Taxing the 1%

George Rebane

We wake up every morning to National Progressive Radio.  Listening to NPR is one of the many outlets we monitor so as to avoid the echo chamber effect of having others just adding to our confirmation bias (q.v.).  In the last couple of weeks NPR seems to have turned the heat on the Republicans, being more blatantly biased than usual in how it supports the Administration and Democrats.  This morning its mission was to repeat the progressive line that increasing taxes on people who create jobs does not affect their efforts to create jobs – a line in tune with 0bama’s current campaign to maintain the payroll tax relief and ‘pay for it’ by more taxes on the 1% - a kind of consistent theme that ranges from the screams of the street idiots, across the congressional Democrats, all the way to the Oval Office.

So NPR wound up sticking its mike into the faces of three fat cat Democratic contributors who run businesses to ask them about the effect of increasing their taxes.  Each dutifully explained that their own marginal tax rates had no effect on whether they decided to hire or not.   You have to know something about businesses to have understood their answers.  You see, each of these worthies ran outfits that hired educated white collar workers to do intellectually demanding contract work for high end clients.  When they sold a contract, then they hired more people if the work load called for it.  Of course their own marginal income tax rate would not enter into the decision – the new work provided marginal revenues which paid for workers, handled the marginal overhead, and dropped more profits to the bottom line.  The risk of hiring for them was essentially zero.

What the country’s NPRs and other like-minded progressives never point out (or don’t even understand?) is that the interviewed fat cats don’t cover the waterfront of small business job creation.  In fact they are a small part of it.  The larger segment of such job creating businesses are the small retailers, motel and restaurant owners, small engine repair shops, boutique manufactories, etc who must hire in anticipation of business which must be serviced in short order or the customer goes elsewhere.  It is those people who run sole proprietorships and Sub-S businesses who must take the risk of 'staff up first and hope that the uptrend you detected actually turns out to materialize'.

When you’re repairing snow blowers, lawn mowers, and chain saws, and then tell a walk-in or call-in prospect that you’re backed up and their chain saw will be ready in three weeks, you can be sure you’ll see their backside as they disappear out your door.  In a small business you have to have the capacity to produce and/or service in place in order to capture the short-order business that is typical in your market.   Such businesses don’t have the luxury of working multi-month contracts for which they can staff up after the contract is inked.

The tens of thousands of JIT (just in time) businesses march to a totally different drummer, and must hire before the new business materializes.  And when you do that, how do you plan to pay the new worker while waiting for the new business to arrive?  The typical and, for most, the only way is through your savings or retained earnings.  That’s the stashed money that is left over after paying your taxes.  Raising taxes, raising minimum wages, guaranteeing jobs, and other state mandated benefits have never enabled such employment to increase – in fact, this ugly aspect of socialism destroys both wealth creation and jobs in tandem.  Nobody on the Left is connecting these dots – they don’t dare because their social justice arguments would disintegrate in even the most modest minds of their constituents.

Again our future’s harbinger is Europe.  Today’s EU crisis is directly linked to a small number of factors.  And unemployment is highest in countries that force employers to pay the highest wages and guarantee jobs while being taxed into oblivion.  Spain is the poster child with 22.8% unemployment caused laws that “guarantee lifetime employment with gold-plated contracts”.  This is particularly hard on entry-level young people (48.9% unemployed) who are forced to “shuffle endlessly between short-term, low-paying jobs” or not work at all.  Anybody picking up such similarities on this side of the pond?

Let’s look again at the 1% whose contribution to all federal income taxes has almost doubled to 40% from about 20% in the 1970s.  These high rollers are also big political contributors to both parties.  They own and operate businesses that benefit from all kinds of government guarantees and subsidies.  Stephen Moore and economist Walter Williams point out ('The Millionaire Subsidy Elimination Act' ) that there are now “more than $200B in annual income transfers every year to Americans whose incomes exceed $1M.”  None of this is pointed out by our “sanctimonious (and grateful) politicians”.

Moore and Williams conclude - “We can't think of a better way to disarm the class-warfare crowd in Washington than by calling for zeroing out all subsidies for the rich and famous. Are Republicans smart enough to embrace this idea? Probably not. Would Barack Obama and Nancy Pelosi oppose ending welfare to millionaires and billionaires? We'd love to see them try.”

Comments

[Steve Wynn]

I tend to believe the NPR is correct, especially when you look at the fact that in the past 20 year, the the top 1% have increase their income share by 300+% when compared to the middle class who's share has decreased.

[Account Deleted]

Two men live next door to each other. They are of the same age, weight and build. One of these gentlemen sits around all day when he's not at the office, swilling soda pop, beer and eating pizza. Exercise is walking to the car. The man next door works out regularly, eats a balanced diet and avoids sitting around. After a few years, one of them is 300% better in physical health than the other. Obviously the fitter gent is an evil person and must be 'taken down' by the govt to even things out. Obsessing with others' possessions will not improve your own fortunes. We've seen this over and over in world history. It appears, however, that the left doesn't care about history or facts. Oh well.

[Todd Juvinall]

If All Americans have a house and food, then who cares is Joe has more money than Tom. The sock puppet Wynn is somehow deciding he wants a better house paid for by Tom? This is the sin of envy and Americans on the left are full of it.

[Mikey McD]

As always it comes down to personal liberty (private property). Who 'owns' the wages I make? Obama believes that society owns the fruits of the individual's labor and that it is governments job to determine how much each individual will get (the producer and the mooch alike). Socialists simply use envy and hate to buy votes.

[George Rebane]

SteveW 1234am - You may be confusing relative levels with rates of increase. But in any event, it sure sounds like you have passed the class warfare litmus - ‘You’re doing poorly because some other people are doing well.’ Class warfare litmus message

[Douglas Keachie]

99% are doing poorly because 1% hsve rigged the game, and what the 1% haven't quite figured out yet, is that it not going to work well for them long term. What the 99% Americans can't do, have a functional, health cared economy,will eventually enabled the 1.3 billion Chinese to do, which is to take over the country. Good luck, 1%'ers! You plainly need it.

[George Rebane]

DougK 910am - "99% doing poorly", you are a true class warrior indeed, but then we knew that. Almost all of the world would give their left nut (or ovary) to join our 99% and do as poorly.

And I have to point out to our independent readers how the Left views the situation in China - that its 1.3B people have 'taken over the country'. Don't tell the Politburo in Beijing. Or is the current type of autocracy China enjoys also the goal for America that our Left pines for? I suspect the latter.

[Douglas Keachie]

I suspect the right is unwittingly handing American to the Chinese on a platter. Have no desire to see that happen, and also recognize the the new robber barons in this country are no smarter than the B eagle Brothers. I'll be the slipup of the no self destruct on the drone was a cost saving measure to get it funded and built. The corporation that lobbied it through, the system that allowed them to lobby it through, both bear the responsibility for the disaster.

[Douglas Keachie]

"that its 1.3B people have 'taken over the country'. Don't tell the Politburo in Beijing. Or is the current type of autocracy China enjoys also the goal for America that our Left pines for? I suspect the latter."

You see everything through filters that only match what you choose to believe to be true about the political beliefs of other Americans. At no point did I say anything to the effect that China was some sort of Democracy.

[Douglas Keachie]

Obmama, clearly upset, said, "We will ask for it back. We'll see how the respond." "it is a classified matter."

It sure as hell is. The company that built such a device without a self destruct should be tried for treason.

[Douglas Keachie]

Well we all agreed that corporations are persons, so it is perfectly reasonable to try one for treason, kill it, and then sell off all remaining assets, since it has no known relatives.

[George Rebane]

DougK - and at no point did I claim that you characterized China as a democracy. And why am I not surprised that you put the blame for the UAV's loss on the shoulders of capitalism?

For those readers not familiar with DOD procurement practices, the RQ-170 was built to the most exacting government specifications. You can bet the farm that all military UAVs have the power dive self-destruct mode (among others) built in - it just needs to be included in the mission's operational control protocols (i.e. turned on).

[D]

Reagan, the only economist president, would be rolling in his grave. Amazing that when the government tries to bypass these rich folk and spend the money directly, it doesn't work. It be as simple when they get a surplus of money, it gets invested and that creates jobs or maybe it is buying more services for themselves.