Friday, October 31, 2008

Br'er Rabbit and the Myth of Hard Work - Oh, Dear, the Privileged are Feeling Persecuted Again

Obama has mentioned redistribution of wealth, and the wealthy are in full freak-out mode. Of course, the furor is completely false, and as wealth gets redistributed every day in every economic transaction, and the "socialist" redistribution that Obama has mentioned is nothing more than reversing the tax breaks that Bush showered on the uber-wealthy. Heck, back when he was a maverick, McCain opposed those same give-aways to the wealthy.

But they are dusting off the apocryphal old tales of how they are smugly demonstrating that those uppity youngsters don't really want to share. Yesterday, I received a story about a guy redistributing a waiter's tip to a homeless guy, as well as a crudely-drawn cartoon of a fat homeowner stealing kids' Halloween candy to go trick-or-treating for themselves. A couple weeks ago, another relatively wealthy friend sent me a story attempting to illustrate the evil of redistribution by comparing it to taking grades from a hardworking student and sharing them with her party-girl roommate.

I love these stories. They are a fascinating genre of fiction, mixing hilariously bogus analogies with self-serving credit to the older (presumptively) white dude outsmarting the naive youngsters. Honestly, if a doctoral student is looking for a thesis subject on mythology, a comparison of these little morality fables to Br'er Rabbit and Native American Coyote Trickster tales would offer some great insights.

The fact that they are being dusted off again, after circulating during Reagan's "Welfare Queen" indignation and the reign of the "Angry White Males" of midterm elections in the Clinton years, is fascinating. What is it now that brings out the stories of white male wit and triumph?

Obama is giving tax breaks to those shiftless, lazy, homeless, naive Americans earning less than a quarter million dollars per year!

These days, from the privileged Republican perspective, redistribution of the tax burden off of the middle class and onto those earning more than a quarter million dollars a year is equivalent to giving money to homeless people. The guy driving a "lesser" BMW and earning only $190,000 is analogous these days to the chimerical Welfare Queens driving their mythical Cadillacs in less skewed times.

Does that strike anyone else as odd? The Republicans are hooting and hollering because the redistribution of American wealth may shift from a shoveling dollars to those with incomes over a quarter million dollars a year to allowing it to stay with those somehow scraping by on something less than a quarter million dollars a year!

And this comes weeks after $700 billion got redistributed to Wall Street firms so they could fund trips and bonuses.

The horrors! The oppression! These are dark times, indeed, if you are struggling to get by on a quarter million dollars a year and a presidential candidate is asking you to step up and shoulder burdens similar to those you had to shoulder during the era of Clintonian Peace and Prosperity.

A better writer would close after mocking the uber-wealthy and their strange obsession with telling apocryphal myths illustrating their wit in the face of oppression by their unworthy underlings, but I have to go one more step and explode another myth that underlies these tales.

On the whole, the very well-paid don't work much harder than the average worker. They happen to be in positions where they generate more wealth, and I have no problem with them getting paid what they are getting paid, but they are NOT, by and large, working harder than you are.

There are a hell of a lot of minor-leaguers working a hell of a lot harder than Johnny Damon is. There are legions of middle-managers putting in longer hours than the people in the Executive Suite. The average factory worker goes home a lot more weary than the owner who happens to have inherited the company.

It's not hard work that pays in our economy. It's education, connections, innate talent, good judgment, the socio-economic class you were brought up in, ability to handle stress, and good old-fashioned luck. I'm not saying that well-paid workers don't deserve their high salaries, but don't try to argue that hard work is what makes the difference. It's harder actual work to run the counter at McDonald's than it is to be regional manager in charge of inventory, but the pay difference favors the regional manager. Again, the stress level, educational and intellectual demands, and other factors more than justify the pay differential, but when the wealthy start describing hard work to you, remember that they have to pay a personal trainer to help them break a sweat.

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Anonymous GMC70 said...

"It's education, connections, innate talent, good judgment, the socio-economic class you were brought up in, ability to handle stress, and good old-fashioned luck."

Dan, aside from the luck part, you've just described "hard work." You suffer from the same delusion my mother does - that if the work isn't physical, it isn't work. That is balony, of course.

You're right, of course, that wealth is redistributed every day. The issue, however, is who makes the decisions that redistribute that wealth? You and I, through the choices we make, or the State?

I'll always choose you and I. The State is still best described as Thomas Paine described it: "at best, a necessary evil, and at worse, an intolerable one."

10/31/2008 8:20 AM  
Blogger les said...

"the State"

It is to laugh. gm, what do you think "the State" is? I don't necessarily include you, gm, in this rant--you sound more like a garden variety glibertarian, not necessarily among the hopelessly Stoopid McPalin is trying to reach. What faceless, soulless ghoul "redistributes" your property tax? What unreachable dark entity builds roads, schools, fire and police stations? What vast behemoth maintains the society that allows you, with nothing but the drive and talent you certainly possess, to prosper, and then tries to steal your deserved wealth and "redistribute" it? The pants pissing fear that McCain is trying to stir for a moderate Democrat aiming to reimpose Reagan's tax scheme is fucking ridiculous. And it's making it obvious that a substantial chunk of the American electorate wouldn't recognize socialism if it bit them on the ass--not that the repubs are aiming at thinking voters--that would be elitist.

10/31/2008 9:11 AM  
Anonymous Anonymous said...

Yes, gm, connections and socio-economic class are the definition of hard work. (Do you really listen to yourself when you are talking?)

10/31/2008 9:13 AM  
Anonymous Anonymous said...

Once again, Dan is playing the role of the melodious pied-piper.

People that make good money don't get screwed by the taxman. They just increase their income and pass the cost along to the consumer.

Under Obama's plan, the consumer will have a little more money in their pocket, so they will pay the higher costs. Unfortunately, the cost of living will increase beyond what the "chosen one" has blessed you with. In the long run, more people will join the low-to-middle income bracket.

Do you really think Johnny Millionaire is going to suffer from higher taxes? Of course not! He's just going to pass the cost along to the consumer.

Do you think you're going to pay less at the pump when you increase the taxes on the people that run "big oil"?

Don't be so naive. That's exactly how the Democrats acquire more followers. The promise of a "better life thru the redistribution of wealth" is a scam that results in greater economic separation and removes the motivation for self-improvement.

Listen to the message. People with money are bad. You don't want to become a bad person; do you? Stay poor. Stay loved. Stay liberal.

10/31/2008 9:30 AM  
Blogger Bull E. Vard said...

First off, I think Republicans make a huge mistake playing the game in this fundamentally dishonest way. What they should be doing is pointing out that raising marginal rates is an inefficient way to get the rich to pay more. The rich pay a smaller effective tax rate than the middle class. They do this by maximizing deductions, home mortgage interest being the big one. So Barack is being effectively dishonest because he knows that marginal tax rates mean next to nothing.

I would prefer to eliminate the home mortgage interest deduction and state income tax deduction and raise the standard deductions by a reciprocal amount so a family earning under 100k doesn't feel a difference in their tax rate. This small change will greatly increase the effective tax rate the wealthy pay. Plus, eliminating the mortgage interest deduction has other great benefits unrelated to tax policy (ie. smaller houses, denser development, more diversified investments).

The flank that should be attacked is the back side of the redistribution scheme. How do we get the poor the money? I don't know what the plan is. I only know that Barack wants more $$ for the government coffers. How is he going to turn that into the poor being better off?

My guess is that whatever the redistribution scheme is, it can be attacked for being inefficient (forgive me Dan for making up numbers). But, if every $100 that is "taken" from the rich, the poor receive $40, is that efficient? Can it be done a better way? Maybe that $100 turns into $85, that's pretty good. But I don't know. Do you? Why isn't anyone asking these questions?

Focusing on the front end, the marginal tax rate, is the wrong way to think about this. And Republicans, who are running a stupid campaign, are doing no one any favors by not asking the right questions. Instead they are trying to paint Barack and Dems as socialists/Marxists.

I think that what Barack is proposing is inefficient and ultimately ineffective, but tax the rich plays well. What is doesn't do, though, is actually tax the rich more.

10/31/2008 9:32 AM  
Anonymous Anonymous said...

GMC, you should listen to Dan and your mother more often. They have more wisdom than you do.

Connections, innate talent, good judgment, upbringing, etc., are not hard work. They are are attributes that someone can have. I know plenty of talented lazy people. I know plenty of well-connected lazy people - and so on.

It's kind of like the difference between capital and labor. Hard work is the actual work, and Dan and your mom are quite correct - in terms of work, it's a helluva lot harder to lay asphalt than it is to spend your day making phone calls, sending emails and attending meetings, the way that I do.

Dan's point, while valid, ignores the personal opportunity to build up personal capital. I did work harder in school than some of my equally-smart friends, and now it's paying off. But my richest friend is dumber than a box of broken hammers, and used his father-in-law's money to build a business on country-club connections. He's a great guy, and I'm happy for him (he can't help it that is intellect isn't stellar), but he's no poster child for hard work and studying.

Now, as for who gets to make the decision about how wealth gets distributed, you are wrong again. First off, as Les points out, in a democracy, "you and I" are the State. Secondly, state interference in the economy is not something unnatural - it is inherent, and so is the redistribution that occurs with it. Unless you're willing to live in anarchy, the government plays a role in the economy, and it does so through taxation.

So, if we accept taxation as necessary (it is), then redistribution is part of every government. Should we run our government on the backs of the poor, or on the fat of the wealthy? Should we take the $5 the poor guy was going to use for food, or the $5 the rich guy was going to pile into a bank and forget? Most people say the rich guy has more flexibility.

Either way, I am glad I get to have a voice in how income gets redistributed when I buy lunch at a nice local restaurant, and when I vote on Tuesday.

10/31/2008 9:37 AM  
Anonymous mainstream said...


Obama is reinstating the 39% top marginal tax rate, which was in effect 1993-2003.

This is a lower top marginal tax rate that what existed under REAGAN.

The redistrbutive nature of a progressive tax system was established by John McCain's hero, Teddy Roosevelt, and it's what we've been living under for just about the whole 20th century.

We need to quit trying to answer the McCarthyism, and call it out for what it is:

The Republican Party has turned to McCarthyism is a deperate attempt to win the election.

It's that simple.

Otherwise, every single president, including Bush 43, is a "redistributionist" or a "scosialist". This is insane.

10/31/2008 10:09 AM  
Blogger les said...

Bull E: Decent questions; there's a lot of decent answers. Here's the impact of various tax/govt. spending ideas--

And the views of a Harvard economist/McCain advisor--

Sorry for the lack of skill--copy and paste to browser. The point--we don't generally, and Obama is not proposing to, just send checks from one taxpayer to another. The government taxes and uses the money; some uses have more bang for the buck, in terms of effect on GDP and income gains to portions of the populace. Bush/McCain policies have given 65% of income gains over the last 8 years to the top 1% of earners; gee, how could that not work? And they have increased debt, without a concomitant increase in GDP, real wages, employment--you name it. Dem admins tend to have good results for the top end, with better distribution across all income groups. You can look it up.

10/31/2008 5:22 PM  
Anonymous ktimmerman said...

Here are the facts on the income tax issue: draw your own conclusions, (based on IRS figures compiled by the National Taxpayers Union, (NTU).

Federal Personal Income Tax Paid By Americans who actually PAID:
Top 1%, making more than $388,806, pay 39.89%.
Top 5%, making more than $153,542, pay 60.14%.
Top 10%, making more than $108,904, pay 70.79%.
Top 25%, making more than $64,702, pay 86.27%.
Top 50%, making more than $31,987, pay 97.01%.
Bottom 50%, making less than $31,987, pay 2.99%.

So 50% of tax paying Americans only pick up 2.99% of the tab? In terms of redistributing the wealth, (governmental services), which McCain opposes, aren't we already redistributing the wealth? The vast majority of Americans are required to file an Income Tax Return. Of the 134,372,678 returns filed in 2005, how many folks were NOT required to pay income taxes, (social security and self employment taxes are another issue!!)?

Of ALL returns filed, 32.6%, had no income tax liability.
Of all "joint returns" filed, 23.7%, had no income tax liability.
Of all "filing separately" returns filed, 18.6% had no income tax liability.
Of all "head of household" returns filed, 67.1% had no income tax liability.
Of all "individual" returns filed, 29.4% had no income tax liability.

Share with me ... is it really fair that 1 out of 3 working Americans pay no income taxes? Is it really fair to increase the tax liability of the top 5%, who are already picking up 60% of the tab? Just who are the "95% of Americans" who will recieve a tax cut?

10/31/2008 8:53 PM  
Blogger Bull E. Vard said...

Les, neither of your examples really get at the heart of the matter as to what the mechanism of redistribution is going to be and what the efficacy of those methods is. Both of those links referred to increasing GDP, increasing tax revenues and getting out of the financial crisis. I want to know how the poor are going get to be better off by raising marginal tax rates on the rich.

10/31/2008 8:58 PM  
Blogger Dan said...

Karl - too bad you could not find a chart comparing percentage of taxes paid to the percentage of income received. You would have found things a lot more understandable. In America, the top 1% controls 38% of our nation's wealth. In that context, the fact that they pay almost the same amount in tax makes things a lot less shocking, doesn't it?

Is either candidate planning on increasing taxes on the bottom third, as you suggest? I wonder what could be wrong with that. Certainly the unemployed and retired and homeless should do their part!

Bull - you're on a roll with the good questions. The simple mechanism of increasing the marginal rates on the very wealthy will not have a direct impact on the poor. It may help avert financial crises by reducing our deficit, but we're all in that boat, and, as Bob Dylan pointed out, "When you got nothing, you got nothing to lose", so I won't really claim that is a huge help to the poor.

11/01/2008 8:15 AM  
Blogger I Travel for JOOLS said...

I'm glad Kitterman posted the tax information so we have a basis upon which to judge the "redistribution charge".

I'd add a couple of things. In my opinion what Obama is proposing is really a big expansion of the earned income tax money to people who pay no income taxes to offset their social security tax payments. In other words, it is a great expansion of the earned income tax credit done via a redistribution of income to only a certain category of "tax payer". It is not simply a return to the Clinton tax categories.

Second, it is my understanding that those who will get an income tax cut are families making less than $200K a year, not $250K, unless of course you believe Biden who says it is $150K or Richardson who says it is $120K. I'm not sure where singles fall into these scenarios. But, whatever the real basis is, the amounts differ within these categories depending on if you have children or not, if you have a mortgage or not, if you have college loans or not, if you pay capital gains tax or not, if you get dividends or not, etc. It's not simply a change in the marginal tax rates for the "wealthy". It's a change in the impact of one's particular lifestyle on what the taxpayer's tax will be. And, that, besides being confusing leads to great skepticism.

And, finally, I'd like to point out that people should not forget that historically speaking, incomes rise and generally grow with age. Unless Obama has factored this into his plan, 10 or 20 years down the road, a whole bunch of the population is going to be categorized as "wealthy". Think this is unrealistic? Take a look at the alternative minimum tax which now hits millions of people it was never intended to hit. I'd like to know what Obama's tax plan does about this potential problem.

I travel for JOOLS aka "Travel"

11/01/2008 8:25 AM  
Anonymous ktimmerman said...

I remain an independent, having run for office as a Democrat, Republican and Libertarian. An analysis by the Tax Foundation, (link at the end of the post).


The Presidential candidates have proposed comprehensive tax plans that reshape tax policy in important ways. The two candidates have put forward two very different visions, with Senator Obama's tax plan emphasizing redistribution and Senator McCain's tax plan focusing more on economic growth. A perhaps neglected aspect of their tax plans is how they alter effective marginal tax rates, the amount of tax that people pay out of their last dollar of income.

The concept of a marginal tax rate is important because it determines how much a taxpayer gets to keep when making various decisions, such as how much to work or save. High marginal tax rates can be economically harmful because some decisions may be based more on tax considerations than on economic merit.

The analysis below summarizes some of the effects the candidates' tax plans would have on effective marginal tax rates. Calculations that capture the effects of changes related to both the income and payroll tax are presented for a hypothetical two-earner couple with two children. Although these calculations are for the couple depicted below, they provide a sense of how the plans would affect taxpayers' marginal tax rates in general.

The major findings include:

To the surprise of some, even though Senator Obama's tax plan lowers taxes for the bottom four quintiles, marginal tax rates would fall only for the very lowest-income couples. Taking both income and payroll taxes into account, those at the very bottom of the income distribution would see their effective marginal tax rates fall from 27.4 percent to minus 58.6 percent due to proposed changes to the earned income tax credit and Senator Obama's new "Making Work Pay" credit.
Most low- and moderate-income couples would see their effective marginal tax rates rise, in some cases, significantly. Indeed, some low- and moderate-income taxpayers will see their marginal rates rise to more than 50 percent.
High-income taxpayers can also expect their effective marginal tax rates to riseā€”to 47.2 percent-under Senator Obama's tax plan. This increase is caused by rolling back the 2001 and 2003 reductions in the top two tax rates, curtailing deductions and exemptions at high income levels, and potentially raising Social Security taxes.
Senator McCain's tax plan also changes marginal tax rates. His proposal to replace the exclusion for employer-based health insurance with a new health tax credit boosts taxpayers' taxable incomes by their health insurance premiums which generally pushes taxpayers into higher tax brackets, but not to as great an extent as Senator Obama's tax plan.

Huggers, Dan

11/01/2008 10:07 PM  
Anonymous Anonymous said...

In a radio interview yesterday Nicole, a high-level staffer on the McCain campaign, specifically referenced the story about a guy redistributing a waiter's tip to a homeless guy. What does that tell you?

11/01/2008 10:07 PM  
Blogger Dan said...

Two things - this blog has its finger on the pulse of American politics, and the McCain campaign thinks America is dumb.

11/02/2008 8:14 AM  
Blogger Bull E. Vard said...

Dan, I don't think the McCain folks believe the American people are dumb. I think they believe the old adage "No one ever became poor underestimating the intelligence of the American people". McCain might become the first data point.

But every other politician that gets elected will be a data point in the other direction.

11/02/2008 8:35 AM  
Blogger les said...

Les, neither of your examples really get at the heart of the matter as to what the mechanism of redistribution is going to be and what the efficacy of those methods is. Both of those links referred to increasing GDP, increasing tax revenues and getting out of the financial crisis. I want to know how the poor are going get to be better off by raising marginal tax rates on the rich.

If you read the links, why are you still asking? Govt. investment--i.e., the application of tax revenues--i.e., "redistribution"--creates jobs; not shockingly, poor people are disproportionately in need of jobs. Wise govt. investment creates good jobs--construction, manufacturing, etc. Direct stimulus-wise, the biggest bang for the buck--biggest improvement to GDP, which means jobs, because, well, it's a measure of production--comes from putting money in the hands of the unemployed, and low income earners, who spend it and get it moving through the economy. Again, not shockingly, that's more the poor than the top 5%.

11/03/2008 11:17 AM  

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