be on its way to respectability again.
3.1.2009 12:34am
Elliot123 (mail):
"But the fact remains that that the share owned IN the tax system"

Wealth is not owned IN the tax system. Income is taxed, not wealth. The reporter is grossly ignorant.

"A significant amount of corporate wealth is in various types of retirement plans."

Correct, and any analysis that ignores that significant share of wealth is a joke.

"So would I. Can you show us that sort of "more sophisticated analysis?" Criticizing any given analysis is easy. Coming up with a better analysis is hard. You like to do what's easy. And it is one of your typical exaggerations to suggest that the data presented "tells us nothing."

Well, when the analysis purports to show the proportion of corporate wealth owned by a certain group, and the reporter admits a significant amount of corporate wealth was ingored in the analysis, exactly what does the analysis tell us? It tells us nothing.

"Anyway, I'm surprised you didn't just say that "freeloaders and parasites" and "Colt-45" drinkers don't deserve to own corporate wealth."

If they had it, he freeloaders and parasites would just sell their stock to buy more Colt-45.
3.1.2009 12:37am
LM (mail):
PlugInMonster,

From your comments here, I'd expect you to find Ann Coulter simpatico. What don't you like about her, and how are you different?
3.1.2009 12:54am
jukeboxgrad (mail):
diversity:

I heard someone say this:

If someone is promoting "family values" legislation they're probably Republican.


I also heard someone say this:

Democrats are just as likely to try to force their values on those that don't share them


I see a bit of a contradiction.

She talks about making divorce harder by perhaps getting rid of no-fault divorce


No, she doesn't talk about "perhaps getting rid of no-fault divorce." What she actually said was this (p. 34):

I am ambivalent about no-fault divorce with no waiting period when children are involved. We should consider returning to mandatory "cooling off" periods, with education and counseling for partners.


Wow, what a radical. Get out of my bedroom!

It starts with the pseudonym.


I didn't say anything about using a pseudonym. I obviously don't think there's a problem with that. Your posturing and obfuscation are not a matter of using a pseudonym. They are a matter of what you write.

I guess I can't convince you of my good faith


No one has to convince me of their good faith, because I assume good faith on the part of everyone, until someone presents evidence which indicates that I've made an incorrect assumption. And that's what you've done.

Who did you vote for?

============
monster:

I admit I want revenge.


There's no news there, because you explicitly called for revenge weeks ago. What would be news would be admitting you're a hypocrite. Because you want revenge, while condemning other who (allegedly) want revenge.

throws Rush Limbaugh, Ann Coulter and the rest of those scumbags under the bus


The odds of the GOP doing that are very close to zero.

By the way, the following remark sounds to me like something one of the scumbags would say:

Obama - "I Swear I will faithfully execute all Republicans and conservatives in the newly established death camps".


Likewise for this one:

Sure Greenwald doesn't parade around in Nazi regalia, but his ends are the same - the death of all Jews.


And this one:

I always knew that the only way Israel can ever win this war is to exact huge death toll on the Palestinians probably in the range of 50-100K.


Which brings us to this:

Only then will the GOP be on its way to respectability again.


What I'm hoping is that the GOP puts you in charge of restoring its respectability.

============
elliot:

But the fact remains that that the share owned IN the tax system


Wealth is not owned IN the tax system. Income is taxed, not wealth. The reporter is grossly ignorant.


The commenter is grossly dishonest. The reporter obviously knows that "income is taxed, not wealth." When he says "the share owned IN the tax system" he obviously means 'share of wealth held in a form where the income from that wealth is taxable.'

any analysis that ignores that significant share of wealth is a joke


What's a joke is you taking the easy way out: criticizing his analysis without lifting a finger to present something better.

what does the analysis tell us? It tells us nothing.


The analysis tells us a great deal, because a great deal of wealth is held in taxable accounts. And you claiming this means "nothing" tells us a great deal about you.
3.1.2009 1:25am
PlugInMonster:
jukeboxgrad, you addressed none of my bullet points from 3.1.2009 12:34am. Typical.
3.1.2009 2:04am
Elliot123 (mail):
"The commenter is grossly dishonest. The reporter obviously knows that "income is taxed, not wealth." When he says "the share owned IN the tax system" he obviously means 'share of wealth held in a form where the income from that wealth is taxable.'"

Nothing is obvious about what this reporter knows. He knows so little he ignored huge segments of corporate ownership in an analysis of the breakdown of corporate ownership.

Using his methods, all Microsoft stock bought and held until 2003, in all types of accounts would be excluded from his analysis. This analysis tells us nothing.

"What's a joke is you taking the easy way out: criticizing his analysis without lifting a finger to present something better."

Easy? Of course it's easy. This analysis is so flawed it's obviously easy to criticize it. It's so bad, it takes no effort. It's a joke. It tells us nothing.

However, I bet Obama falls for it.
3.1.2009 2:38am
DiversityHire:
I see a bit of a contradiction.
I don't. Values or family values—they're still being forced on those who do not share them. And I guess that's where we'll have to agree to disagree. Thanks, JBG, see you around. I'll get back to you once I've worked-out all my shame issues :)
3.1.2009 4:33am
jukeboxgrad (mail):
monster:

you addressed none of my bullet points from 3.1.2009 12:34am.


You're talking about these:

Unless the GOP wants to lose like 510-28 in the electoral college, they better nominate someone:

* secular
* pro-science
* sees a role for limited government
* stops using stupid labels like "conservative" and "liberal"
* throws Rush Limbaugh, Ann Coulter and the rest of those scumbags under the bus


First of all, what do you mean by "addressed?" Did you ask me a question? Did you suggest that those "bullet points" required some response from me? No, you didn't. Also, there are many, many things I have said (to you and to others) that you have not "addressed." So it's quite arrogant for you to suggest that I have some obligation to make sure that everything you say is "addressed."

And why did you say "none?" I did indeed make a comment about your "bullet point" #4.

=============
diversity:

I'll get back to you once I've worked-out all my shame issues


Good idea. A significant milestone will be when you reach the stage of being willing to admit who you voted for.

=============
elliot:

he ignored huge segments of corporate ownership in an analysis of the breakdown of corporate ownership


It's not a question of something being "ignored." It's a question of measuring what is practical to measure, and not measuring what is not practical to measure.

Still waiting for you to show us a superior study that attempts to answer the same question.

Using his methods, all Microsoft stock bought and held until 2003, in all types of accounts would be excluded from his analysis.


Which matters only if you assume that any given person in the bottom 99% is more likely to own Microsoft stock than any given person in the top 1%. What is your basis for making that assumption? Common sense indicates that the opposite is true.

This analysis tells us nothing.


Even if your criticism was valid (and I've just explained why it's not), that would mean that the value of the analysis is reduced somewhat. It would not mean that the value of the analysis is "nothing." But please keep reminding us how much you love to exaggerate.

=============
duracomm:

Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.


Can you offer an example?

By the way, as LN pointed out, the tax rates are low in Somalia. Send us a postcard.
3.1.2009 11:34am
Tony Tutins (mail):

Damage them and you cause worse damage to the less well off.

Oh, a Heinlein fan.

Realize that the higher income demographic is free to live anywhere it chooses, yet somehow they choose to remain in the US.

Other countries, with truly extortionate tax rates, somehow manage to survive, and even flourish. I once asked a Danish co-worker why his family had moved to America. He said they came the year his father was taxed more than his income -- Denmark had a wealth tax at the time: a real one. Yet the Danes are the happiest people in the world, while Americans rank only 23rd, on the Leicester University Satisfaction with Life Index. (Congo, Zimbabwe, and Burundi bring up the rear.)
3.1.2009 11:43am
jukeboxgrad (mail):
Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.


Between 1932 and 1981, the top marginal income tax rate was never lower than 63%. Between 1940 and 1963 it was never lower than 81%. I guess that's why the 40s, 50s and 60s are remembered as a time of such "abject poverty."

On the other hand, since 1987, the top rate has always been lower than 40%. This obviously ensures great economic stability!
3.1.2009 12:13pm
Steve P. (mail):
Gover — the blogger in question tends to avoid evidence that run contrary to his views. From what I've seen, willful ignorance tends to incite more commenters than plain old ignorance.
3.1.2009 1:06pm
Duracomm:
Jukeboxgrad,

You are ignoring inflation's impact on the high tax rates you mention.

In 1951, the year that rate was enacted, the 91% tax rate kicked in at $400,000 for a married couple filing jointly (Moreover, due to statutory adjustments, its effective limit was about 87%, but that's a quibble).

In today's dollars, that's about $3.2 million...we're discussing something under 50,000 tax returns.


You are also ignoring the impact of deductions prior to the 1986 tax reform

even those who had very large incomes didn't pay anything like a 91% effective marginal rate, because deductions were much easier to come by before the 1986 tax reform.

That's how we got the AMT; people used to find it relatively easy to structure their income to evade tax.
3.1.2009 1:31pm
Duracomm:
Tony Tutins said,
Realize that the higher income demographic is free to live anywhere it chooses, yet somehow they choose to remain in the US.
Tony does not realized that it does not matter where you live or even if you renounce US citizenship, you still have to pay US taxes on their income.

In other words moving from the US won't impact peoples tax obligation and the fact that people stay here does not make the point he wants.
3.1.2009 1:51pm
Duracomm:
Another link on the negative impact of those past high tax rates liberals likes so much.

U.S. GDP per capita is now about 30 percent higher than much of Europe’s.

There is good evidence that this has to do with incentives to work, definitely including tax rates.

He concedes that these astronomical rates put a brake on growth. So what would the growth rate have been with much lower tax rates?

if it had as much as 1 percent higher on average, that’s going to be close to the difference between GDP per capita tripling rather than doubling over that time span —

Does Chait think that something like a 20 or 30 percent higher average income in the lowest decile would have been “minor” for the poor?
Liberals like to aim punitive economic policies at the affluent. They also like to ignore the harm these policies cause to the less well off when the inevitable unintended consequences kick in.
3.1.2009 2:12pm
Elliot123 (mail):
"It's not a question of something being "ignored." It's a question of measuring what is practical to measure, and not measuring what is not practical to measure."

If it's not practical to include all corporate ownership, then it's not practical to claim any segment of the population has a given percentage of total corporate ownership. The analysis tells us nothing.

"Which matters only if you assume that any given person in the bottom 99% is more likely to own Microsoft stock than any given person in the top 1%. What is your basis for making that assumption? Common sense indicates that the opposite is true."

If we use our own a priori asusmptions, there's no reason for any analysis. Actually, it appears that's what this reporter did. The analysis tells us nothing.

"Even if your criticism was valid (and I've just explained why it's not), that would mean that the value of the analysis is reduced somewhat. It would not mean that the value of the analysis is "nothing." But please keep reminding us how much you love to exaggerate."

I agree the value of the analysis is reduced somewhat, all the way to zero. This analysis tells us nothing.

But, I bet Obama falls for it.
3.1.2009 3:01pm
jukeboxgrad (mail):
duracomm:

You are ignoring inflation's impact on the high tax rates you mention.


What's your basis for claiming I'm "ignoring" something? I said nothing about absolute amounts. I made a statement about top marginal rates. And the top marginal rate is still the top marginal rate, regardless of inflation.

The ignoring is all yours, as I'll explain in a moment.

In today's dollars, that's about $3.2 million...we're discussing something under 50,000 tax returns.


There are a bunch of problems with the analysis you're presenting. Let's take them one at a time.

You're saying it's 'only' 50,000 returns, as if those returns don't represent a lot of money. But they do. Your source indicates that those returns each show income of at least $3 million (roughly). Let's assume $3 million is the average income for all 50,000 returns (obviously the average would be much higher; I should use the actual average, but I don't have that number handy). If those returns were taxed at an effective rate of 50%, that produces revenue of $75 billion. That's real money. So changing the effective rate for this group has a significant effect on revenues, even though it's 'only' 50,000 returns.

It turns out that this tiny portion of the population collects, in aggregate, a relatively large portion of national income. I cited figures for this upthread. For example, the top 0.1% of earners collect 7.4% of the nation's income. And that share has more than doubled since the beginning of the era of Reaganism.

Another big problem with your analysis is that you're ignoring this important fact: in the Ike era, it's not just that the highest marginal rate was high. It's that the other rates were high, too. Let's consider the threshold that's currently relevant: $250,000. Obama is going to raise the rate for joint returns over that amount. You mentioned 1951, so let's compare what Obama is doing to the situation in 1951.

$250K in today's dollars is the equivalent of about $32,000 in 1951. So what was the marginal rate for a couple showing income of $32,000 in 1951? Answer: 51% (pdf). A lot higher than what Obama is proposing for the same (inflation-adjusted) income level. So if Obama is a socialist, I guess Ike and JFK were uber-socialists. And they sure wrecked the economy! Like I said, the 50s and 60s are remembered as a time of "abject poverty."

Our current top rate is low, by historical standards. A helpful graph is here.

And a very peculiar characteristic of our current system (compared, say, to 1951) is that a household earning $250,000 pays the same marginal rate as a household earning 10 or 100 times that much. Under Ike, a household at that level (in inflation-adjusted terms) paid a much lower marginal rate than a household earning 10 times more.

even those who had very large incomes didn't pay anything like a 91% effective marginal rate


I'm sure they didn't. But I think the effective rate they paid was still a lot higher than it is now. Effective rates going back to 1979 are here. Can you find the same figures for the 50s? I can't.

By the way, speaking of ignoring things, I notice you're ducking the question I asked you here.

moving from the US won't impact peoples tax obligation


I thought you were telling us that rich people were going to flee if they were taxed more, and the rest of us would be left in "abject poverty." But what is their incentive to flee if "moving from the US won't impact peoples tax obligation?" Here's an idea: you should pick one story and stick with it.

the harm these policies cause to the less well off when the inevitable unintended consequences kick in


It appears that 28 years of Reaganism have brought the "unintended consequences" of the greatest financial crisis since the Great Depression. By the way, do you recall what the top marginal rate was in 1929? 24%. Let the good times roll!

The GOP has spent the last 28 years trying to undo all the things we learned from the last depression. No surprise that these efforts have induced something close to another one.

===================
elliot:

If it's not practical to include all corporate ownership, then it's not practical to claim any segment of the population has a given percentage of total corporate ownership


Actually, it is practical, unless you have some basis for claiming that people in the bottom 99% are more likely to hold securities in tax-exempt accounts, as compared with people in the top 1%. And you have no such basis.
3.1.2009 3:12pm
Elliot123 (mail):
"Actually, it is practical, unless you have some basis for claiming that people in the bottom 99% are more likely to hold securities in tax-exempt accounts, as compared with people in the top 1%. And you have no such basis."

Well, if it's practical, the buffoon who wrote this article didn't do it. And he ignored far more than stock held in tax exempt or deferred accounts. He ignored all stock that did not generate a taxable event by paying a dividend or being sold in 2003, regardless of ownership. He ignored all Warren Buffet's stock in Berkshire Hathaway except the shares he sold. If this method was used for 2002, it would have ignored all Bill Gates Microsoft stock except what he sold. Then he ignored all pension, 401k, and endowments. This analysis tells us nothing.

But, I bet this reporter is on ashort list for the Obama administration.
3.1.2009 3:39pm
jukeboxgrad (mail):
He ignored all stock that did not generate a taxable event by paying a dividend or being sold in 2003, regardless of ownership.


Which makes no difference, unless you have some basis to surmise that people in the bottom 99% are more likely to own stocks "that did not generate a taxable event," as compared with people in the top 1%. And you don't.
3.1.2009 4:39pm
ChrisTS (mail):
jukeboxgrad: Thanks for the thanks. However, I see my effort to wind up the program has failed.

I think once people begin to quote Robert Heinlein on economics, it really is time to close up shop and go home.
3.1.2009 5:00pm
jukeboxgrad (mail):
I see my effort to wind up the program has failed.


Not really. This is just the post-program program. Kind of like the after-party.

I think once people begin to quote Robert Heinlein on economics, it really is time to close up shop and go home.


You mean he's not an economist? That's OK, maybe he aspires to be one, kind of like how Joe aspires to be a plumber. So Heinlein might actually be an authority on aspirational economics.
3.1.2009 5:24pm
DiversityHire:
it really is time to close up shop and go home
Not until the thread hit magic 512.
3.1.2009 6:06pm
Elliot123 (mail):
"Which makes no difference, unless you have some basis to surmise that people in the bottom 99% are more likely to own stocks "that did not generate a taxable event," as compared with people in the top 1%. And you don't."

It makes a huge difference if you are analyzing percentage of ownership by population segment. He doesn't know how much corporate ownership there is, so how does he determine percentages of that unknown?
3.1.2009 6:24pm
jukeboxgrad (mail):
He doesn't know how much corporate ownership there is, so how does he determine percentages of that unknown?


There's no practical way to precisely determine "how much corporate ownership there is," for all sorts of reasons. Here's one: some corporations are privately held, and their value is not public information. But most large corporations are publicly held, which means that their total market capitalization is not a secret (it's about $50 trillion for all companies listed on global markets).

There's also no practical way to precisely determine who owns what, in the form of an analysis by income distribution. But looking at tax data gives us a pretty good approximation of how the ownership of corporate wealth is distributed according to income, because there's no particular reason to think that the bottom 99% is much more likely (compared to the top 1%) to hold their corporate assets in a form that does not generate a taxable event.

You haven't even made a pretense of presenting such a reason. I guess this is your way of indicating that you don't expect to be taken seriously.
3.1.2009 7:22pm
Elliot123 (mail):
"There's no practical way to precisely determine "how much corporate ownership there is," for all sorts of reasons. Here's one: some corporations are privately held, and their value is not public information. But most large corporations are publicly held, which means that their total market capitalization is not a secret (it's about $50 trillion for all companies listed on global markets).

There's also no practical way to precisely determine who owns what, in the form of an analysis by income distribution. But looking at tax data gives us a pretty good approximation of how the ownership of corporate wealth is distributed according to income, because there's no particular reason to think that the bottom 99% is much more likely (compared to the top 1%) to hold their corporate assets in a form that does not generate a taxable event.

You haven't even made a pretense of presenting such a reason. I guess this is your way of indicating that you don't expect to be taken seriously."


Most researchers use the total NYSE and NASDAQ market cap, and define it as such. Only a NYT buffoon would use tax data that ignores the huge holdings of the rich which do not generate a taxable event, and the total holdings of pensions, 401ks, and endowments. The analysis tells us nothing.

Only someone as ignorant of economics as Obama would fall for it.
3.1.2009 7:43pm
Duracomm:
Jukebox you said,

I thought you were telling us that rich people were going to flee if they were taxed more, and the rest of us would be left in "abject poverty." But what is their incentive to flee if "moving from the US won't impact peoples tax obligation?" Here's an idea: you should pick one story and stick with it.

Juke, kindly provide a link to my comment that said, specifically the “you were telling us that rich people were going to flee if they were taxed more” statement.

Producers don’t have to move to respond they just have to stop producing.

Stop work, put their money into tax-free municipal bonds and pay zero taxes without moving. This works well or the Kennedy’s and the other idly wealthy liberals that like to avoid paying taxes. Of course that means no jobs for the working people you are so concerned about.

I guess jobs are not as important to you as punishing the productive is.
3.1.2009 7:51pm
Duracomm:
Jukebox,

Paragraphs of your blogarrhea won’t hide the fact that you are ignoring (the elephant in the room as it were) this critical fact.

The earlier rates did not have as big an impact because people could very effectively shelter their income. A high rate does not matter if the tax law of the time provides abundant legal methods to reduce your income.

even those who had very large incomes didn't pay anything like a 91% effective marginal rate, because deductions were much easier to come by before the 1986 tax reform.

people used to find it relatively easy to structure their income to evade tax.
3.1.2009 7:56pm
Duracomm:
Jukebox funny that in your paragraphs of verbiage you had nothing to say about this

He concedes that these astronomical rates put a brake on growth. So what would the growth rate have been with much lower tax rates?
if it had as much as 1 percent higher on average, that’s going to be close to the difference between GDP per capita tripling rather than doubling over that time span —

Does Chait think that something like a 20 or 30 percent higher average income in the lowest decile would have been “minor” for the poor?

Again I guess punishing the better off is more important than actually helping the less well off.
3.1.2009 8:03pm
Duracomm:
Jukebox admirably illustrates his respect for the working class he is supposedly so concerned about.
You mean he's not an economist? That's OK, maybe he aspires to be one, kind of like how Joe aspires to be a plumber. So Heinlein might actually be an authority on aspirational economics.
I guess the lesson here is that if the working folks don't tow the liberal line they can expect folks like juke to deliver a swift kick to the huevos until they get back in line.
3.1.2009 8:09pm
Duracomm:
Regarding my quote
Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

Juke said
By the way, speaking of ignoring things, I notice you're ducking the question I asked you here.
and jukes question I was apparently ignoring was
Can you offer an example?

1. I was not ducking your question I just missed it in your typical dissertation length comment blogarhea.

2. A good example is the farmers who left Zimbabwe after their farms were redistributed to others by Mugabe.

This equalized the society. Unfortunately at the cost of bringing famine to a country that had previously been the bread basket of Africa.
3.1.2009 8:21pm
Duracomm:
Juke said
By the way, as LN pointed out, the tax rates are low in Somalia. Send us a postcard.


Right back at you Juke, Zimbabwe has plenty of the big government you love, why don't you send us a postcard?

Of course no government Somalia is in much better shape than big government Zimbabwe.

In fact liberals favorite whipping boy no government Somalia has

1.) Per capita GDP three times larger than big government Zimbabwe

2.) GDP growth rate 9 % larger than big government Zimbabwe.


Zimbabwe

GDP - per capita (PPP): $200 (2008 est.)

GDP - real growth rate: -6.2% (2008 est.)




Somalia

GDP - per capita (PPP): $600 (2008 est.)

GDP - real growth rate: 2.6% (2008 est.)
3.1.2009 8:36pm
trad and anon (mail):
Since DavidB has refused to allow comments on his follow-up post, I guess we have to offer them here:
More on the "Rich":

I caught some flack from commenters a couple of days ago after wondering aloud how purportedly "rich" Obama supporters who have a family income in the 250 to 380K range and who live in expensive, high-tax urban areas, especially those with hefty mortgages and large child-care expenses, feel about his tax plans. Some commenters suggested that even raising the question suggested I was an out-of-touch troglodyte.

So imagine my amusement to read the following today in that bastion of reaction, the New York Times:
The New York Times out of touch? Impossible! I concede to the force of Bernstein's impeccable logic.

Now I understand that McKinsey consultants are regular working Joes just like you and me.
3.1.2009 9:02pm
jukeboxgrad (mail):
elliot:

Only a NYT buffoon would use tax data that ignores the huge holdings of the rich which do not generate a taxable event, and the total holdings of pensions, 401ks, and endowments.


You seem to think "the rich" are more likely to have "huge holdings … which do not generate a taxable event." If you're correct, then the results of the study are understated, not overstated. Are you sure you meant to say that?

=============
duracomm:

kindly provide a link to my comment that said, specifically the “you were telling us that rich people were going to flee if they were taxed more” statement


Here:

Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.


I don't see much difference between "driven out" and "flee."

Producers don’t have to move to respond they just have to stop producing. Stop work, put their money into tax-free municipal bonds and pay zero taxes without moving. This works well or the Kennedy’s and the other idly wealthy liberals that like to avoid paying taxes. Of course that means no jobs for the working people you are so concerned about.


I have already addressed this issue, but maybe you didn't notice. Unless you are da Vinci or Steve Jobs, you are not indispensable. When you choose to "stop producing," one of the millions of unemployed or underemployed is going to step forward to take your place. So it means the opposite of "no jobs for the working people." Whoever steps up the ladder to take your place will vacate his own spot, which in turn will be filled by someone behind him on the ladder. And so on.

And by the way, there's a reason why tax-free municipal bonds are tax-free. When you buy them, you are helping the government in a manner that is just as substantive as paying taxes. A city or town will be very happy that you are helping them invest in their infrastructure, and employing their citizens. So I heartily encourage you to help society by investing all your money in tax-free municipal bonds.

I guess jobs are not as important to you as punishing the productive is.


I have also pointed out that the truly successful and "productive" generally keep working their tails off long after they have to. Beyond a certain point, they are not in it for the money. You have said nothing to address this.

The earlier rates did not have as big an impact because people could very effectively shelter their income.


You already said this, and I responded by pointing out that "very effectively" doesn't mean much unless you can be specific, and tell us what the effective tax rates were in the Ike era. Can you do so? Because there are still ways for people to "effectively shelter their income."

you had nothing to say about this


Yes, I had nothing to say about someone citing a hypothetical growth rate that was a number they pulled out of their hat.

I guess the lesson here is that if the working folks don't tow the liberal line they can expect folks like juke to deliver a swift kick to the huevos until they get back in line.


Wrong. The problem with Joe the non-Plumber is not that he fails to "tow the liberal line." His problem is that he's a phony. Therefore he's the perfect mascot for the GOP's phony populism.

A good example is the farmers who left Zimbabwe after their farms were redistributed to others by Mugabe. This equalized the society. Unfortunately at the cost of bringing famine to a country that had previously been the bread basket of Africa.


The country formerly known as Rhodesia is a huge mess, and that mess goes back to Rhodes making statements like this:

the native is to be treated as a child and denied the franchise. We must adopt a system of despotism in our relations with the barbarians of Southern Africa


This led to a system where white farmers "making up less than 1% of the population, owned more than 70% of the arable land, including most of the best land." So what eventually happened? There was a movement to change this, but the movement was corrupt, inept and violent. And the results are disastrous.

So what does that prove, and how is it relevant to our vastly different circumstances? I have no idea how this example is relevant, unless you're implying that you're nostalgic for the antebellum South.
3.1.2009 10:41pm
Elliot123 (mail):
"You seem to think "the rich" are more likely to have "huge holdings … which do not generate a taxable event." If you're correct, then the results of the study are understated, not overstated. Are you sure you meant to say that?"

Of course I meant to say it. The rich have huge holdings which do not generate a taxable event. 401Ks have huge holdings which do not generate a taxable event. Pensions have huge holdings which do not generate a taxable event. Endowments have huge holdings which do not generate a taxable event. The NYT buffoon ignores them all. This analysis tells us nothing.

Only Obama with his diminished grasp of history and economics would fall for this junk.
3.1.2009 11:42pm
jukeboxgrad (mail):
holdings which do not generate a taxable event


It doesn't matter that there are "holdings which do not generate a taxable event" unless you think such holdings are disproportionately found in the hands of the bottom 99%. And you've offered this many reasons to think that: zero.

The NYT buffoon ignores them all.


He didn't ignore them. He measured what was practical to measure, and did not measure what was not practical to measure. Which makes sense, especially because the data in the former category is sufficient to support the claim he made.

But here's a good example of a "buffoon:" someone who repeats the same nonsense without making even a pretense of addressing the argument which proves that it's nonsense.
3.2.2009 7:12am
jukeboxgrad (mail):
Producers don’t have to move to respond they just have to stop producing. Stop work, put their money into tax-free municipal bonds and pay zero taxes … Of course that means no jobs for the working people you are so concerned about. I guess jobs are not as important to you as punishing the productive is.


One more thing about this bogus, destructive, discredited philosophy that is at the heart of Reaganism and trickle-down economics.

"Jobs for the working people" are not created by the generosity of the rich. They are not even created by business, or by capital. They are created by demand. Jobs come into existence because there is someone ready, willing and able to buy something. And jobs don't go away because the rich decide to "stop work [and] put their money into tax-free municipal bonds." Jobs go away when there is no demand, because people don't have money to spend.

Henry Ford understood this very well. He said that higher wages would lead to higher sales, because they would support the development of a prosperous middle class:

I have learned through the years a good deal about wages. I believe in the first place that, all other considerations aside, our own sales depend in a measure upon the wages we pay. If we can distribute high wages, then that money is going to be spent and it will serve to make storekeepers and distributors and manufacturers and workers in other lines more prosperous and their prosperity will be reflected in our sales. Country-wide high wages spell country-wide prosperity


From "My Life and Work" by Henry Ford.

Ford understood that business thrives when there is a prosperous middle class. (And democracy also depends on the existence of a strong middle class.) Reaganism is all about destroying the middle class, and creating a two-class society: rich and poor. And the GOP has had a great deal of success in this regard, as I documented here. Reaganites are too short-sighted to understand what Henry Ford understood: when you destroy the middle class, ultimately you also undermine the rich. And that's the road we've been on.
3.2.2009 9:34am
George Smith:
Howe much is "rich?" If wee're going to discuss evil, there should be a definition.
3.2.2009 10:29am
Elliot123 (mail):
"It doesn't matter that there are "holdings which do not generate a taxable event" unless you think such holdings are disproportionately found in the hands of the bottom 99%. And you've offered this many reasons to think that: zero."

It sure matters if you're dividing up the pie of total corporate ownership. The NYT buffoon only counted holdings that generate a taxable event. The fool ignored all other holdings. This analysis tells us nothing.

"He didn't ignore them. He measured what was practical to measure, and did not measure what was not practical to measure. Which makes sense, especially because the data in the former category is sufficient to support the claim he made."

If he thought huge segments of corporate ownership were not practical to measure, and he therefore didn't measure them, then he ignored them in his analysis. He's a buffoon. This study tells us nothing.

However, today we learned Obama requested a simplified version of the article for his teleprompter. Robert Gibbs said Obama wanted one "without all that dollar stuff."
3.2.2009 10:53am
Tony Tutins (mail):

Tony does not realized that it does not matter where you live or even if you renounce US citizenship, you still have to pay US taxes on their income.

While it is possible to eliminate US tax liability by changing one's domicile, in practice expats wipe out US tax liability by offsetting their foreign income tax. This works because most places Americans move to have higher income taxes.
3.2.2009 2:00pm
jukeboxgrad (mail):
smith:

Howe much is "rich?"


Review the data here and draw your own conclusions.

=================
elliot:

It sure matters if you're dividing up the pie of total corporate ownership.


It only matters if you think that non-taxable securities are disproportionately found in the hands of the bottom 99%. And you've offered this many reasons to think that: zero.

It's interesting to notice how many times you're willing to repeat yourself while refusing to address this issue.
3.2.2009 6:22pm
Duracomm:
Juke you really are economically ignorant aren't you? You said
"Jobs for the working people" are not created by the generosity of the rich. They are not even created by business, or by capital. They are created by demand. Jobs come into existence because there is someone ready, willing and able to buy something. And jobs don't go away because the rich decide to "stop work [and] put their money into tax-free municipal bonds." Jobs go away when there is no demand, because people don't have money to spend.
Your like a creationist, you think those jobs just magically appear out of the mist.

Those jobs a created by some company or individual, they go away the instant they don't return enough to that individual or company to make it worth the work of keeping the jobs.

Tax producers to where their time and money invested is less then what they value it and they won't do the work. Now the unmet demand will eventually cause prices to increase until it becomes worth someones time to produce the product.

The result is higher prices for the consumers including the less well off.

Once again you show you are happy to hurt the less well off if that is what it takes to punish the producers.
3.2.2009 6:41pm
Elliot123 (mail):
"It only matters if you think that non-taxable securities are disproportionately found in the hands of the bottom 99%. And you've offered this many reasons to think that: zero."

Securities are not taxable. Only taxable events generated by those securities are taxable. The NYT buffoon doesn't know that, so he missed huge segments of corporate ownership, then tries to provide a breakdown of ownership when he doesn't even know total ownership. Maybe next he can tell us how he handled foreign ownership of US corporations. This analysis tells us nothing.

If A and B both have stock portfolios. Stock portfolio A has a market value of $500. Stock portfolio B has a market value of $5,000,000. If A pays more tax than B on taxable events, the NYT concludes portfolio A has a greater value than portfolio B. The NYT thinks 500 is greater than 5,000,000. This analysis tells us nothing.

When asked about the 2003 NYT article, President Obama consulted his teleprompter and said, "Stock? What's stock?"
3.2.2009 8:02pm
George Smith:
OK, Slick, duly reviewed. Now, is a gross wage of $250,000 (without any non-taxable income) rich for, say, a family of four with two small children? Let's make them a two earner family. OOOH, lets even put them in the suburbs of a large Midwestern city. What say ye? Be they rich?
3.2.2009 8:12pm
jukeboxgrad (mail):
duracomm:

Those jobs a created by some company or individual, they go away the instant they don't return enough to that individual or company to make it worth the work of keeping the jobs.


If there is a demand for what's being provided (i.e., a demand strong enough to make the product/service economically viable), the job doesn't "go away." And if you (an employer) choose to not employ someone to meet that demand, then someone else will.

Tax producers to where their time and money invested is less then what they value it and they won't do the work. Now the unmet demand will eventually cause prices to increase until it becomes worth someones time to produce the product. The result is higher prices for the consumers including the less well off.


You are correct that this is a bad thing if the taxes are going to waste (like, say, pouring $3 trillion into a pointless war). But if the taxes are used to build our nation (instead of someone else's), then we all end up better off.

=================
elliot:

Securities are not taxable.


Then how shocking to find that many people (including "Federal Reserve Board Governor Lawrence Lindsey, who served on the staff of Reagan's Council of Economic Advisors") are perfectly happy using the term "taxable securities."

If A pays more tax than B on taxable events, the NYT concludes portfolio A has a greater value than portfolio B.


Your example would be relevant if there was some reason to think that the bottom 99% tends to hold portfolios similar to B. And that the top 1% tends to hold portfolios similar to A. But there isn't. And it's quite entertaining to notice that you're repeating yourself over and over again without making even a pretense of addressing this issue.

=================
smith:

Be they rich?


If your household income is over $157K, you're in the top 5%. If 'top 5%' is not synonymous with "rich," then the word has been drained of meaning. Although obviously some are much richer. I think that's where the term "super-rich" becomes useful.

Also, one or more people above have correctly pointed out that looking at wealth is as important as looking at income. We tend to tax the latter, and not the former. I think that's a problem.
3.2.2009 8:44pm
George Smith:
OK, we've established that in Juke's mind, a household wage income of $157,000 is "rich." Is it OK with you if this "rich" couople have $300,000 in their 401(k)/403(b) plans? Is that "wealth" that should be taxed? What if it was in individual stocks, bonds and mutual funds, bought with income they saved and invested, and was not inherited? After they pay the taxes on the dividends and capital gains, do you want to further tax their wealth?
3.2.2009 9:22pm
jukeboxgrad (mail):
in Juke's mind, a household wage income of $157,000 is "rich."


If being in the top 5% isn't "rich," then where would you put the threshold? 1%? 0.1%? 0.01%? Just curious.

Is it OK with you if this "rich" couople have $300,000 in their 401(k)/403(b) plans?


As I have suggested previously, the main problem is not that this couple is taxed insufficiently. The main problem is that the super-rich are taxed insufficiently:

The 400 wealthiest taxpayers accounted for more than 1 percent of all the income in the United States in the year 2000, more than double their share just eight years earlier… But their tax burden plummeted over the period. … The rate actually paid by the top 400 in 2000 was about the same as that paid by a single person making $123,000


We have the best government money can buy.
3.2.2009 9:45pm
George Smith:
You've just gotta be frackin' kiddin' me. A total waste of time.
3.2.2009 10:02pm
Elliot123 (mail):
"Then how shocking to find that many people (including "Federal Reserve Board Governor Lawrence Lindsey, who served on the staff of Reagan's Council of Economic Advisors") are perfectly happy using the term "taxable securities."

That doesn't change the act that only taxable events are taxed. This is what led the NYT to make such a stupid mistake.

"Your example would be relevant if there was some reason to think that the bottom 99% tends to hold portfolios similar to B. And that the top 1% tends to hold portfolios similar to A. But there isn't. And it's quite entertaining to notice that you're repeating yourself over and over again without making even a pretense of addressing this issue."

The example is relevant because that is exactly the mistake the buffoon at the NYT made. If we follow the NYT logic, if a company pays no dividend, and nobody trades its stock in a year, then that company has no value. This analysis tells us nothing.

However, according to Robert Gibbs, Obama really does know what stock is.
3.2.2009 11:49pm
jukeboxgrad (mail):
smith:

You've just gotta be frackin' kiddin' me.


I guess this is your way of letting us know that even though I answered the question you asked me, you're not going to answer the question I asked you.

================
elliott:

That doesn't change the act that only taxable events are taxed.


I guess this is your way of letting us know that you're not going to take responsibility for your ignorant statement ("securities are not taxable").

If we follow the NYT logic, if a company pays no dividend, and nobody trades its stock in a year, then that company has no value.


That's not "the NYT logic." That's your fantasy of "the NYT logic." "The NYT logic" is that the bottom 99% and the top 1% are equally likely to hold non-taxable securities.

I'm counting on you to keep demonstrating your transparent refusal to address this issue. Please don't let me down.
3.3.2009 12:25am

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