Traverse City Record-Eagle


Taxes and employment

We are told that all we need to do to increase employment is to reduce personal and business taxes and to reduce regulations on businesses. Of course President George W. Bush reduced personal taxes but that does not seem to have helped the economy. At the end of his second term the country was hemorrhaging over 700,000 jobs a month. It’s better now, but what does make employers start to hire people?

First, let’s look at things that demonstrably have little to do with increasing employment. We’re told that rich people do the hiring in our country because poor people don’t have the money to hire anyone. Wow! What an insight. Perhaps a Nobel in Economics awaits!

First of all, just because someone is rich doesn’t necessarily mean their wealth has any significant effect on job creation. Several entertainers have contracts paying them tens of millions a year.  Bouncy-Bouncy Limbaugh has a contract paying him about $30 million a year. Judge Judy earns more than that. Mr. Romney, an aspirant to the Presidency, has an income of $20 million a year. This isn’t earned income, so Mr. Romney pays only about 15% of it in federal tax. (Mr. Romney confesses a love affair with cars and when asked what kind his family drives, declares dismissively that his wife has “a couple of Cadillacs,” proving once again that one can become acclimatized to wealth.)

But what has this enormous personal wealth to do with reducing unemployment?  These people probably try to do their bit for the economy. They can easily add another pool boy, perhaps a full time gardener, maybe add another cook, and perhaps employ an additional interior decorator. The Florida place has gotten so tacky.  Maybe one of them will put an addition on the lake cottage or hire another stable hand.  There are all sorts of jobs this wealth can create.

Of course we’re told that these folks make investments and these investments create jobs. A few may start a business, nurse it through the early stages, and perhaps make another mint. But lots of great entrepreneurs started with an idea and not with much money. I doubt that Angie of Angie’s List was a multimillionaire before she started her business. Did Sam Walton of WalMart begin as a millionaire? Ray Krock started as a kitchen supply salesman, joined McDonald’s, and then some years later bought the company. Do you think Bill Gates began as a millionaire?

Much of what passes for investment is just buying stock in some publicly-traded company, or maybe buying an apartment house. Ford stock could be bought for about $2 a share in 2009. If you had invested in it then you could have sold it for $12 a share in 2010. That was a great investment, right? But the Ford Motor Company didn’t see a dime of that profit. The increase in the stock price accrued to the gambler who bought the stock, to the broker who made the trade, and to the market maker whose job it was to provide an orderly market in Ford stock. Investing in the stock market is gambling. You buy a stock because you believe the price will go up; you sell it if you believe the price will go down. The company whose stock is bought or sold gets nothing. Of course the company may decide to issue more shares if their share price goes up and then sell those shares, invest that money in a larger plant, or maybe just buy another company. So in some few cases the investment in a company’s stock might create jobs. Just don’t stand outside the plant gates waiting for the “Hiring!” sign to go up.

Let’s say you’re the owner of a small shop. Your shop makes plastic stuff for the interior of automobiles. Assume that dear old Aunt Martha has died and left you a cool million. Will you run out and hire a couple more workers? Of course not, so why would a nice business tax refund or any other reduction in your cost of doing business cause you to hire another bunch of people? Lowering business taxes doesn’t increase hiring. Exactly the same thing is true if you’re running a restaurant downtown, or if you are running any other business. Lower business taxes may make a businessman more likely to situate his business in your state, but usually businesses locate where they know the territory. If the state or federal government reduces your cost of doing business you do not, because of that fact, immediately run out and increase your staff. Business owners, being for the most part conservative Republicans, would love to have their costs reduced because that means more money in their pockets, so they thump the table for the RNC lower taxes, fewer regulations, party line; but lower business costs have little or no impact on their hiring; it only impacts their income. That’s why they like it.

So why do businesses increase staff? There is only one reason; they increase staff when they have more demand for their product. No store owner, just because she got an unexpectedly big business tax refund, is going to hire more clerks to simply stand around and look at each other. That’s silly. She’ll hire more clerks when her customers are getting impatient standing in line to pay for goods they’ve bought or because customers need help finding something and there is no staff member available to help them. The manufacturer of auto parts hires more people when orders for his products increase. That happens when people buy more cars. In short, more people get employed when more people buy more stuff! The key word is demand. Without that we go nowhere and that’s why the government must prime the pump, that’s why bailing out General Motors was so important. Just ask the folks in Flint and in northern Ohio. That’s why we need to continue unemployment benefits. These benefits create at least some demand and that demand increases employment.

Be very careful about buying the RNC agenda that tells us if we just lower taxes (again) and reduce regulations (some more) jobs will automatically grow. Be very wary about drinking that RNC Kool-Aid.  You already know what it tastes like and you know what it has done in the past. You know that drinking it will continue this acute economic indigestion. Time now for an Alka-Seltzer.

  • Cathy Stripe Lester

    Thanks so much for your sensible analysis! If only everyone thought so clearly, and expressed it so well!

  • Peter Panner

    Every time I read the comments of progressive my thoughts return to the plight of the citizens of Detroit. Where fifty years of the failed policies this author is advocating for has left a once vibrant city in economic ruin. No author I turned your voice off in my mind 20 years ago. And the voice will never again be allowed a platform in my mind for you to attempt to deceive me.

  • GenePH

    Sam Walton, Ray Krock and Bill Gates didn’t become millionaires by working for the government (ie. you and me) and B. H. 0bama and Harry Reid did, but I am a generous person and not complaining. 

    • Emeritus

      Harry Reid was a millionaire real estate investor before he went to congress. Obama wrote a couple of lucrative books. Actually, there are 249 millionare congresspersons, 140 of those are republicans and 109 are democrats. Check your facts.

  • Troy Keith

    Although economists are always quick to tweak the numbers to support a
    particular point of view, I believe that history has shown fairly
    consistently that reduced tax burdens generally translate to greater
    revenue flowing into the gov’t coffers.  Even Kennedy seemed to support
    this theory.  Given such an abysmal economy, why not reduce spending
    before increasing taxes on anyone?  How about passing a budget which the
    D’s have not done in 3.5 years?

    As Jack Kemp has stated: “At some point, additional taxes so discourage the activity being taxed, such
    as working or investing, that they yield less revenue rather than more. There
    are, after all, two rates that yield the same amount of revenue: high tax rates
    on low production, or low rates on high production.”

    All of this class warfare nonsense has become a ridiculous
    distraction over the last several months.  I’m no fan of the Republicans
    these days but the D’s seem to be pulling out all the stops since they
    cannot run on any sort of economic record.  You can pull the last 2
    months of economic stats under Bush, but a great deal of that can be
    attributed to the panic many felt waking up on the morning of Nov. 3rd. 
    What was the unemployment average throughout his entire presidency?  How about the budget/deficit?

    When presented just today with the opportunity to vote on the
    President’s “tax the rich” plan, Senate Dems blocked the measure and
    then turned around immediately to blame the Republicans for standing in
    the way.. Even had this passed, my understanding is that the money
    gained from this incredibly urgent and important matter (discussed daily
    by the Pres.) would only amount to about 8 days of spending under the
    current government.

    I’m not familiar with your blog, but given the references to the
    “bouncy-bounce” Limbaugh or the Carl Rove playbook along with the
    standard class warfare rhetoric, it would seem that you are equally
    guilty of that which you direct towards some of those making comments

    • Emeritus

      More right wing idiocy: Reagan raised taxes 13 times during his administration with the largest peacetime tax increase in the country’s history in 1982. He raised taxes 7 of the 8 years he was in office and the country boomed! So much for the nonsense that raising taxes kills the economy!

       Incidentally where in that post do I suggest raising taxes? You have the same knee-jerk reaction that Stallman has. The same goes for “class warfare,” that’s the standard warcry of the righrt wing. Where do I say we should confiscate the money of the richest Americans? All I said was that rich people do not ipso facto create jobs; that now constitutes class warfare? Really??
      You are unhappy that I have ridiculed Limbaugh. I suppose a libertarian is delighted to bow down to a drug addict who sent his hosekeeper out to buy his drugs and who called a young woman a slut because she thought her medical coverage should include contraceptives. If that’s the case thank god I’m not a libertarian.

      • Bob

        Henry you fail to note that the Reagan tax increases were in the context of trade offs to the left as part of the price paid to do the things needed to win the cold war.

        • Henry Klugh

          The point I made was that raising taxes did not throtle the economy. That fact hardly changes as a result of Reagan’s reasons for raising taxes.. 

          • Bob

            You are wrong, they did throttle the economy without them growth would have been higher.  Reagan accepted this due to the importance he placed on efforts in the cold war, not because he thought that raising taxes was the right policy for the nation.

          • Henry Klugh

            How could you possibly know “that without them growth would have been higher”? Is there a secret control group we don’t know about? This sounds like Bush claiming his policies prevented a terrorist attack. Again why he raised taxes is irrelevant. (Nancy’s astrologer maybe?)

      • jeff4

        Henry, although i agree with some of your points and am a liberal democrat myself, your finger pointing, grandstanding, and calling people and ideas “idiocy” makes you look foolish.  Argue, make your point, and stand on it.  Don’t resort to low class tactics and ridicule.  If you re-read Troy’s comments he is intellectual, well researched, and has tact.  Learn from him.

        • Henry Klugh

          If I hadn’t read your jousts with Ed I’d take you comment here to be condescending enough to ignore. I must admit I’m surprised. As for ”Low class tactics and ridicule…” How about Rumsfield Rules who said, ”Bob, you are talking to a robot.” Is that the sort of thing you mean? Troy said, “…standard class warfare rhetoric.” If I wanted a lesson in “low class tactics and ridicule” there is plenty to be learned from the comments here.How about Troy’s “Hiding behind a computer keyboard to snipe at people you disagree with.” That’s close to what he wrote. Coming from him I thought it was pretty funny. 

          We’ll look at the wealth issue. Troy sees no difference between Romney’s campagn trail reference to his wife’s Cadillacs and digging around in an anti-Obama blog to get the monumental discovery that Obama plays golf more that 30 times a year and imports a Chicago barber every few weeks to cut his hair. He sees these as equivalent. One flaunts his wealth; one does not. I see a difference;he does not.

          On Romney’s income: I have no trouble with its size. (Apparently Troy thought to contrast Romney with Kerry whom he said had married his money. Apparently this intellectual didn’t bother to find out that Kerry was richer than Romney, not because he married money,he did, but because his mother was a memeber of the Forbes family.) The problem I see, and mentioned, was with the differential taxation rates. Troy, in one of his later comments pointed out that life is often unfair. He mentioned many examples. He and others have also made the case that there is no point in raising taxes on capital gains and dividends because this would have a miniscule effect on the debt. That’s true…and beside the point. M position was, and is that just because much in life is unfair this is not justification for an unfair government tax policy. Apparently Troy believes it is’t unfair and besides it wouldn’t reduce the debt much anyway. I hope I haven’t misrepresented his position. If I have I’m sure he’ll jump right in and point that out.

          Meanwhile why not go back and instruct Ed in tact?

          • Ed Hahnenberg

            Henry…Tact is not one of Jeff’s strengths, nor is it one of yours as he points out.

          • Henry Klugh

            No one posting here is likely to get a prize for tact Ed. Remember “Atheisticators” and “Agnnosticators.” These terms are not likely to bring new people to “the true faith.” Would you rather call names or get converts?

          • Ed Hahnenberg

            Henry…After responding to atheists and agnostics for over three years with moderation, this is all you could find? You’ re a newcomer to the block, so dig some more. You’ll find I have patiently responded, only to be attacked with anti-Catholic venom time and again. You started out with a very clever post, but now you’ve gotten in the weeds. What will your first 300 posts generate…time will tell. No hard feelings, by the way.

          • Troy Keith

            Ed, you can chalk this up in the “for what it’s worth category” but I
            remember several conversations in which I was searching my agnostic soul
            for answers and I found our dialogues to be very insightful and
            informative.  Never once did I feel belittled for my views.  I can’t
            speak to whatever is going on between you and Jeff but you’ve been a
            stalwart of interesting and informative posts here over years.

          • Henry Klugh

            I quite understand. I don’t expect to get converts; I am trying to expose the inconsistancies of some on the right. I certainly don’t expect to convert anyone, maybe sway a few independents and support those few liberals who live up here.
            As for needing a break: Responding to all the venom my last political post produced is just too time consuming. I won’t be doing that for comments I’m sure will be made to my next political post which appears tomorow.

          • Bob

            On Capital gains taxes see:

            Raising it will discourage investment and with the reported unemployment rate at 8.2% and the real rate much higher it would be a poor time to play with this.  Fairness really has nothing to do with it. Try explaining to the guy that loses his job, or the one that never gets one about fairness.

          • Henry Klugh

            Your right investment results should benefit from a tax break. Gamblng in the stock market supported by an army of lobbyists should not . We need a narrower definition of investment.

          • Troy Keith

            Gee Henry, I didn’t mean to get so far under your skin.. Thought we were in the process of wrapping all of this up?  Yes, I suggested that you were sniping from behind a keyboard because I found your comments to be rude and short sighted.  Despite your suggestions, I don’t feel that I’ve stooped to such levels.  As an author on the RE site, I think you need to be held to a higher standard – many will criticize and often in an unsavory manner but I think a certain amount of skin hardening is required for this sort of exposure.

            Yes, regularly flying in an out of state barber, pizza chef and personal trainer (and probably more) is an equivalent to someone’s wife owning two cars.  If you’re going to call one out, the same should apply to the other – especially in this election cycle.

            You’ve ignored 75% of my points yet somehow get stuck on whether or not John Kerry married into money and hold that up as some sort of evidence of my unsound argument.  I think we’ve gotten lost in the minutia but for what it’s worth:

            According to the Boston Globe: “Almost all of Senator John F. Kerry’s wealth — his reported joint assets this year of at least $231 million — comes from his wife, Theresa Heinz Kerry, heiress to the Heinz ketchup fortune. (Pat Greenhouse/Globe Staff/File 1998). Senator John F. Kerry reported 16 years ago that he was living on his Senate salary and a trust fund worth no more than $100,000. He sometimes lodged at a friend’s home and had to watch his spending carefully.”

            Either way, this point is completely irrelevant.  Even in responding to others in this post about me, you use phrases like “even this intellectual didn’t bother..” The point was never whether Kerry was “richer” than Romney – why do we even go there?

            My response to your tax question was not so much whether it was fair (although I think the numbers I showed clearly demonstrate the other side) but whether or not the government should be in the position of imposing some sort of “fairness standard” or redistributive action from the top down.

            Best of luck with things!

  • Ed Hahnenberg

    Troy…Right on. All that Romney and the Republican Party has to run as far as advertising is the debt clock. I cringe every time I watch those numbers increase by the second. We are so far in debt and Obama, master tale teller that he is, seems to change the subject and propose some new tax and spend program to save this or that group. Meanwhile, the rivers of debt continue to fill the ocean of economic hopelessness.

    • Emeritus

      “Rivers of debt fill the ocean…” And to whom do we owe this debt? Well just less than 10% is owed to China.  We hear a lot about that. Just slightly less is owed to Japan. We don’t hear much about that at all because China is the bogeyman now  not Japan. Most of the rest we owe to us. That’s right we owe it to ourselves.  Big deal. It is owed in our own soverign currency. If anyone holding our debt wants to cash it in, to spend it, where would they finally do that. Ultimately, those dollars must come right back here to buy stuff. What a disaster!

      • Ed Hahnenberg

        Em…For a guy who opines with opinions on everything, I find your financial analysis, like that of Klugh’s, wanting. True, most of our debt is owed to ourselves. Soon the interest payments on the debt to ourselves will exceede our GDP. It is a big deal if like Russia and banana republics, we just create money out of thin air. 
        Over the past 20 years, the amount of currency has steadily increased year after year, due partly to quantitative easing programs and partly to the rapid rise of the $100 bill as a world currency. In 1990, there was just a little over $268 billion in currency in circulation, and around 1.4 billion $100 bills floating around. Today there are more than 7 billion Benjamins out there in the world — $704 billion worth, according to figures from the Federal Reserve. The majority of those are held outside the country, the Fed estimates. The total value of cash currently in circulation, along with money in checking accounts, is just over $1.9 trillion.

        The other way the Fed “prints” money is more virtual: The Central Bank buys assets from banks with newly created “electronic money” to add credits to the account balances at those financial institutions. Voila, the banks now have more money, which means more money in circulation. This is also known as quantitative easing.

        In either case, Economics 101 says that printing more money is a short-term fix to financial problems, and the downside to doing it is inflation. The more money there is in circulation, the less value a dollar has. The national debt is not exactly owed “to ourselves.” It is owed to bondholders who have loaned money on the understanding that they are going to be paid back. Even Democrats in the highest positions often have trouble grasping this reality. The bond market is not an abstraction. It is a group of people who have loaned money to the government. As creditors, they are acutely aware of the unspoken words at the end of “We owe it to ourselves,” which are, “We owe it to ourselves, therefore we really don’t have to worry about paying it back.”

      • Ed Hahnenberg

        Henry…I thought I was replying to Em. Anyway, the shoe fits. 

  • Troy Keith

    I’m not even sure what you’re talking about – where do I suggest that you suggest raising taxes?  You simply speak consistently against the argument of lowering them.  The title of your “piece” is taxes and employment and you seem to mock the suggestion that our problems would be solved if we lowered taxes and even go so far as to caution readers to “be wary of RNC suggestions to lower them”.  As to the class warfare, you also spent a great deal of time on the subject of Romney’s income, the amount of taxes he pays, the cars his wife drives and the subject of rich people in general – should we infer that you admire his/their ability to create wealth and advocate keeping taxes low for everyone?

    I’m not unhappy that you ridiculed Limbaugh, merely pointing out the hypocrisy inherent in sniping from behind a keyboard while belittling others for their views.  You’ve completely ignored the points I made and chose to resort to labels and obfuscation rather than having a reasoned conversation about the issues – the Fluke controversy perhaps? although I’m not sure how a Georgetown student is qualified to speak at a Congressional hearing on religious liberty or why she’s unable to afford $9 birth control.

    You seem to be a very angry individual Mr. Klugh – makes it hard to have a meaningful conversation whilst entrenched behind the walls of such bias.

  • Henry Klugh

    You’re absolutely right. You did not  suggest that I wanted to raise taxes. My mistake.

    You are also absolutely right again; I do mock the suggestion that lowering taxes would increase employment and I present a reasoned argument for my position. You do understand that lowering taxes is not a republican suggestion; it is a republican demand. I don’t believe it will increase employment. It will however delight those whose incomes will immediately increase.

    Your comment that I “spent a great deal of time on Romney’s wealth” depends on what you define as a great deal of time… it was in fact a half paragraph of a nine paragraph piece. One of my points was that someone”earning” $20 million a year should pay federal taxes at least at the same rate as his houskeeper. That makes me culpable of class warfare?? Romey’s casual reference to “a couple of Cadallics has nothing to do with his wealth. You can buy used Cadilacs as cheaply as used Fords. It does however speak to the man’s tone deafness about displays of his wealth and names associated with wealth.

    Glad you pointed out “the hypocrisy inherent in sniping from behind a keyboard while belittling others for their views.” And that I “chose to resort to labels.” You mean like class warfare? Gee, hyprocrisy everywhere you look.

    It would be nice to have a reasoned discussion: We could begin by staying away from labels like class warfare, failed presidency, (failed is a favorite word), war on women, unconstitutional (By people who believe the first ammendment gives them the freedom to swear at police officers). etc.

    • Troy Keith

      Well there you go.. at least now we can start over although “you’re absolutely right-wing” would have been a nice touch..

      As to the Republican demand to lower taxes, I’d say it’s more of a demand to not raise them at this point in the game.  The income disparity concerns me but I have a hard time reconciling the redistribution model in a “free society”.  Attempting to define fairness or just compensation in regards to business seems to be a slippery slope and I’d rather leave that to the marketplace lest we find such intrusions creeping into many different facets of our lives down the road.

      Class warfare is an overused term but when the primary goal is to show a distinction between us and them.. “the rich”, I’m not sure what other term would describe it more accurately.  It’s often whispered as though it’s meant to be derogatory.  Why not say prosperous, affluent or abundant?  I’m not a Romney biographer, but it’s my understanding that while he was indeed born into money, he made his own way in the world – albeit with a huge leg up afforded by privileges of his family.  This is a far better “American story” than John Kerry marrying into money but either way, why is our society now learning to disparage the wealthy rather than attempting to emulate them?  Wouldn’t it be better to raise everyone’s standard of living rather than bringing down the achievers?

      In the case of Romney’s tone deafness, it probably is hard to understand the lives of mere working stiffs from his perspective but I don’t take it as an in your face “can I get me one of ‘dem huntin’ licenses” moments.  Despite the ongoing wars and our economy being on life support, the President still plays 30+ rounds of golf per year.  The O’s fly in pizza chefs, personal trainers and barbers from around the country on a regular basis, take extravagant “shopping vacations” to Spain w/a personal entourage staying at 5 star resorts.  They fly to New York for “date nights” at a huge expense to taxpayers.. The dresses? Martha’s Vineyard? Million dollar book deals? Seems to me this also suggests a certain amount of tone deafness depending upon your perspective.

      • Henry Klugh

        Well, that pretty much cuts it. I thought we could discuss policy, but no it’s back to the old class warfare bit. Actually, Kerry’s wealth is about $200 million, his wife is worth about $1 billion! He had money in great quatnity before he was married; his mother was a Forbes. Apparently you didn’t know that, or didn’t want to.

        So Obama flies in his Barber every two weeks from Chicago. He pays the freight for that out of his pocket…forget to mention that part did you? You clearly don’t like Obama so why woud you bother? 

        I guess you’d like us to emulate the wealthy no matter what. Maybe we should start with Bernie Madoff. I guess you don’t care how people get the money just as long as we don’t disparage wealth.

        This is obviously never going to involve a discussion of why cutting taxes won’t do much to help the economy. I’m not really angry that such a discussion seems impossible; I am disgusted though.

        Bob’s post follows: Why not tilt at him a while?

        • Troy Keith

          Well, first of all, I tend to agree with just about everything Bob says -
          if he’s a windmill, then he seems to have a pretty solid (and
          constitutional) foundation from where I’m sitting.

          The point of Obama’s barber (and the other examples) was to show that
          it’s disingenuous to portray Romney as being out of touch or “tone deaf”
          if you’re going to ignore the the other side of the coin – which you
          seemed to do in your article and the subsequent replies.  The fact that
          Mr. Obama regularly pays out of pocket to fly his barber in from Chicago
          is exactly the point I was making – it did not need to be mentioned.. I
          don’t know the man so I cannot dislike him, but I definitely dislike
          his policies and find him to be one of the most divisive presidents
          we’ve had in recent history.

          I do think we should attempt to emulate the wealthy – I’d rather people
          aspired to be successful and independent rather than training them to
          despise those who are.  I’d rather give people a hand up and teach them
          how to be self sufficient rather than stealing from those who have. 
          Bernie Madoff has absolutely nothing to do with this conversation – who
          on earth would think to defend or excuse his actions and what does that
          possibly have to do with the cars that Mitt Romney’s wife drives?

          As to the discussion about cutting taxes, if you have statistical
          evidence showing that taxes do not have a bearing on the economy, I’d be
          most interested in seeing it although I’m not sure why you’re disgusted
          at this point.

          Also, it looks like a post from “Mike” around 9 this morning is still waiting for approval – thought you may have missed it.

          • Henry Klugh

            I guess you didn’t read my comment above so here it is again: More right wing idiocy: Reagan raised taxes 13 times during his administration with the largest peacetime tax increase in the country’s history in 1982. He raised taxes 7 of the 8 years he was in office and the country boomed! So much for the nonsense that raising taxes kills the economy!

            This speaks to the lack of a negative effect from raising taxes. As to the wonderful beneficial effect of lowering them: The morning R-L carries a piece delaring that our taxes are already at a 30 year low…is it any wonder then that the economy is doing so well? What? You say we should just lower them some more? Of Course we should!

            Bernie has everything to do with the conversation about wealth: Until Romney stops hiding his tax returns and the curious bit about claiming he controlled Bain when he claimed he didn’t, we don’t know how different his money is from Madoff’s.

            The Obaba barbaer and the Romnet Cadillacs are very different: Romney parades this wealth to the public during a recession; he wallows in it. To learn about Obama’s barber you have to go on line to the Obama bashing conservative websites. Of course now you’ll probably say that  Obama wasn’t flaunting his wealth because he was trying to hide it. If you’re the president you can’t hide a bout of acid stomach!

            And speaking of playing 30 rounds of golf a year; your boy GW over his eight years as President spent over 900 days on vacation. That’s about a third of his Presidency. If he had just spent more time in Crawford the country might now be much better off.

          • Troy Keith

            I don’t know why you keep resorting to the phrase right wing idiocy as I’m probably more liberal than you in many regards, but if tossing labels about is easier than addressing the substance of my replies, then I guess we can agree to accept that.  I could post mine again as you seem to have missed the points I was attempting to make although it might be more productive for us to start arguing about which day of the week is the best day or whether orange is a better color than yellow.

            So to get to the meat of the matter in regards to the question as to whether or not you feel that tax rates impact the economy, you’re suggesting that things are better when citizens are taxed at a higher rate (at least “some citizens”)?  Again, I think history leads us to a different conclusion.  You didn’t address my tax the rich point previously – do you disagree with the contention that raising taxes on the wealthy would only amount to a little more than one week of spending at our current levels?  What about the point that Harry Reid blocked a vote on that very matter just the other day?  Is this a legitimate issue that would benefit the country or just another “class warfare” wedge do drive between us?  Inquiring minds want to know!

            The suggestion that Romney should be compared to Madoff strikes me as “left wing lunacy” – I’m not even sure that it merits further discussion.  It’s unfortunate that our political process has become what it is – big money definitely runs the show and we’ve come a long way from the concept of average citizens serving a short term in DC for the good of the country.  Romney certainly isn’t “my boy” any more than Bush was but I would most definitely pick either of them over another 4 years of Mr. Obama for a variety of reasons that we could discuss at some point.  Incidentally, if you referred to Mr. Obama as “my boy” you’d be labeled as a racist would you not?

            You have a flare for redirection and I think we’ve gotten off the original issue which was what I perceived to be the hypocrisy in both your post and the subsequent replies.  I still haven’t seen anything that would lead me to believe that raising taxes (or not lowering them) would benefit the country in any way.  The wealthy most definitely do create jobs and drive a great deal of the economy – and yes, they usually become “more prosperous” in the process.  If only there was a way to take from each according to their ability and give to each according to their need..

            I’d be curious to hear what you feel has been working for the country over the last 3.5 years.. If it can be done without references to Bush, is it possible to offer reasonable explanations for our runaway debt, abysmal unemployment or the pathetic state of the union in general? Is it always the fault of the republicans?  What about the first years when the D’s had full control of the reigns? What is the excuse for not having a budget?  You can decry the right wing lunatics all you want, but at least they’ve passed them regularly only to lie dead on the Senate floor.  The country has become so polarized it would seem an impossible task to get beyond this divide until we can all see the faults in both parties and demand some accountability from congress.

            But I digress.. Saturday and definitely orange.

          • Henry Klugh

            You asked me if I had statistical evidence that tax rates do not  effect the economy. I never said that. I pointed out that during one period Reagan’s tax increases, and there were many during his reign, did not stop economic growth. I also pointed out that today’s Record-Eagle claims we have the lowest tax rate in thirty years. That doesn’t seem to be helping the economy. You however don’t respond to either of these pieces of information, you prefer to mention my comment about right wing idiocy. Isn’t it a fact that the right wing does not want to raise taxes? Doesn’t the tax increase during Reagan’s years demonstrate that tax increases don’t necessarily kill a recovering economy. Doesn’t the fact that we have the lowest tax rates in thirty years suggest that lowering them even more probably won’t help? Why don’t you want to talk about any of that?…And you say that I have a flare for redirection?? Also it is obvious that abolishing the favored status of some sources of income will not solve the debt crisis. I never said it would. Again you attack something I didn’t say at all.

            Calling someone my boy, whether your boy or my boy, is just another example of your misdirection as is your accusation of hypocracy. You claimed Kerry married money and when I pointed out that he was wealthy to start with you dropped that line of chat. Just as you did when I pointed out that nearly a third of Bush’s eight year presidency was spent on vacation.Who is misdirecting?

            The budgets were left on the floor because the republicans refused to allow various welfare programs to continue and refused to allow tax increases to pay for them…of course they didn’t pass. The democrats had a majority in the senate but they never had a filibuster proof majority which requires sixty members. In 2008 the democrats, with the objections raised by the blue dogs, couldn’t agree. Republicans have a similar problem now with their tea party people . Now the republicans have the emersed themselves in Grover Norquist’s cement so they are ulikely to break ranks on tax increases.
            On another topic The NRA and some republican legislators seem at odds over whether private property rights trump second ammendment rights. Does a business owner have the right to exclude a gun carrying citizen fom his establishment? 

          • Troy Keith

            I guess I’m confused about this whole tax the rich mantra.. if you say it won’t solve the debt crisis and don’t dispute my contention that even if Mr. O’s urgent need to rescind the 250k tax cuts would only recoup about 8 days of gov’t spending and you can’t offer any explanation as to why, when the issue was forced, Mr. Reid decided to pass on the option to vote on that very thing, then what is all this hoopla about?

            Obviously taxes are only part of the economic equation as other factors are always at play.  Rates under Carter were very high compared to today – how was the economy at that time?  Is that an absolute argument against high rates?  In general, combined with other factors, I’d still contend that less gov’t, greater personal liberties and yes, lower tax rates are almost always best for the country.  Yes, Reagan raised taxes at various times but he also cut the top rate from 70% to 28%.

            According to CNN:
            “Two bills passed in 1982 and 1984 together “constituted the biggest tax increase ever enacted during peacetime. The bills didn’t raise more revenue by hiking individual income tax rates though. Instead they did it largely through making it tougher to evade taxes, and through “base broadening” — that is, reducing various federal tax breaks and closing tax loopholes.”

            To answer your points, yes, the “right wing” does not want to raise taxes – nor do I as I think it would have a negative impact on the economy.  More importantly, I think we’re well on the way to spending ourselves into hyper inflation.  Demonizing the wealthy does little to help our current situation but much to motivate the democrat base.  In regards to the Bush vacation time, it was irrelevant to the conversation – more redirection if you will.  The issue at the time was Romney’s wealth and his “tone deafness”, I was simply showing that the President is guilty of just as much, if not more in terms of superficial extravagance – particularly when the country is hurting to such a degree.

            For what it’s worth, Romney responded to the Cadillac comment with: “If people think there’s something wrong with being successful in America, then they better vote for the other guy. Because I’ve been extraordinarily successful, and I want to use that success and that know-how to help the American people.”

            Jumping around a bit here but you covered a lot of ground.. I can’t imagine anyone actually wading through all of this in an attempt to follow the conversation.

            So the reason we do not have a budget today is all because of the Republicans?  They “refused to allow tax increases”?  hmm.. If it were true, I’d have to exclaim “Imagine that!”  How is it that Obamacare was passed if the R’s had such power – was it because so many of them voted for the bill?  Perhaps they were just excited by the prospect of passing it so they could see what’s in it?

            In the ‘for what it’s worth’ category, I didn’t say “my boy”, you did.  Again, no misdirection, just fact.  I simply used it as an opportunity to highlight the often overplayed race card in this election cycle (about as much as the evil rich card).  It was not misdirection by any means.

            Not sure what the NRA issue has to do with anything here but I’d vote for the rights of business owners in just about all cases, even the most unpopular.  Smoking, only serving men, people with blue hair?  IMHO, these decisions, right or wrong, should be judged by the marketplace.

          • Henry Klugh

              In regards to the Bush vacation time, it was irrelevant to the conversation – more redirection if you will.

            Really? On the other hand your talking about Obama’s thirty rounds of golf a year was right on pont.

            The 15% tax paid by Romney comes up as a matter of fairness. I guess if an increase in rate to the level paid by his housekeeper produces an insignificant gain in revenue you can’t imagine why it would be important.
             Friend, we simply ilve in different worlds and we aren’t communicating…nor are we likely to. So this dialogue stops right here.

            I will tell you that my next blog entry will really shrink your shorts. Have a nice Sunday.

          • Troy Keith

            “Really? On the other hand your talking about Obama’s thirty rounds of golf a year was right on pont. ”

            Yes, the point being that if Romney is going to be portrayed as tone deaf because of his wealth, then the same lens should be applied to the Obamas and their extravagances..

            Life is a game of chance, fairness is a relative concept.  Some people are born to be skinny & beautiful from day one.. others, not so much.  Some vegan marathon runners get cancer, others smoke and drink well into their 90′s – that’s not to say that hard work & values don’t account for anything, it’s just that sometimes, that’s the way it goes..

            When 48% of people in the US currently pay no income taxes, it’s difficult to have a conversation about fairness.. According to the CBO, “wealthy Americans earn roughly 50% of all income yet they pay nearly 70% of the tax burden.  The bottom 20% of earners paid only 3/10 of one percent but the richest 20% paid nearly 68% of the nation’s taxes.  In 2009, the evil top 1% earned 13.4% of the income and paid 22.3 percent of the tax burden.

            It’s all relative.. Drew Brees just signed a 5 year, $100 million dollar contract while an EMT saving lives every day probably earns less than 50k.  Fair?  Solutions?  Nothing top down that I could justify at least.

          • Henry Klugh



            Once again
            your comment convinces me that any discussion with you on these issues is a
            waste of time

            “extravagancies”: a round of golf less often than once a week? You
            are joking, right? Flying a barber from Chicago every few weeks on Obama’s
            dime. People here in TC commute to DC and NYC on a weekly basis and think
            nothing of it.

            Of course
            life is unfair, and according to you that makes it OK for the government to
            have an unfair tax policy which enormously favors ultra-high incomes. You can’t
            seem to understand that my primary concern isn’t the wealth; it’s the tax

            The fact
            that such a low percentage of filers pay any tax at all is partly the result of
            tax loopholes. Last year GE paid nothing. “Corporations are people my
            friend.” Gee, who said that? Then there are really a lot of poor people
            who simply don’t earn enough to pay taxes but still must file.

            income for a minute and look at wealth. This follows a power law and is far
            less equitably distributed than income. The top 1% control 33.4% of the
            nation’s wealth; the bottom 50% control just 2.5%. That will change; you can
            count on it!

            Again (and
            finally) your posts convince me that we are wasting our time with this dialog.
            Of course you’ll probably want the last word; you’re welcome to it. 

          • Troy Keith

            Well Henry, as long as you continue to make such statements, I will be compelled to write.. I cannot believe that you feel Mrs. Romney owning two cars is evidence of a rich person’s tone deafness yet flying in people from out of state to cut your hair or bake a pizza is just a normal occurrence – like people who commute every day.  Fair is fair right?

            In regards to tax fairness, are you in favor of a flat or “fair” tax system?  If the grossly imbalanced percentages paid by the wealthy vs. the poor or middle class do not even the scales in your mind, I wonder what percentage of income confiscation you would consider to be fair?

            The tax system is obviously flawed and does indeed favor the rich but it also favors the poor in the sense that they only pay consumption taxes.. If the loopholes were closed, would a straight 30% across the board be a reasonable compromise?  50%, 75%? I don’t mind the concept of paying taxes although it goes against my Libertarian core – what I do have a problem with is the incompetence of our elected officials and the gross negligence exhibited every time they spend our money (and the money of our children & most likely great grandchildren).

  • Bob

    Mr. Klough
    When jobs are created is certainly a complicated multivariate problem in which absolute tax rates are only one factor.  Laffer curve aside, as I don’t accept as legitimate the notion that we should be maximizing Federal revenue, and spending other people’s money is certainly not a path to sustainable job growth.  It is pretty absurd to posit “we owe it to ourselves” when almost half the income earners pay no federal income tax.

    We had a bubble in real estate based on well intentioned yet misguided efforts of both parties to put people whose credit did not warrant it in homes as owners as well as good old fashioned malfeasance & fraud.  It nearly brought the whole house down.  It has and will continue to take a long time to work through (See Japan).  We have bubbles in government spending, healthcare, and education that are ongoing.  When something can’t go on forever someday it stops.

    Given the environment as described above and that long slow climb we face it does not make sense to raise taxes for any income group.  Those at the top of the income range are the ones with the most flexibility as to when to realize income and ability to move it out of the system.  Beyond those that receive their income from it, you will be hard pressed to find many that believe they get full value for their money when it is spent by the government.  When we have sustained GDP growth above 3.5% for 24 months we can talk about adjusting tax rates and who should pay them.

    Manufacturing has gone the way of farming.  Even if we closed the boarders to all foreign manufactured goods it would not bring back the manufacturing employment rates of the 50-60s. I would suggest other areas to look at with respect to employment are Illegal immigration and, tax policy with respect to family formation.
     Illegal immigrants tend to compete for jobs with those most hard hit by unemployment in our society (IE: NAM, the poor, the long term unemployed).  A perverse coalition of business and political interest result in gridlock here.  My suggestion is to open legal immigration to the US to each of the nations that share a contiguous land border with the US to all those who can pass a background test checking for felony convictions.  This may seem counter intuitive as it may result in higher total immigration, but I believe the worst problems from illegal immigration stem from the illicit nature of the employment and the potential for abuse it sets up, and the splintering of families it creates.

    As if that first was not hard enough that brings us to tax policy with respect to family formation. Whatever one’s personal moral beliefs the data shows that outcomes for children are better when raised in traditional two parent households.  Jeff will point to his gay friends well adjusted children as evidence that these need not be traditional, but that is anecdotal and I suspect the numbers will not back him up on average, and the data is overwhelming on single parents.  This is not easy as we don’t wish to harm the children of these single and non-traditional households.  Beyond these non-traditional households we also have dual income households. There is data available to support the idea that beyond some threshold around $70k per year of income reported happiness does not increase.  With this in mind we need to think about what tax policy should be.
    First we can establish some poverty threshold and all those below it will pay no income tax. Now for those that have crossed it we establish some preferred bottom tax rate this rate is for traditional families & other households while they contain dependent children and their income is below that happiness threshold.   I think we should also extend this preferred rate for traditional families to some multiple of that threshold let us say 2X for single income households.  That brings us to who should pay punitive progressive tax rates. Both parents who had children raised in a single parent household for any amount of time should pay punitive progressive rates for income earned after the children leave the care of the custodial parent.  The non custodial parent should pay the punitive progressive rate starting at the time of separation.  Perhaps an adjustment can be made for those custodial parents that remarry to limit their period of punitive rates to the length of time the children were in a single parent household.  For dual income households the punitive progressive rates should kick in on that second income at the happiness threshold.  Rates for those who remain childless should be higher than the preferred rate, but less than the punitive rate moving to the punitive rate at 2X the happiness threshold.

    For those that would complain this is not fair to non-parents I say tough, failure to contribute to the continuation of the nation has a cost to the nation and you must pay it.

    In addition to these we should add government policy that promotes cheap access to energy and this should go before the other two.

    Move all government expenditures as close to the taxpayer as possible.  If States can do it move it there, if counties can do it move it there, if townships and cities can do it move it there.

    Sorry if this gets there twice i misstyped the e-mail the first time

  • Henry Klugh

    So you did not see a viable alternative. Have you heard of General Motors?  None are so blind as those who will not see! …
    Now it seems I risk being called a Nazi when I said nothing about what people  should do with their money. I talked about Romney’s Cadillacs not because he spent money on them but because a politician who flaunts his wealth in a recession is a stupid politician.
     Will you quote me a single line I wrote that includes the words “fair share.” Romney pays 15% tax on $20 million of income. I don’t know what would be fair, maybe his housekeeper would have a suggestion if you can’t figure it out.
    Your attitude seems to be “I’ve got mine; you can get yours anyway you like.” When politicians in a democratic society no longer care about fairness you may find a lot more people buying guns!

  • Henry Klugh

    Very colorful Rummy; now go back a step and read my response to Peter who, just like you, loves to paint with a broad brush. You know, like the wealthy create jobs, so exactly which jobs were created bt Romney’s $20mil income last year. Name just one formerly unemployed person now employed because of Romney’s last year’s income.

  • jeff4

    Troy, glad to see you back in action!!

  • Henry Klugh

    But Jeff, some of them ARE idiots. They really and truly are. You know that even if you’re too polite to say so.

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