I love the front page of today's Times.
Ki Gulbranson owns a logo apparel shop, deals in jewelry on the side and referees youth soccer games. He makes about $39,000 a year and wants you to know that he does not need any help from the federal government. He says that too many Americans lean on taxpayers rather than living within their means. He supports politicians who promise to cut government spending. In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip Cravaack, who ousted this region’s long-serving Democratic congressman.
Yet this year, as in each of the past three years, Mr. Gulbranson, 57, is counting on a payment of several thousand dollars from the federal government, a subsidy for working families called the earned-income tax credit. He has signed up his three school-age children to eat free breakfast and lunch at federal expense. And Medicare paid for his mother, 88, to have hip surgery twice.
The Times points out that many "middle class" Americans actually receive more money in assistance from the Federal Government than they send it but lack of math skills (thanks Education cut-backs!) to understand that and non-stop propaganda from the MSM has them convinced that Ignorance is Strength, War is Peace and Freedom is Slavery so he, like millions of others goose-steps off to the polls to vote for his own destruction.
In recent years Gulbranson has earned so little that he did not pay federal income taxes, although he still paid thousands of dollars toward Medicare and Social Security. The earned-income tax credit is intended to offset those payroll taxes, to encourage people with lower-paying jobs to remain in the work force.
The times goes on to point out (many pages with polls, charts, statistics) what a crisis we are approaching right here in America as the Middle Class now receives 69% more Government assistance they it did in 2000 and the bottom 20% – our nation's poorest 5th (including many retired parents living on SS) have seen their share of Government aid DROP from 54% to 36% – at the time when they need it the most. Meanwhile, our entitlement costs are climbing and chewing up more and more of the Federal Funds while the "solution" of the GOP is to put less money in and see if we can collapse the system so the Government won't "bother" us anymore.
One of the most interesting statistics is that Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates while states that pay more in taxes than they receive in benefits tend to support Democratic candidates.
Most people responding to the NYTimes/CBS poll (56%) did not even think Medicare will still be available when they turn 65, only 35% believe it will remain solvent. Interestingly, 59% of the people surveyed believe that raising the current premiums or raising taxes in general are the best wy to solve this vs. just 8% who believe current benefits should be reduced and 16% who believe future benefits should be reduced. Essentially the same 60% of the people believe that increasing taxes on "wealthy Americans" should play a major role in reducing the deficit.
As you can clearly see from the chart on the right, the disparity of wealth in this country is shocking. Of course people in the top 10% generally don't feel rich when the average person in the top 1% is 10 times richer than they are while people in the bottom 90% have just 1/100th as much. As Micheal Bloomberg is to you, you are to the guy washing your car.
I know a lot of you don't want to hear that but these are real numbers. The bottom 90% of FAMILIES live on an average of $31,244 a year. That's INCOME, if they took ALL of it home (but they don't because of SS, Medicare, Unemployment, State and Local, etc… even if they are some of those evil leeches in the bottom 50% who "pay no taxes"), it would only be $600 a week for the WHOLE FAMILY of 3.2 average people.
Please, take 20 $20 bills and put it in a pile on the kitchen counter and see if it lasts you a week without using your credit cards. I'm not talking about bills because, hopefully, these people don't have $600 monthly auto lease payments to make or $5,000 mortgages.
Let's just assume they use just $200 of that money for rent and utilities per week (and your next assignment will be to find a $800 per month place to live and stay there for a month), leaving them $400 to spend on whatever Mom, Dad and 1.2 kids need to get by on. Don't forget to save for college, your retirement, any potential medical catastrophes, weddings, funerals and other, normal emergencies…
We're not taking about the poorest of the poor here, we are talking about the AVERAGE of the bottom 90%. Compare that to those in the top 10%, who have $3,166 a week to spend. Even taking out $4,000 a month for a home (5x what the bottom 90% can afford), they are left with 108 $20s to spend each week. I'm sure many of you reading this have more than $2,160 in your wallets right now.
Don't get cocky though, the $2,160 you have in your wallet is less than a single day's allowance ($2,747) of the AVERAGE guy in the top 1% AFTER allowing for a $10,000 monthly home payment (2.5x your home). There are 1.2M families in the country with that kind of money and 120,000 of them have an average of $7,500 a day to spend and 12,000 of those guys have an average of $67,500 PER DAY to spend and we are supposed to believe that taxing those last 1.2M people 10% more ($120Bn) will destroy their lifestyles and leave them so burdened that they will no longer find the will to get up in the morning and create jobs.
Speaking of "job creators" – did you know that in December, NPR called the Republican party and asked to be put in contact with some tax burdened job creators. They were unable to provide anyone for NPR to interview. NPR then contacted several of the business lobbies who have been complaining that higher taxes would impede job growth. These organizations were also unable to find any job creators who would speak to NPR. NPR then put in a request to talk to job creators on Facebook. It got several responses from small business owners. The ones featured on its segment said that the personal tax rate would affect their disposable income but would have no effect on their hiring. This is pretty much what economic theory would predict.
Amazingly, this lovely bit of Newspeak refuses to bite the dust. Probably because all the Ki Gulbranson's of the World who fall for this rhetorical BS don't really grasp the fundamentals of business – they just like to think they do. From Ki's perspective, when he hires someone, it costs him money. That's because he "hires" plumbers and electricians and lawyers and accountants and maybe a cashier for his small business so it's not a big stretch to him to think of people who hire thousands of people as "really nice guys."
The fact of the matter is, as businessmen know, is we only hire more people because we have an expectation that they will make us more money than we pay them. Not only that, but we NEED those people to make more money or we would not hire them in the first place (no different than raw materials that we expect to finish and sell for a profit). If you give us money for free – then we don't need to hire people to make our money. Once you get to the level of public corporations, it is essentially their duty to control costs and labor is a cost. THEREFORE, in the absence of laws to the contrary, they will do anything and everything possible to pay as little money as possible for as much work as possible.
Labor costs are based on supply and demand so businesses are always looking to increase the supply of labor, by extending themselves geographically (also increases the supply of customers, which increases the demand for their products) and, historically, they will move their production to wherever it is least expensive. With the rise of multi-nationals, it's not just moving to another state anymore but moving production to other countries. Patent Law, IP Law, Labor Contracts etc. help to insure the companies that, after they dump their workforce, close down the plant, destroy a town and move production overseas – they won't face the danger of their former workforce re-opening the plant and going into competition with them – that's SMART!
It is the ROLE OF GOVERNMENT to protect the MAJORITY of its citizens from having their labor devalued by Corporations. Government is SUPPOSED to be the brakes that are applied to runaway corporate greed. In an ideal Capitalist World, the first shift of workers would show up at midnight and work until noon for no wages, followed by another shift to maximize use of our fixed investments. After going about as far as we could using automation in the last 20 years – the focus of cost savings for businesses has shifted to wages, which are still just a bit higher than zero.
It would also be ideal for Corporations in the ideal capitalist works to pay no taxes and no fees for the infrastructure and to be able to expect the full support of the police and military to shoot anyone who protests when they dump toxic goo into the water supply. All this maximizes profits and thus is the duty of the Corporation to pursue it. As long as these actions don't damage the demand for your goods – there is no logical, Capitalist reason not to pursue them. This is what it means to "minimize Government."
By what sudden leap of faith do we believe that taxing our Corporate Citizens less (they only pay an average of 10% now) is going to lead to more jobs? How do removing environmental controls lead to more jobs? How does handing out incentives that are not directly tied to new jobs lead to new jobs? Again, we are being asked to exercise acts of faith to support a model that has already PROVEN to be detrimental to our society at large! China understands this, as least as far as foreign Corporations go – the World's fastest-growing economy frowns on "excess profits."
And what are "excess profits"? They used to be clearly defined in the US. In 1917, there was an excess profit tax charged against corporations of 20-60% and that lasted through the war into 1921 as Congress (Republican) refused to make it a permanent part of the tax system. The National Industrial Recovery Act of 1933 used a form of excess profits tax to prevent evasion of the declared-value capital stock tax. Later in the decade, as war seemed imminent, a broader based excess profits tax began to be discussed. In 1940 President Roosevelt, insisting that government should ensure that “a few do not gain from the sacrifices of many,” sent a message to Congress calling for a “steeply graduated excess-profits tax.”
Between 1940 and 1943, there were 4 statutes passed regarding excess profits with taxes between 25-60% and, in 1942, there was a 90% rate, bumped up to 95% in 1943 – strongly discouraging corporations from war profiteering. Again in the 1950s (Korean War), Congress imposed up to 70% taxes on companies deemed to be making "too much money." In the 1980s, we had the "Windfall Profits Tax," passed by Carter and repealed by Reagan – who received record-breaking campaign donations from oil companies and was able to outspend Carter 3 to 1 in the election. As recently as 1991, some members of Congress sought to impose excess profit taxes on oil companies as prices climbed for the consumer and profits soared.
Most large companies are enjoying bloated bottom lines by refusing to return their workforce back to pre-recession levels. They can do this because unemployment is high, unions are weak and those with jobs find it difficult to resist demands for intensified workloads. Along with the perpetual wars in Iraq and Afghanistan, there is a war at home – a war against workers that amounts to a form of profiteering. If the leaders of this country were not in thrall to corporations, we would be talking about an excess profits tax focused on employers that keep their staffing levels artificially low.
It could very well turn out that higher, not lower taxes are what would induce companies to begin hiring again. Those companies which resist would at least be helping reduce the national deficit rather than further enriching the investor class.
Why has the very term "excess profits" been drummed out of the lexicon? Why is it not discussed in the MSM, why do we think it's good and normal for XOM to make $10Bn a quarter as part of $400Bn in energy sector annual profits – costing every man, woman and child on the planet Earth $57 ABOVE what it costs them to produce the energy that is a necessity for modern life? Of course it's more like $1,000 for each of the 500M industrialized families in the OECD nations and perhaps you think it's fine to pay $1,000 EXTRA to XOM et al for all the good work they do.
If that's the case, then we should pay WMT 10% too insteady of 3% – surely we could dig in and come up with another $30Bn a year for WMT as they too provide $400Bn worth of things we use every day. KR sells you $100Bn worth of food and only makes 1% – if they can jack food prices up 3 or 4 times then they can make 10% too – surely we need to encourage this. After all, it's just Capitalism, nothing personal…
