Tax Scam

(Ed Note: we continue to host guest editorials from time to time. This month’s guest op-ed is from Max Holland. “Max, aka Birdpilot, is a retired former business owner who also spent a number of years in the corporate and academic arenas. He is a pilot and sailor, who has been active in politics since the Goldwater-Johnson election in 1964. Having been born in South Carolina and lived a number of years in California, he now is a Texan by choice.”)

by Max Holland

How many times have we heard the primary justification by the Republican Party of extending the Bush tax breaks for the rich being the reason for ‘job creation’? Because the “uncertainty of tax policy” makes those earning over $250k per year; only a fraction of which are actually small business owners, reluctant to add employees?

Let’s see now: American companies are holding on to something between 2 and 3 trillion dollars in cash and a couple percent change in the marginal tax rate keeps them from adding jobs?  Or is this more of the old, outdated, and disproven ‘supply side theory’ that the same group of geniuses, excluding Reagan budget director David Stockman, have hoodwinked us with for 30 years now? Does demand not have more to do with job creation than this Republican talking point?

I have operated three companies over the years and never have I considered the marginal tax rate of my (potential) income either at start-up or during the growth phase of the business. Nor have any of my friends who also own small businesses ever mentioned marginal tax rates as affecting their hiring decisions. All of us, myself included, have spoken of increased demand for our product as the impetus for hiring new employees. This is true during short term needs as well as spikes in orders. How can this be?

Assembly Line

Well the easy answer is due to the simple fact that income for a proprietorship, partnership or other small business is only that revenue remaining after all business expenses are deducted. All business expenses, including labor costs, are paid out before the owner gets a dime! It begs the question, then, as to how marginal tax rates on income and the money that the owner gets to keep after paying all business expenses affects the decision to hire additional employees.

The hiring decision has always been based on the increase in units of production each new employee generates for the business. If I expect that my demand is to increase from 1000 units to 1200 units and each employee produces 200 units, I’ll add one additional employee. Conversely, if my demand goes from 1,000 units to 800 units, I’m going to have to lay off one employee. The marginal tax rate on my income, other than the possible decrease as I possibly try to maintain employee level constant before that lay off, has no bearing on my hiring decision. I cannot hire additional workers if the demand for my product does not increase above current levels. In fact, the government could reduce my effective tax rate to zero and, unless the demand for my product was rising, I still would not add additional workers.

Any other process of business decision making that does not have the demand for product as its principle basis and the amount of production each employee represents, is foolhardy at best. And I’ll bet an owner would get a significant amount of negative feedback from their accountant for attempting to do otherwise.

My concern is why haven’t Democratic political operatives used this argument, loudly and often, to counter the GOP talking point? Here’s my take on the new Democratic talking points in four sentences:

  1. Demand drives business.
  2. Workers are hired when business demand increases, not before.
  3. Owner income is only available after other business expenses are paid.
  4. Marginal tax rates on owner income does not affect hiring, only demand does.

Imagine if we heard this come out of the mouth of every Democratic politician, operative, consultant, etc; particularly on the same stage or debate as the GOP counterpart. Imagine if it were broadcast in every news program or on every opinion program.

It’s time to expose the Republican tax scam for the charade that it is.

About Mr. Universe

Mr. Universe is a musician/songwriter and an ex-patriot of the south. He currently lives and teaches at a University in the Pacific Northwest. He is a long distance hiker who has hiked the Appalachian Trail and the Pacific Crest Trail. He is also an author and woodworker. An outspoken political voice, he takes a decidedly liberal stance in politics.
This entry was posted in Uncategorized and tagged , , , , . Bookmark the permalink.

80 Responses to Tax Scam

  1. Monotreme says:

    Nice article, Max.

  2. dcpetterson says:

    That was a great article, Max. Thanks.

    The Republican argument in favor of tax cuts for the top few percent can be exploded easily by a simple observation of history.

    During the Clinton Era, when the Clinton Era tax policies were in effect, the US economy added some 23 million jobs. During the Bush Era, when the Bush Era tax policies were in effect, the economy added a paltry 2 million jobs.

    If tax policy is the most important factor in job creation, we must conclude that the Clinton Era tax structure is far better for creating jobs. QED.

  3. Bart DePalma says:

    Max:

    You have taken profit out of the equation.

    Most business owners require some level of profit/income from the business to forego other opportunities. If taxes drive that profit below what the owner considers necessary, he or she is more likely to sell off or close that business and seek other more lucrative opportunities. Why bust your ass running a business when you can make more money with less effort working for someone else managing their business?

    Recessions accentuate the impact of tax increases. The lack of demand has already driven down your profit and the government is piling on.

  4. filistro says:

    I’m no economist, but this article still makes perfect sense to me. (Well done, Max!) I can’t imagine that any business owner would hesitate to expand because he might pay a bit more in taxes… because TAXES ARE ASSESSED ON PROFITS. If he’s paying more taxes, it means he’s making more money.

    This whole scam is designed to promote the Republican obsession with cutting taxes at all costs. The really interesting thing about the current controversy is that it brings two winger hobby-horses…. lower deficits and tax-cutting… into direct conflict with each other. And this makes it clear that when push comes to shove, Republicans don’t really care about deficits. They only care about putting more and more money in the vaults of the wealthiest Americans.

    I heard somebody yesterday (wish I could remember who it was but I can’t, I think it was on Meet the Press) saying that Republicans always decry “redistributive economic policies” but in reality the past few decades have seen the greatest redistribution of wealth in all of American history. However, the redistribution has all been upward, flowing from the lower and middle classes to the upper class.

    History has shown us over and over what happens to any country that loses its middle class and is reduced to a small, vastly wealthy ruling oligarchy and a huge, angry, disaffected underclass.

    The answer… nothing good. (Think France at the end of the 18th century, or Russia at the beginning of the 20th. )

    The wealthy in America will pay dearly for their horrendous, rapacious greed. Unfortunately, everybody else will suffer along with them for a long time.

    “Those who refuse to learn from history are doomed to repeat it.”

  5. Bart DePalma says:

    Fili:

    Pray tell how did the wealthy take/redistribute a dime from the poor or middle class?

    The tax system surely did not accomplish this since:

    1) The top 1% of earners earned 19% of total income, but paid 28% of all taxes under an effective total federal tax rate of 31%.

    2) The top quintile of earners earned 56% of total income, but paid 69% of all taxes under an effective total federal tax rate of 26%.

    http://citizen-pamphleteer.blogspot.com/2009/04/taxation-in-excess-of-representation.html

    Even if your rant had a grain of truth in it, how does having the government take even more money from the wealthy increase the income of ether the poor or middle class? This is like Robin Hood stealing from the wealthy and spending on himself and his merry band of bureaucrats.

  6. filistro says:

    Bart, if you feel there has been no upward redistribution in recent decades, how do you explain this?

    Or this (from the article: Between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation — an increase in income of $973,100 per household — compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth (see Figure 1).

  7. Mainer says:

    So right Fili and Max and Bart do you never get tired of being an asshole? No I will not play cute with words. What Max said mirrors what actual small business owners I know have been saying. The Barts of the world will eventually be the recipients of the new growth industry……the next mini bubble as it were. I am thinking of setting up a shop to build prefab gallows to be ready for the eventual reality that is coming. I have friends that already handle the finest line (rope for you danged landlubbers) my bosun buddies would love to 1099 their line tieing skills and local wood workers could enjoy some good pay days building fine prefab gallows for the mobs that will descend on the Barts of the world. Now understand I am not talking any second amendment sollutions here…hell every body knows lefties down own guns…….keep repeating that Bart it will make you sleep better but several million pissed off people converging on the national mall (with really nifty pre fab gallows) will be enough to get some ones attention.

    Now Bart from your picture I am guessing that you will require a small noose (we can give a discount on that) while a Mitch could easily get into the large or very extra large (going to have to adjust the pricing here a little) hey business is business right Bart? If you can’t make a profit then why do it? I see opportunity here. Hmmmmm how would one go about doing an IPO on a rent a gallows operation?

  8. Bart DePalma says:

    Fili:

    I would be pleased to. First, a couple notes:

    1) I would note that household income provides a poor comparison over this period because more folks moved out on their own during this very prosperous period, thus reducing the number of folks per household earning income. Also, family dependent composition has changed over time. You need to look at income per worker broken down by quintiles to get an accurate measure.

    2) This time period should begin in 1982 when the Reagan reforms went into place. Including the 1980-82 double dip recession skews the measure because it harmed the poor and middle class far more than the wealthy.

    As for your question, there were four factors at work during the generation long Reagan boom:

    1) Freeing up the economy made it far easier to invest in and start successful businesses. This is how you become wealthy and many folks became very wealthy.

    2) The emergence of the knowledge economy and a very well paid government bureaucracy vastly increased the size of the upper middle class or upper quintile.

    3) Low skill middle class manufacturing jobs went the way of farming – competition and mechanization are inexorably reducing these jobs.

    4) The prosperous economy brought in a large wave of poor, low skill immigrants. They improved their individual economic lot, but depressed the wages for the bottom quintile.

    In no case did categories 1 or 2 steal a dime from the middle class or poor nor would punishing them with even higher tax rates help the middle class or poor. Rather, such a policy would bring back the frequent recessions we suffered between WWII and 1982 and make the country less prosperous.

    Instead, we need to educate people for the current array of jobs and live with the fact that we will have a relatively poor immigrant class which is actually improving their economic situation from the home country.

  9. Bart,

    Most business owners require some level of profit/income from the business to forego other opportunities. If taxes drive that profit below what the owner considers necessary, he or she is more likely to sell off or close that business and seek other more lucrative opportunities.

    In other words, with lower taxes they are seeking less lucrative opportunities? If so, then by all means let’s raise the taxes!

  10. Bart DePalma says:

    Michael:

    Huh?

    Lowering taxes makes the present business more lucrative and thus reduces the probability that the business owner will bail and the employees will be laid off.

  11. dcpetterson says:

    Barted:
    1) The top 1% of earners earned 19% of total income, but paid 28% of all taxes under an effective total federal tax rate of 31%.

    This typical nonsense bit of Republican talking-noise ignores the most important feature.The income of the top 1% skyrocketed while the income of the lower 90% stayed the same or went down

    So, not only did the the hugely wealthy get their taxes cut, they paid these lower taxes on immensely more income. Yes, the tax structure played a big part in redistributing the wealth of America upward, and you are being both dishonest and disingenuous to deny it.

    The question is not, “What percentage of their income went to taxes?” but “What was their annual after-tax income at the end of the decade compared to what it was at the beginning of the decade?”

    For the middle class, annual after-tax income went down during the Bush years. For the top 1%, after-tax income increased by about 230% (this is from memory — we need to verify this number). And the tax structure helped that by reducing both capital gains and income taxes.

  12. Bart DePalma says:

    dcpetterson says: The question is not, “What percentage of their income went to taxes?” but “What was their annual after-tax income at the end of the decade compared to what it was at the beginning of the decade?”

    Why is that at all relevant in determining tax rates unless your socialist goal is to reduce the income of a minority of taxpayers through confiscation of their earnings?

    An equitable tax system is broad (reaches nearly everyone, even if nominally, so there are no free riders) and relatively flat (no one should be paying substantially more of their income after basis living expenses [the personal deduction] than other tax payers).

    Ours is the most progressively punitive among developed nations.

  13. dcpetterson says:

    Why is that at all relevant in determining tax rates

    Because you tried to claim lowering the tax rates on the wealthy did not help to redistribute wealth upward. In point of fact, if they are playing lower taxes on increasing income, then yes, those lower taxes helped them keep more of the nation’s wealth for themselves. Duh.

  14. dcpetterson says:

    And to my earlier point, Republicans like to claim that lower taxes on the wealthy equates to more jobs created. Yet ten times as many jobs were created under the eight years of the Clinton tax rates as were created under eight years of the lower Bush tax rates. Clearly, the Clinton rates are far better for job growth.

    Furthermore, the real after-tax income of the middle class increased under Clinton, and decreased under Bush. Clearly, the Clinton tax rates are better for middle-class income growth.

    We’ve had an 8-year experiment in Republican economic policies. The period ended in the Great Recession. Clearly, Republican economic policies are bad for the world’s economy.

    Why is this even a discussion?

  15. Bart,

    Lowering taxes makes the present business more lucrative and thus reduces the probability that the business owner will bail and the employees will be laid off.

    Yes, but you said that if the business owner did all of that, the owner would then go start some other more lucrative business. My question to you is, why wasn’t that person going after the more lucrative business in the first place? And, given that the other business, being more lucrative, would clearly have a higher effective tax rate, why would higher tax rates make the business owner shift to the other business?

  16. Bart DePalma says:

    DC:

    Redistributing a lower percentage of the wealthy’s income through the tax system does not take a dime from the poor or middle class. It is still redistribution from the wealthy. Indeed, the wealthy today pay more absolutely and in comparison to the middle class and poor than in the past with higher income tax rates.

  17. filistro says:

    Another data bit that jumped out at me from the CBO article I linked: The gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007 (the period for which these data are available), according to data the Congressional Budget Office (CBO) issued last week. Taken together with prior research, the new data suggest greater income concentration at the top of the income scale than at any time since 1928.

    Got that? Taken together with prior research, the new data suggest greater income concentration at the top of the income scale than at any time since 1928.

    And what happened in 1928? And what just happened in the past two years?

    Clearly the concentration of wealth at teh top leads to massive recession or depression. (That’s actually a no-brainer since the middle-class, when it it becomes disproportionately impoverished, can’t afford to buy anything so the whole economy grinds to a halt.)

    Ergo… regular readjustment and redistribution of wealth appears to be a necessity for a healthy economy, just as regular fires are necessary for a healthy forest. And how can wealth, once acquired, be effectively redistributed except through taxation policy?

    You’d think the wealthy would WELCOME a more progressive tax policy since concentration of wealth clearly leads to recession… and the wealthy suffer during recessionary times along with everybody else.

    Come on, Bart. It’ll only hurt a little bit… and you’ll feel so much better in the long run. ;-)

  18. dcpetterson says:

    Bart, you are disingenuously ignoring my point.

    If the wealthy are acquiring an increasing amount of the nation’s wealth, in both absolute and percentage terms, and is paying lower taxes on it than they did previously, then the altered tax structure is helping them to keep more of the wealth they have acquired.

    Meanwhile, if the nation’s wealth is increasing, but the income of the middle class remains constant or even declines, then the newly-created wealth (which is being primarily created by the middle class, we should add) is being transferred, as a percentage of the total national wealth, from the middle class to the wealthy.

    You seem to be convinced that the tax rates o the wealthy determine everything from job growth to inflation to business profitability to incidence of dandruff. Why is the transfer of wealth from the middle class to the wealthy the one and only important aspect of the economy that is not determined by tax rates on the wealthy?

  19. dcpetterson says:

    Bart, I dare you to find me a single investor or business owner who ever said, “I think I will forgo earning the next $10 million because I’m going to have to pay 39% Federal tax on it instead of 35%.”

    Unless you can find me that person — no, you have to find me a couple of hundred of them — your arguments are meaningless noise.

    Find them, or admit you’re just trying to rationalize greed.

  20. filistro says:

    @DC.. Find them, or admit you’re just trying to rationalize greed.

    Which takes us back to the “Quote of the Week” at the top of this page. Galbraith was such a wise man.

  21. Mr. Universe says:

    @Bart

    Please get your head out of your ass. We’ve discussd the topic here a few times already. I did a cursory search for the article I specifically cited but it’s buried in the archives somewhere. And anyway, you’d just ignore it and keep your fingers in your ears and just keep repeating your well rehearsed talking points.

    The redistribution of wealt in this country since Reagan has been going in one direction and that is up. That is a FACT, Bart; a FACT! The middle class didn’t start the class war but, by GOD, we will finish it.

  22. dcpetterson says:

    @filistro

    I thought it was very revealing when Bart said,
    “Ours is the most progressively punitive among developed nations.”

    Many conservatives seem to think that paying taxes is a “punishment.” What an odious and unpatriotic notion! Uncharitable, unChristian, uncaring, and even unAmerican. The idea that people who are well-off should be offended at the thought of helping those they walk on and upon whose backs their homes are built, is despicable elitism at its core. It is the very sort of tyrannical feudal thinking that led to the American Revolution, this thought that the moneyed upper crust had some sort of god-given right to hold the nation’s wealth while everyone else created that wealth for them.

    It is particularly dishonest for someone who holds this elitist outlook to claim to be part of a “populist” movement. It does, however, help to reveal the truth of the Republican/conservative mindset as the enemy of the common man, the enemy of actual liberty. For in their feudal world of privilege , the serfs exist only to serve them. No wonder Bart would also write, “I know what is best for you rabble,” the instinctive cry of the oligarchic tyrant.

  23. Mr. Universe says:

    Hey, I just visited Bart’s blog for the first time. Good for a laugh if you’ve never visited oppositeland. And Bart, shouldn’t you give us a shout out in the blogs section? We apparently give you lots of ammo for your site.

  24. filistro says:

    @DC.. No wonder Bart would also write, “I know what is best for you rabble,

    …and don’t forget… write it with “a condescending sneer.” (I love to picture Bart sneering condescendingly and twirling the waxed ends of his handlebar moustache while typing , “I know what’s best for you rabble.” ;-)

  25. Bart DePalma says:

    filistro says: Got that? Taken together with prior research, the new data suggest greater income concentration at the top of the income scale than at any time since 1928. And what happened in 1928? And what just happened in the past two years?

    Good heavens, did you learn anything about coincidence, correlation and causation from Nate?

    In 1928, the United States enacted the first of two tariffs which started a trade war and reduced out exports bay half.

    In 2006, the CRS subprime mortgage market started entering default, in 2007 the housing bubble burst and then dragged the economy down with it.

    Neither had a thing in common with the other or the distribution of earnings.

  26. Bart DePalma says:

    dcpetterson says: “Bart, I dare you to find me a single investor or business owner who ever said, “I think I will forgo earning the next $10 million because I’m going to have to pay 39% Federal tax on it instead of 35%.”

    The ultra rich simply avoid increased taxes or move their profit making overseas where the taxes are lower.

    What we were discussing are small and medium business people who are dealing in hundreds of thousands and not billions.

  27. dcpetterson says:

    I just actually read this piece of bart:

    2) The emergence of the knowledge economy and a very well paid government bureaucracy vastly increased the size of the upper middle class or upper quintile.

    Uhm… by definition… a “quintile” is one-fifth. The top one-fifth did not increase it size. It remained one-fifth.

    However, the top quintile did increase the size of their take of the national pie. Mostly because that top one-fifth includes (again, by definition) the top 5%. those were the folks — the top one-quarter of the top one-fifth — who wound up with more net wealth. The other 75% of the top one-fifth remained pretty much where they had been for the whole decade.

    And if you are going to claim a “well paid government bureaucracy” makes up any significant portion of this top one-quarter of the top one-fifth, you’ll have to provide some evidence for your outrageous claim.

    We’ll wait. Please show us what percentage of those who make over $500,000 / year are members of the “well paid government bureaucracy.”

  28. filistro says:

    @Mr U… I just visited Bart’s blog for the first time.

    Hey, Bart has wv’s! I’m so jealous.

    Bart, I gotta tell you, I’m so tempted to leave a snide comment on “Mr Chunk, the Fat Cat,” that I can hardly stand it. I need to go and do some housecleaning until the urge subsides ;-)

  29. Bart DePalma says:

    Mr. Universe says: “The middle class didn’t start the class war but, by GOD, we will finish it.”

    This is predatory progressivism boiled down to its poisonous bile without the lies and spin. This might as well have come from a Fidel Castro or Hugo Chevez rant.

    This is why progressivism cannot be compromised with or lived with in a free society. It must be utterly discredited and discarded onto the intellectual ash heap of history with communism and fascism.

  30. Bart DePalma says:

    dcpetterson says: “Many conservatives seem to think that paying taxes is a “punishment.” What an odious and unpatriotic notion! Uncharitable, unChristian…”

    Christianity is about giving to help others of your own free will.

    Give unto Caesar what is Caesars (tax money), and to God what is God’s.

  31. dcpetterson says:

    @Bart
    The ultra rich simply avoid increased taxes or move their profit making overseas where the taxes are lower.

    Yes, they “avoid increased taxes” by re-investing that money rather than taking it as personal profit. In other words, as we raise taxes, we create jobs by encouraging people to make investments instead of taking profit (income taxes, remember, are applied to money that is not otherwise invested).

    As for moving overseas, I agree, the conservative taxation structure that encourages this needs to be changed. Start punishing companies for moving overseas.

    What we were discussing are small and medium business people who are dealing in hundreds of thousands and not billions.

    Then provide quotes from a few thousand people who make more than $350,000 / year saying that they going to forgo earning an extra $100,000 because their Federal taxes might be 39% instead of 35% (a total difference of $5000 on that extra $100,000 of income).

    Oh, and while you’re at it, show me how many jobs that extra $100,000 of personal profit to collected by each of those individuals (i.e., money not invested in their businesses) would have created. Remember, this is personal profit, which means it is money that would not have gone into their businesses anyway.

    In fact, find me anyone who said, “I would have taken the trouble to earn a a few tens of thousands of dollars, but hell, with an extra 5% in taxes, it’s not worth it.”

    I dare you. Find someone.

  32. Mr. Universe says:

    Bart, you’re a good stormtrooper from an Orwellian nightmare.

  33. dcpetterson says:

    And while you’re finding people Bart, explain why the Clinton tax structure created over twenty million jobs while the Bush tax structure created about a tenth as many, and why this means lower taxes on the wealthy will create jobs.

  34. dcpetterson says:

    Mr. Universe says: “The middle class didn’t start the class war but, by GOD, we will finish it.”

    Bart answers: “This is predatory progressivism boiled down to its poisonous bile without the lies and spin. This might as well have come from a Fidel Castro or Hugo Chevez rant.”

    Bart, you really do have absolute contempt for the middle class, don’t you? Your authoritarian and elitist extremism really does drive you to crush the middle class out of existence, and to see a defense of the middle class as something dangerous, huh? Well, I understand that, because the class warfare you and yours are waging really is dangerous to the elitist tyranny you support. But at least the hypocrisy of right-wing extremism has been revealed by your opposition to The People, and I thank you for your honesty.

  35. Bart DePalma says:

    dcpetterson says: “And while you’re finding people Bart, explain why the Clinton tax structure created over twenty million jobs while the Bush tax structure created about a tenth as many, and why this means lower taxes on the wealthy will create jobs.”

    This is nonsense. America has been a jobs machine since 1983. Our average unemployment rate during the following quarter century was the lowest for any similar period in US history since records were kept.

  36. shortchain says:

    Bart,

    Conveniently picking endpoints does not constitute a valid statistical analysis. I’m guessing if you change those endpoints, say, to 1972-present, you’d get a drastically different result.

    That would be a class-3 falsehood (classes 1 and 2 are “lies” and “damn lies”).

  37. Just Sayin' says:

    Poor Bart, let me tell you how its going to play out, All those conservative talking points that holds America back and you hold so dear are just going to be a memory in two short generations. All abortions will be done in the doctor’s office or the privacy of your own home. No one will care if a dude marries another dude. Universal Health insurance for all. Immigrants will be welcome and fairly treated. Education will be on par or better than the rest of the world and our young people will be competitive. We’ll stop polluting our land and water. Energy will be plentiful and won’t be held captive by the current monopolies. In other words as the young become of age, all that fancy liberal education will come to fruitation, the pitiful policies of the right will be exposed for what they are and finally come to an end.

  38. dcpetterson says:

    Me: “And while you’re finding people Bart, explain why the Clinton tax structure created over twenty million jobs while the Bush tax structure created about a tenth as many, and why this means lower taxes on the wealthy will create jobs.”

    Bart: “This is nonsense. America has been a jobs machine since 1983. Our average unemployment rate during the following quarter century was the lowest for any similar period in US history since records were kept.”

    Once again, let me lay it out for you. We’re told, again and again, that lower taxes for the wealthy will create jobs for the middle class. Under the Clinton tax structure, over twenty million jobs were created. Under the Bush tax cuts — that you want to reinstate — only about two million jobs were created. Explain why we should not go back to the Clinton tax structure, which worked ten times as well.

  39. dcpetterson says:

    By the way, Bart, Saint Ronnie raised taxes twelve times during his eight years, including what was at the time the largest single tax hike in history.

    The period 1983 – 2001 say much higher taxes than the period 2001-2010. As you said, the American economy produced many millions of jobs — before the Bush tax cuts, and then pretty much stopped producing jobs.

    Explain why the job killing Bush tax cuts should be re-instated.

  40. Mr. Universe says:

    Bart…I give up. You are so beyond delusional that it’s just a waste of keyboard strokes to present you with facts. FACTS, Bart, FACTS. Not your interpretation of them, but the truth.

    Man, why do I bother?

  41. Max aka Birdpilot says:

    Bart said: “Max, You’ve taken profit out of the equation”.

    No Bart, wrong. Because profit NEVER was a part of the equation. I thought you said your undergraduate degree was in econ. Surely, (RIP, Leslie “Don’t call me Shirley” Nielsen) you had to take a couple of accounting courses working towards that degree. You biggest fallacious assertion in your argument that an owner would close one business and open another is that his marginal taxes on profits in the new business will be the same as the ones on the profits of the old. What with the costs of dissolution and then the start-up costs of the new, an owner would have a tremendous payback to overcome in a relatively short time span for such a move to be remotely reasonable. Not too many would make such a move. Real world, Bart. Join us in the real world.

    Pay attention, here. This is important: A lower marginal tax rate (please don’t forget the word “marginal”) will NOT cause me to hire another worker (means to an increase in units of production) UNLESS my DEMAND increases to a point that I am selling a majority of the production increase that worker represents. (50%=100 additional units sold is break even point) Why the hell would I do that? My profits would go down! Nor will a higher marginal tax rate cause me to lay off a worker since it would cut my production below what my current demand is! Since I can’t sell as much as the original quantity demanded, my profits will decrease again. It’s lose-lose!

    Real world, Bart.

    Try this:
    Selling price = $100
    COGS = 60%
    Labor = $4000 per each 200 units of production
    Overhead Constant @ $10,000

    Run that at Demand = 1000 and Effective tax rate of 35%, Profit = $6500
    Run that at Demand = 1000 and Effective tax rate of 30%, Profit = $7000, a 7.6% increase in profit
    Run that at Demand = 1200 and same effective TR, Profit = $9100, a 40% increase in profit
    Run that at Demand = 1000 and Effective tax rate of 40%, Profit = $6000, a 7.6% decrease in profit
    Run that at Demand = 1200 and Effective tax rate of 40%, Profit = $8600, a 32% increase in profit

    Now, these number are using EFFECTIVE tax rates, NOT marginal tax rates which would have a MUCH SMALLER effect on change in profits. I repeat: EFFECTIVE, not the MUCH smaller marginal!

    Still, an increase in BOTH Effective tax rate AND Quantity Demanded of ONE Worker production increase results in FOUR TIMES the profit change than that of the tax increase/decrease alone.

    Finally, if the CURRENT tax rate was working as advertised, WHERE ARE THE JOBS?

    Bart and the GOP are saying maintaining the STATUS QUO will increase jobs or stop further job losses. This is patently false as demonstrated.

    Bart, if you got the NUMBERS to back up your assertions, lay ‘em on the table.

  42. filistro says:

    @Just sayin’… Poor Bart, let me tell you how its going to play out, All those conservative talking points that holds America back and you hold so dear are just going to be a memory in two short generations.

    Bless your heart. I’d give you TEN thumbs up for this post if I could. It puts everything in perspective… and it’s all so true. The reactionary right wing is on the way out… not just here but around the world. We really are witnessing its furious death throes. How comforting to remember that.

    Thank you for a wonderful post.

  43. GROG says:

    Max said:

    How many times have we heard the primary justification by the Republican Party of extending the Bush tax breaks for the rich being the reason for ‘job creation’?

    For all you writers out there, does that sentence make sense? Extending the Bush tax breaks for the rich is not a “reason for job creation”.

    Does he mean to say the reason the Republicans give for extending the Bush tax breaks is “job creation”?

  44. dcpetterson says:

    Well done, Max!

    Bart has maintained previously that economies are driven by supply, not by demand. He has claimed that decreasing the tax rate will decrease the cost of production, and this will therefore lead to an increase in production, and, therefore, and increase in employment.

    He cannot understand that if demand does not increase, no company will increase production, even with a fall in the cost to produce. In fact, increasing production at a time of flat demand will actually reduce profits by merely creating unsellable units.

    Your example drives the point home. Increased demand = increased production = increased profits and increased employment. Profits increase even if the marginal tax rate goes up — in fact, unless the marginal tax rate reaches 100%, profits will always go up if there is increased demand, since taxes are assessed only on the portion of income that did not go to cost of production.

    The right-wing talking point that taxes discourage an increase in production is complete nonsense. Production is driven by demand, plain and simple.

  45. Max aka Birdpilot says:

    GROG,

    If I have syntactical errors, please ask filistro for corrections. I am a computer science and math major, not English. Your suggestion is noted.

    I admit that, sometimes, my points to be made get in front of my grammar!

    Thanks for your constructive input.

  46. Max aka Birdpilot says:

    @ dcpeterson:

    Bart has also, in the past, maintained that intelligent people are not influenced by advertising. (Although he never answered the question of whether or not he tastes a new pet food before he purchases).

    But if supply drove economies, companies would create things and, to get us to buy them, advertise like hell about how much we need their product. Then we would all rush out like a herd of lemmings to buy said product.

    But if advertising does not influence the buyer, all those new products would not be bought.

    Huh?

    Wait, did we just catch Bart in a contradiction?

    But does not advertising actually COMPARE(in some form or fashion) a new product with an existing item we already demand, with the implied promise that the new is “better”?

    Repeat often:
    Demand drives business.
    Workers are hired when business demand increases, not before.
    Owner income is only available after other business expenses are paid.
    Marginal tax rates on owner income does not affect hiring, only demand that justifies increased production does.

  47. Max aka Birdpilot says:

    @ mainer:

    I’d recommend using sheets instead of halyards for the gallows line. Anchor rode would be MUCH too heavy.

    OR a good dock line! It’s already got an eyesplice. Just thread the bitter end through the eye and apply as necessary!

  48. GROG says:

    DC Pettered:

    “And while you’re finding people Bart, explain why the Clinton tax structure created over twenty million jobs while the Bush tax structure created about a tenth as many, and why this means lower taxes on the wealthy will create jobs.”

    You do realize Clinton was a Supply Side, non-Keynesian president, don’t you?

    Clinton gave America the largest Capital Gains Tax CUT in American History. He cut spending by 3.5% percentage of the GDP. He reduced regulations, passed welfare reform, removed the retirement earnings test for Social Security, and passed NAFTA through congress. (He also happened to help pass the Federal Housing Enterprises Financial Safety and Soundness Act which helped to destroy the American economy in 2008, but that’s for a different discussion.)

    His policies are a sign of true supply side success.

    DC Pettered:

    “….and why this means lower taxes on the wealthy will create jobs.”

    The GOP discussion has nothing to do with lowering taxes on the wealthy. It involves keeping the current tax structure that has been in place for the better part of a decade. Are you saying raising taxes during a recession will have no negative impact job creation?

    Do you have any evidence from either history, a quote from an economist, or a quote from a CEO that shows raising taxes during an economic downturn will have no negative impact on job creation?

  49. GROG,

    Are you saying raising taxes during a recession will have no negative impact job creation?

    Do you have any evidence from either history, a quote from an economist, or a quote from a CEO that shows raising taxes during an economic downturn will have no negative impact on job creation?

    I don’t know whether he will say it, but I’m working on an article in which I will say it. I’ll use evidence from history. But you’ll have to wait until I’m done.

  50. GROG says:

    MW,

    I look forward to reading it.

  51. Mainer says:

    Good ideas Max. With dock lines one could have a wide assortment at hand and of course one size would fit all. You do undertand those pre fab gallows will have to be built by union labor and I’m sure the IBONS (International Brotherhood of neck stretchers) will do a fine job operating these quality, Maine made, union shop, spruce (hardwood extra) pre fab gallows.

  52. filistro says:

    Max and Mainer… you do realize you’re both getting a bit scary, right?

    On the other hand, it’s kind of thrilling to see a couple of red-blooded righteous American males get REALLY ANGRY. God bless ‘em… it’s how the country was built, the west was won and the bad guys got their butts kicked in two world wars.

    I sure wouldn’t want to be one of the people y’all were mad at ;-)

  53. Max aka Birdpilot says:

    @ filistro

    A WISE choice.

    Progressives are not all pacifists. Pure pacifism is counter productive to self and racial preservation. One must avoid conflict, but must be both prepared and willing to engage should conflict be forced upon one. Any quality sensei of the martial arts drills this in every student. A goodly chunk of what Sun Tzu had to say was cautioning AGAINST war, its costs and pitfalls, but also how best to wage war when necessary.

    Once conflict is unavoidable, the sole purpose is to WIN in as short a time as possible by whatever means necessary! There is no “fair”! Anger is a tactic, not a strategy, to either upset the opponent or stir one’s own adrenaline, or both. Rational tactics before and during conflict is a requirement. One may then resort to humanitarian actions AFTER the opponent is assured to be no longer a threat. Assuming they survived, of course.

    I prefer to use words. But, should some damn fool decide they actually want to use “Second Amendment remedies”, they better shoot first and accurately. They won’t get a second chance!

  54. filistro says:

    Max.. as always, I am so happy to have you on OUR side ;-)

    Welcome back, you’ve been greatly missed.

  55. filistro says:

    @Max… Progressives are not all pacifists.

    Hey Max, no kidding. I just noticed that Mainer got TWENTY-SEVEN THUMBS UP for his first bit of gallows humor up there. We’re mad as hell and we’re not going to take it much longer!

    You and all those fat cat elites you’re pimping for had better watch your backs, Bart. As Monty Python would say… the peasants are revolting!

  56. dcpetterson says:

    GROG, Clinton exercised a number of techniques to improve the economy. He’s a pragmatist, not an ideologue. My point was that wingers often insist that returning to Clinton-era tax rates will kill jobs, whereas reinstating the Bush tax cuts will increase jobs. Yet history contradicts this idea, and no winger (not even someone of your abilities) has explained why.

    Would like like to take a shot at an answer? If Clinton-era rates would kill jobs and Bush-era rates would create jobs, why were ten times as many jobs created during Clinton’s eight years as during Bush’s eight years? And if Bush-era rates will create jobs, why haven’t we been seeing that magical growth for the last two years?

    I’m in favor of keeping the Bush-era rates for the middle class, since that would help avoid harming demand still more. For the wealthy, I cannot see that it would harm anything to return to Clinton-era rates, since they already aren’t investing the money, and (as Michael showed), marginal rates on business owners have little to no negative effect on investment anyway.

  57. Max aka Birdpilot says:

    @ fili

    Thank you, ma’am.

    Hope to be able to contribute in some small way.

  58. dcpetterson says:

    Personally, I think a guillotine would be a better symbol than a gallows, though they both work.

    The French Revolution was inspired by our Revolution, and France has been America’s oldest and most faithful ally — almost since the day we signed the Delcaration. Invoking the spirit of the revolt against the rich aristocracy is the perfect parallel for the astroturfed Teapers, bought and paid for by the rich and powerful oligarchs of today.

    The French gifted us with the Statute of Goddess Liberty — and invoking also that symbol of embracing immigrants, while at the same time sticking it to the jingoistic xenophobic wingers and their “freedom fries” (the French were right about Iraq, goddamit) … just too delicious.

  59. filistro says:

    @Max.. Hope to be able to contribute in some small way

    Oh, c’mon,… when did you ever do anything in a “small” way? :-)

  60. filistro says:

    Good grief… even the gentlemanly DC is getting bloodthirsty! (Personally, I think a guillotine would be a better symbol than a gallows )

    Be very afraid, Bart. This is not looking good.

  61. Bart DePalma says:

    filistro says: “Good grief… even the gentlemanly DC is getting bloodthirsty! (Personally, I think a guillotine would be a better symbol than a gallows ) Be very afraid, Bart. This is not looking good.”

    Typical. However, you might recall that we Tea Party folks outnumber progressives about 2:1 and we are far better armed.

    Listening to progressives talk tough is more an occasion for eye rolls than fear. Today, DC was quaking at the thought of using the power of the United States to merely discredit Assange. He would probably piss himself if I had suggested Assange meet with an unfortunate end in a car accident.

  62. GROG says:

    @DC,

    Other than just tax policy, there are many things to consider when comparing the “decades” of the Clinton years and the Bush years.

    The 90’s ushered in an entirerely new economy with the internet and technology booms. Consumer debt skyrocketed which fueled the economy and drove job creation.

    In the 2000’s, Bush inherited a post-Clinton era recession. Huge consumer debt. Then came 9/11. Then came 2008.

    The left likes to argue that Obama saved millions of jobs thanks to his economic policy. How do you know Bush didn’t save millions of jobs thanks to his economic policies?

    Bush and Clinton presided over drastically different times. We have to be careful when comparing their eras.

  63. filistro says:

    @Bart.. Listening to progressives talk tough is more an occasion for eye rolls than fear.

    Ah yes. And the last time somebody was so loftily dismissive of genuine populist outrage against greed, selfishness and inequity, she was wearing a powdered wig and talking about cake.

    How’d that insouciance thingy work out for ya, Marie?

  64. dcpetterson says:

    Bart? It wasn’t me who took you to task for your desire to ignore both the law and the Constitution. Nor, I think, are any Progressives here frightened by the reminder that you elites imagine yourselves to be too good for the law.

    It takes a lot more to frighten me than an empty threat put forward by someone with tea bags on a tricorn hat. Hell, I lived through two teenaged kids. Which also means I recall my daughter having Tea Parties when she was 4. I don’t care how many of you there are. Your bed time’s at 8:00 anyway.

  65. dcpetterson says:

    @GROG
    Other than just tax policy, there are many things to consider when comparing the “decades” of the Clinton years and the Bush years.

    EXACTLY!

    You win the prize here, GROG. I mean that sincerely.

    Bart keeps insisting tax rates are enough to create or kill jobs. You are absolutely 100% correct here. There was far more involved, and the Republican inane babbling that allowing the tax cuts for the extremely wealthy to expire will “kill jobs” is utter nonsense.

    Republicans try to tell us that “cutting taxes” is the cure-all for everything. Is there a recession? Cut taxes, to create jobs! Is there inflation? Cut taxes to reduce borrowing! Is there a surplus? Cut taxes, we can afford it! Is there a deficit? Cut taxes, it will magically increase revenues!

    You just admitted there may actually be other factors to the economy than the tax rates on the wealthy. I want to sincerely acknowledge the admission. You done good.

  66. dcpetterson says:

    GROG just put his finger on the biggest problem with right-wing economic “theory.” Either they have to admit they’re exactly wrong about the effects of tax rates, or they have to admit the economy is more complex than tax rates. Either way, their simplistic bleating about the holy value of tax cuts is clearly just so much empty rhetoric.

    I was pushing for exactly the answer GROG gave. If one is going to cling to even a fantasy of the magical power of tax cuts, then one has to recognize there are other factors as well — which means the power of tax cuts is no longer to be seen as limitless, and we must consider other factors in the economy as well.

    Once we can being to consider other factors, tax rates can begin to be seen in context of the rest of the economy.

    This is the reason Bart refused to address my question — or even to acknowledge that I’d asked it. He saw the trap. He had no way out, because to him, there are no limits on the sacred manna of tax cuts, and nor are there any other factors to consider.

    So again, GROG, I sincerely salute you. You’re more honest, and have more contact with the real world, than does Bart. I am truly impressed.

  67. Max aka Birdpilot says:

    Bart said: “However, you might recall that we Tea Party folks outnumber progressives about 2:1 and we are far better armed. . . . Listening to progressives talk tough is more an occasion for eye rolls than fear. “
    :-)

    The Art of War, Sun Tzu

    III. Attack by Stratagem
    2. Hence to fight and conquer in all your battles
    is not supreme excellence; supreme excellence consists
    in breaking the enemy’s resistance without fighting.
    IV. Tactical Dispositions
    4. Hence the saying: One may know how to conquer
    without being able to do it.
    17. Simulated disorder postulates perfect discipline,
    simulated fear postulates courage; simulated weakness
    postulates strength.
    22. Though the enemy be stronger in numbers, we may
    prevent him from fighting. Scheme so as to discover
    his plans and the likelihood of their success.
    23. Rouse him, and learn the principle of his
    activity or inactivity. Force him to reveal himself,
    so as to find out his vulnerable spots.
    24. Carefully compare the opposing army with your own,
    so that you may know where strength is superabundant
    and where it is deficient.

    Brag on, Col. Tarleton.

    BTW. It’s a shame you did not have the courage of your convictions 6 months ago when, was it Shiloh?, who offer a wager on your boast of a 50+ seat House pick-up. Oh well, no GUTS, no glory!

  68. dcpetterson says:

    @Max
    BTW. It’s a shame you did not have the courage of your convictions 6 months ago when, was it Shiloh?, who offer a wager on your boast of a 50+ seat House pick-up. Oh well, no GUTS, no glory!

    Actually, Bart proposed that wager, and I took him up on it. Then he backed out.

    Too bad for him.

  69. Bart DePalma says:

    filistro says: “Ah yes. And the last time somebody was so loftily dismissive of genuine populist outrage against greed, selfishness and inequity, she was wearing a powdered wig and talking about cake.”

    Funny, the woman who most comes to mind playing the modern Marie Antoinette was Nancy Pelosi, who was the face of the party who the working folks ran out on a rail last election.

    You folks in the credentialed elite forget that you are the ruling class against whom the Tea Party working folks are rebelling against.

  70. filistro says:

    @Bart… you are the ruling class against whom the Tea Party working folks are rebelling against.

    Oh, please.

    Unless and until the “Tea Party working folks” join the attempt to deny 700 billion dollars in tax cut to multi-millionaires, they are not and never will be “working folks.”

    They are merely bought-and-paid-for tools and pimps for the greed-crazed elite that is stealing America’s wealth (and its future) entirely for its own gain.

  71. dcpetterson says:

    You folks in the credentialed elite forget that you are the ruling class against whom the Tea Party working folks are rebelling against.

    You elitist Teapers seem to forget that you’re all in thrall to the ruling class who is funding your ad campaign, and whose taxes you dearly want to cut.

    Your faux populism doesn’t fool anyone but yourselves, you know. You might as well try to make arguments on their merit, rather than on this absurd pretense that you somehow support the unwashed masses.

    Thankfully, we live in a nation of laws rather than under the Chinese cultural revolution style lynch mobs you fantasize about. And some lawmakers still try to make decisions based on the good of the country, rather than on the will of a corporate-backed mindless mob.

  72. Max aka Birdpilot says:

    So, just WHO were you before?

  73. dcpetterson says:

    By the way… Bart? Nancy Pelosi was reelected. The people she works for love her.

    Half-Governor Palin, on the other hand, resigned to avoid prosecution….

  74. dcpetterson says:

    @Max

    Many of the regulars know my alter ego. I haven’t made a secret of it. For those who don’t, I’ll allow a sense of discovery :)

  75. Max aka Birdpilot says:

    Bart said: You folks in the credentialed elite forget that you are the ruling class against whom the Tea Party working folks are rebelling against.

    And YOUR hero and main face of the TeaPers is an anti-intellectual, opportunist multimillionaire, failed half-term governor who can’t get more than a third of the voters IN HER STATE to vote for her anointed for US Senate, who cowardly avoids rigorous media questioning and who could not produce more than about one-third of her anointed candidates outside the deep red states elected to office.

    Ironic, you speak disparagingly of the “elite” when EVERY effort made by you and your kind is to GIVE billions in tax breaks while adding HUNDREDS of billions to the deficit to the actuall elite of this country.

    Spin it, Bart, spin it!

  76. shiloh says:

    @dc

    Hell, I lived through two teenaged kids.
    ~~~~~

    Coincidentally Bart has no kids as maybe the very thought of having children frightens ;) him even though he mentions he is “very well armed” ad nauseam.

    be afraid, be very afraid …

    >

    Listening to progressives talk tough is more an occasion for eye rolls than fear.

    Again Bartles, after Republicans cheney/bush/condi got caught w/their pants down on 9/11 and got their butts kicked in Iraq until they bribed the Iraqi tribal warlords and Iraqi puppet govt. etc. etc.

    and cheney/bush started the on going Afghanistan war, which has lasted longer than the Soviet Union’s skirmish w/Afghanistan mainly because cheney/bush dropped the ball there to start their misbegotten/foolish Iraq war.

    Conservatives always missing the target …

    Indeed, I’d be a tad wary of sarcastically implying liberals are weak on defense after cheney/bush’s 2001/2009 failure to protect NYC and the The Pentagon from foreign terrorist attacks.

    Let me repeat: failure to protect NYC and the The (((frickin’))) Pentagon from foreign terrorist attacks, hence, ergo, therefore the WTC Twin Towers were totally destroyed forever changing the way Americans live their lives ie the terrorists won! w/out firing a shot, eh.

    solo estoy diciendo

    >

    btw, shiloh doesn’t wager although I make an occasional prediction … and predict Bart will continue to make a 24/7 frickin’ fool of himself! at 538.

    Oh hell, if someone wants to wager will give 100 to 1 odds on Bart makin’ a fool of himself lol

    death ~ taxes ~ Bartles

    Liz Cheney: Bush Administration To Blame For North Korea Aggression

    carry on

  77. Max aka Birdpilot says:

    Ahh, the Minnesota connection. Must be my old pal shrinkers. Did you ever get in contact with Mr P?

    Has anyone heard from Tim from down here in San Antone?

  78. Gainsbourg69 says:

    While we’re on the topic of economics, would someone like to write an article about how the free market philosophy has been responsible for the fiscal failures of Greece, Ireland, Haiti, Argentina and the rest of Latin America? I think it would be awesome to debate the likes of Bart over this issue.

  79. Pingback: Take 2: Could Employing Tax Cuts Tax Employment? | 538 Refugees

  80. Pingback: The Reckoning | 538 Refugees

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s