Joe the Plumber, a new spin

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Registered: 10-16-2008
Joe the Plumber, a new spin
166
Fri, 10-17-2008 - 4:16pm

The appeal of Joe the Plumber is that he puts a face to a tax number. Even if he's really not earning that much or isn't even a plumber. I am married to someone who makes that much and let me try to make the same point from a different perspective.

Go ahead, raise my taxes Obama. You are right, I can afford it. But first I'd like you to meet Mike, Steve and Emily. I don't own a business or anything, but I do spend my money (you know, since I'm one of the have's, that's what we do). Obama wanta to spread my wealth around and here's how it will affect 3 people in the middle and lower income brackets.

Mike - Mike is a music school teacher. He does private lessons on the side to make a little extra, in addition to volunteering in a community band. He loves teaching and playing music. He teaches one of our children and we pay him $100/mo.

Steve - Steve works full time doing private music lessons. He has two kids who he pays child support for and he lives on the edge of poverty. Private lessons is his only source of income. We pay for him to instruct three of our children and me every week. We pay him $364/mo.

Emily - Emily works full time but became a mom at age 18 yo, has no education past high school and lives near the poverty level. She is on her own being recently divorced. She helps us out once or twice a week, earning $120-$160/mo.

I recalculated Obama's tax proposals and realized it will only cost my family $1,350/mo on average. I can cover almost half of that by cutting my budget back, not hiring the babysitter and doing away with private music lessons (they are luxury items anyway).

I'm sure Mike, Steve and Emily will be glad to know that instead of earning money from my family, they will get $500 refundable tax credit next year under Obama's plan. And maybe even if $300 stimulus check like they got from Bush in the past.

Make less and pay less in tax, that's Obama's plan for the middle class.

Pennsylvania Mom http://openlettertobarack.blogspot.com/

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Registered: 10-16-2008
Fri, 10-17-2008 - 9:56pm

I'm not asking you to feel sorry for me, I don't feel sorry for me. I'm asking if it's possible for you to feel for Steve, Mike and Emily who will be worse off under Obama's plan. Maybe you some will be better under Obama's plan but I don't see how these three will. They make money that is dependent on the "haves" spending. The haves don't spend, they earn less.

Here are Obama's tax changes, the only credit I can see applying to these three is the $500 "making work pay" tax credit: http://www.taxfoundation.org/candidates08/compare/

Pennsylvania Mom http://openlettertobarack.blogspot.com/
iVillage Member
Registered: 10-16-2008
Fri, 10-17-2008 - 9:58pm
Oh, and I have the babysitter usually only one night a week while my husband is working and I need to be out of the house (sometimes it's for volunteer work I do, the rest it's for a class I'm taking).




Edited 10/17/2008 10:01 pm ET by pennsylvaniamom2008
Pennsylvania Mom http://openlettertobarack.blogspot.com/
iVillage Member
Registered: 03-09-2007
Fri, 10-17-2008 - 10:10pm

"They make money that is dependent on the "haves" spending. The haves don't spend, they earn less."

Jess


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Registered: 05-06-2007
Fri, 10-17-2008 - 10:10pm

It's not really important but I do think

Chrissy
mom to Aidan 8/21/03
Grayson Blaine 12/30/07

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Registered: 08-31-2008
Fri, 10-17-2008 - 10:11pm


Why

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Registered: 05-05-2008
Fri, 10-17-2008 - 10:24pm
"...and yet
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iVillage Member
Registered: 09-15-2008
Fri, 10-17-2008 - 10:32pm

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-i dont think you need to ask many of the people who have involved in this discussion to "feel" for steve mike and emily. as many of the people are voting for obama because they feel for the middle and lower class. also, i think steve mike and emily would fair better with obama, not just because of this tax policy, but because of his overall economic policy.


-on a side note, i do appreciate that you are taking into account how your choices will affect these three people in your life. there are many other mccain supporters on this board who would hear the stories of steve mike and emily say: "too bad. they need to pull themselves up by their bootstraps. personal accountability."

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Registered: 09-15-2008
Fri, 10-17-2008 - 10:38pm

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Registered: 05-06-2007
Fri, 10-17-2008 - 10:39pm

For one, not all teachers are government employees. And to be honest, nobody's taxes should have to be higher to pay those government employees that really do deserve more money. The reason that I say nobody's taxes should have to be higher is b/c of the amount of government waste, particularly in the military, that could be going to pay these employees higher wages. But that wasn't really my point. There are so many important occupations in this country that we NEED to keep our country running but the pay is so low in comparison to many jobs that really don't make that big a difference in the scheme of things.


Chrissy
mom to Aidan 8/21/03
Grayson Blaine 12/30/07

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Registered: 07-23-2008
Fri, 10-17-2008 - 10:43pm

If trickle down for tax cuts does not happen, why do you think it would for tax increases? Trickle down economics flat out does not work. A history of economy policy lesson:

When Reagan was elected, the wealthy were severely overtaxed - close to 70% - and this *did* stifle the economy. When he lowered taxes (to 28% by the end of his 2nd term), the economy had largely recovered and this was attributed to the lower tax rate of the wealthy. Then George Bush I was elected and promised "no new taxes" - remember? We read his lips and everything! However, he soon realized, under the advisement of the economics experts on his staff that the economy was tanking again, the US was falling farther and farther into debt, and taxes needed to be raised to help correct these things. Of course that pissed everyone off and he was not elected for a 2nd term. However, it is widely recognized that Bush I was more or less screwed by Reagan's tax cuts at the end of his last term. By instating tax increases, the economy started improving and when Bill Clinton was elected, he got most of the credit for this - but he also did some tax increasing of his own. And so the economy flourished for the next eight years. Then, the American people elected George Bush II. Bush II thought that since tax cuts worked for Reagan, they must work again. However what he did not consider is that the wealthy were NOT severely overtaxed when he came into power - so that plan wouldn't work. He did it anyway. You could say he took Reaganomics and ran with it - ran right off a cliff. And here we are eight years later and in a world of hurt.

My point: There is a taxation balance that needs to be found. The economy works because the lower and middle income workers fuel the economy by exercising their spending power and the high income workers create jobs for the low and middle income workers who in turn buy the products they produce - it's a cycle. If either thing is out of whack, the economy suffers. The progressive tax is a good thing because the upper income earners have more disposable income than the middle income earners. In fact a much larger percentage of their income is disposable - making it less of a burden on them when they have a higher tax rate. Of course the tax rate is not on their entire income, which many of you seem to not know - it is only on the part that is over the income bracket that is taxed at the higher rate. However, if they are overtaxed, it will stifle the economy. Likewise, if the middle and lower income earners are overtaxed, they will stop buying things and this will also stifle the economy. Overtaxing of the lower and middle income earners becomes repressive at a much lower percentage because of their low relative percentage of disposable income.

The trickle down effect only works if the higher income earners have an outrageously high income tax. Otherwise the government gives these tax breaks to the wealthy, the wealthy pocket a large amount of that money (who could blame them) and only a very small percentage actually transforms into jobs and higher wages for workers. Basically the government is "wasting" all that potential tax revenue for a vanishingly small return. The government would have done better to keep that money and invest in job creation - such as green energy and higher science grants to churn out more ideas for small businesses. Tax cuts do NOT encourage people to make more jobs and give higher wages. But the opposite is true - too high taxes DO stifle the economy.

Think about it this way: People need food. If they eat a little food they can barely survive. If they eat more food they get stronger, can do more, and have a better chance of survival. However there is a tipping point at which more food won't help. It will just make them fat. Then, they become victims to obesity related diseases. While this is not a perfect analogy, I think it does help illustrate my point. The wealthy are now victims of "financial obesity". I know, lame analogy.

Anyway, the progressive tax is a smart economic policy - so long as the highest earners aren't paying a stifling tax rate - which NO one is proposing. What needs to be done is to raise the tax rate on the wealthy back to the point that it was just before our economy reached a peak - that's probably close to the optimal tax situation for the country.

On a tangentally related topic, I'm SO tired of people throwing around words like "socialism" in regards to raising the tax rate on the wealthy. First of all - no one is proposing socialism. That's just a manipulative fear buzz word thrown around by people who, IMO, don't really understand economics. Secondly, raising tax revenue in this way is a smart economic policy and it's probably the only thing that will ever get our country out of debt.

The whole "rich people worked harder for what they have and so they should be able to keep the same percentage of it - it's only fair" ignores the fact that we all did not start out on a level playing field. The wealthy kid who goes to private school, has tutors, private music lessons, etc. had many more advantages that the poor kid raised by a single mom who works several jobs and is not really ever around to support her child's education. That's also not fair. Life is not fair. It is not the President's job to make life fair. It is the President's job to grow the economy, keep us safe (which to me includes healthcare and providing services to the poor to help them break the cycle of poverty so they have some hope in their lives and do not become criminals), and provide essential services to the population (infrastructure, etc.). If the best way to do these things is to make the wealthy pay a little more - then that is what should be done. The government gets way more "bang for its buck" so to speak by raising taxes on the wealthy. The increased revenue does a greater economic good (so long as it is spent wisely) than whatever small residual economic declines would occur from lost jobs, lower wages, etc. - to a certain point. There is a tipping point at which higher taxation becomes more harmful to the economy than the benefits of the extra revenue - we should look historically at the economy and set the tax rate there or just below that point.





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