Tuesday, September 20, 2011

Tax, Lies and Idiot-Gate

OK... I made up the Idiot-Gate thing to get the whole "Sex, Lies and Videotape" analogy... but it really seems to me like the idiocy on display by various Republicans should be considered a major scandal.

Sooo, have you seen the inane comments made by Republican Congressman John Fleming of Louisiana? If not, I offer this for your viewing pleasure.

Multi-Millionaire Lawmaker: I Can't Afford a Tax Hike

Where to begin?

First of all, let's start with this statement:

"The income flows to my personal tax return, and whatever is leftover after taxes are paid, I feed my family on the one hand, and on the other hand I reinvest in my business."

Ummmm.... WRONG!

I'm not sure if this man is just stupid or if he's counting on the fact that most Americans don't own their own businesses, and therefore don't understand how taxes for business owners are calculated. But here's the deal. If you invest money back into your business, it's called... let's see... what's the term... oh yeah... a BUSINESS EXPENSE!!! And business expenses are subtracted BEFORE taxes, so that means, that any money invested in your business is, let's see, what's the term... oh yeah... TAX FREE!!

So, my dear Mr. Fleming, the only money you pay ANY taxes on at all, is the NET income... you know... the profit... the AFTER business expenses part. 

It just totally kills me that both the media and the Democrats continue to let the Republicans get away with making this completely spurious argument that somehow taxing the personal (IE after business expenses) income of small business owners discourages them from re-investing in their businesses. Is the whole world too stupid to know that only net income is taxed... or to even know the difference between net and gross income? 

Let me spell it out for you Mr. Fleming...


If anything, upping the amount that small business owners pay in taxes actually encourages them to reinvest money in their businesses because it allows them to pay... get this... LESS TAXES!! 

But I digress. 

Let's take this next statement by Mr. Fleming.

"My net income... is more like $600,000"

Did you get that? So this guy is screaming and crying about how he can't afford to pay more taxes under the "Buffet Plan" - which would increase taxes on people making more than a million dollars. But HE ONLY MAKES $600,000!!! So he wouldn't even be affected one way or another by this new tax plan!!

But does our intrepid MSNBC interviewer bother to point this out?

Photo by Laughing Squid on Flickr
Good God... it just makes me want to scream.

Of course, I realize that when you talk about taxes, people aren't really responding based on logic or facts, they're responding on pure emotion. No matter how much or little money you make, on some level it just doesn't seem "fair" that you have to give a portion back to the society.

But no matter how you feel about taxes, government spending, redistribution of wealth and the like (and I assure you, I have PLENTY of opinions on the topic) the truth is that this isn't about ethics, its about economics.

I mean, when you have an enormous disparity between rich and poor, as we do in this country, what ends up happening is that all the money collects in the hands of a small group of uber-wealthy. These folks don't spend the money because... really... there's only so much money that a person can spend. So you end up with a huge chunk of the society's wealth "trapped" and not circulating in the economy. 

This is bad for EVERYBODY, because if the poor and the (quickly vanishing) middle class don't have any money to spend, they can't purchase any goods or services. And if people can't buy anything, then all of these precious businesses that we're so concerned about HAVE NO CUSTOMERS!

If, on the other hand, you take some of that money and let the government invest it in the country... you know... things like bridges that won't fall down. Not only does it create jobs and get money circulating, it creates infrastructure that benefits everybody... including the businesses! 

Just think for one moment what it would be like if we had single payer health care in this country. Businesses would no longer be responsible for paying health costs for their employees. That means that it would be significantly more attractive for corporations to create jobs here in the US, not the mention the burden it would relieve from our precious "small business owners."

OK... single payer health care is a pipe dream, but I'm not just making this stuff up about taxes. According to New York University economics professor Edward Wolff:
"We had very high top marginal tax rates in the '50s and '60s, upwards of 90 percent, and we had our highest growth of the post-war period, perhaps the whole century."

But alas... I fear I am only spitting into the wind...

The rich and powerful will say and do anything to keep their free ride.

I wish I had some fabulous uplifting conclusion to this little tale... some way we could all "pull together" and "make things better" but I'm afraid I'm just not very optimistic these days.


  1. Oh!! There is so much one could say about that interview!! IF I'd seen that one, I'd be screaming at the TV like your guy at the computer. What a Class A Jerk.

    Excellent point re tax write-offs!
    Another thought, which I can't wrap my head around: if someone is "smart" enough to have a [small] business, make a million $, you'd think they wouldn't be such an idiot as to not incorporate. Clear separation business/personal. no personal liability, etc., etc.

    Seriously, when talking about the uber rich it is now -latest talking point- "class warfare", but when addressing the real issues facing the rest of us, it's about "the little people", the "working class", or some other quaint, patronizing phrase, and well, really, in their minds: "employees" or "suckers" (thank you PTBarnum).

    I think they MAYBE are going too far, now. Not a sympathetic position to say the least. But clearly, they don't care. They know how they will grab the power: not by popular vote, but by selling themselves to the highest bidders.
    Not a new concept, but this is incredibly brazen.

    I am a true believer in Karma, but sure wish I could speed up its appearance.

  2. Thanks for a wonderful (?) start to the day. Me & the critters are going to find a comfy cave and retreat from the world. If you know of a vacant one with indoor plumbing, please let me know.

  3. Jay - I fear I too am a bit impatient with Karma, but CatMan always says "Calm down... time wounds all heels." Here's hoping they finally are going too far.

    Connie - Sorry. I fear I've been a tad bit negative of late.

  4. I don't know that I can calm down. This is some sociopathic bullshit. (Excellent post, by the way.) I'm glad his idiocy has gone viral though.

    I really think that part of the reason why folks keep catering these asshats is the element of the American Dream where we can all be rich. We don't want to rock the boat, because one day soon we'll be in it! Yes, it's pure delusion, but it's so ingrained. Campaign finance reform, dude. We need to cut the damned puppet strings.

  5. This comment has been removed by the author.

  6. Check out this study:

    (tried posting w' tinyurl but didn't work)

  7. Demandra - You are SOOO right. I generally don't congregate with folks of a conservative bent, but I happened upon a few last summer at my high school reunion. OMG - this guy is going on and on about how unfair it us that the government takes "his" money and gives it to those greedy poor people. He's also going on and on about "his" gym. So I'm sitting there thinking the guy owns a gym and is one of those irate small business owners that the GOP is always catering to. Turns out, he's some sort of low level office tool making about $35K annually... he just hangs out at the gym all the time. It's totally ludicrous! Yo! Dude! The folks getting screwed here are YOU! Sigh.

    Jay - Oh my... I am shaking my head in disbelief after reading that article.

  8. Jay-isn't there a book out about psychopaths in positions of power? I think it's called "The Psychopath Test." Must investigate further.

    ECL--he sounds like a typical "aspirational." Totally disconnected from where he actually is in life, voting against his best interests, all because he wants to be what he is not. The GOP knows how to manipulate those types so well. Ug. I wonder what it will take to make those types see that they are just shooting themselves in the foot?

  9. "AspirationaL' ah, that is a dying breed I bet! I think the years of chronic unemployment is eroding that illusion slowly, but surely.

    Want to hear a terrible statistic? The unemployment rate of those under 30 is 45%*. I bet the underemployment numbers are even more staggering. What are we doing????

    (http://sanfrancisco.cbslocal.com/video/6281240-bay-area-young-adults-face-highest-unemployment-in-decades/ --now don't know how he got that %, if cumulative of all the age groups under 30, only Bay Area, or what)

  10. That is a seriously scary stat. I must investigate! But yeah, I think it's much worse than we're being led to believe. But perhaps the end of the aspirational voter will be the silver lining to all this crap. ??!?

  11. I wanted to point out that "investments" into a business are considered balance sheet item, not an expense. If you Grossed 1,000,000 dollars, and spent 500,000 of it buying the building where your business is located, that money is not an expense and is instead a fixed asset. No tax break in the way you mention. :)

    1. What? You mean to tell me that my little rant of 3.5 years ago might not have been entirely valid? :-)

      Seriously, I did not know that about capital expenses, but it does make sense since you're not really spending the money, just putting it into something that has value. But I'd be willing to bet you can still depreciate capital expenses, yes?

      Still... the dude never said "capital investments" per se, and the argument we always hear about why it's a sin to tax rich people is that they are the "job creators", as if somehow taxing them prevents them from hiring another employee - and salaries are most definitely a deductible expense.

      Anyhow, I'll stop ranting now - I just get really tired of hearing about all of the poor rich people out there.


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