A friend of mine quotes from the New York Times’s editorial endorsement of Obama, and then comments. First, the quote:
Mr. Obama is clear that the nation’s tax structure must be changed to make it fairer. That means the well-off Americans who have benefited disproportionately from Mr. Bush’s tax cuts will have to pay some more.
Working Americans, who have seen their standard of living fall and their children’s options narrow, will benefit. Mr. Obama wants to raise the minimum wage and tie it to inflation, restore a climate in which workers are able to organize unions if they wish and expand educational opportunities.
And my friend’s comment: “I love the second and third sentences, juxtaposing ‘well-off Americans’ and ‘working Americans.’ That’s right: Those Americans who are well off aren’t working. They are just fat cats sitting around, letting their money grows on trees. The whole editorial is so offensive, it sickens.”
I should mention that this particular friend is very hard-working — in fact, inordinately so. He is also not very political. He just smells nonsense — and dangerous, confiscatory, growth-killing nonsense — when it’s in the air.
Bush’s tax cuts actually shifted a higher burden onto higher earners. Let’s review exactly who pays income taxes in the USA:
Percentage of Federal Personal Income Tax Paid
The middle number is adjusted gross income
Top 1% — $388,806 — 39.89%
Top 5% — $153,542 — 60.14%
Top 10% — $108,904 — 70.79%
Top 25% — $64,702 — 86.27%
Top 50% — $31,987 — 97.01%
Bottom 50% — <$31,987 — 2.99%
Note: AGI is Adjusted Gross Income
Source: Internal Revenue Service
The NYT thinks it brilliant to tie minimum wage to inflation, as if wages are some arbitrary number employers pull out of a hat.
Wages must be tied to productivity and profitablility or else you’ll get higher unemployment.
Most politicians, especially lawyers like Obama, have never run a business, never met a payroll. They inhabit a world of theory and high-minded intentions. Such people are dangerous.
Consider this from a June post:
My parents own an ice cream shop, and rely heavily in its operation on eight 16-20 year olds working part-time schedules of 16-24 hours a week, along with one full-time manager who is assisted by my parents in their free time. Over the course of a 7 day work week, they typically employ the part-time workers for a total of about 340 hours a week.
Raising the minimum wage by .70 increased their straight wage expense by $240 a week, or about $1000 a month. But it had collateral consequences as well, as their worker’s comp. and unemployment insurance costs rose in relation to their payroll, as did their payroll tax contributions. The combination of wage increase and the various increases that spin off that wage increase was about $1500 a month. This is against a total wage expense for the part-timers of about $8000 a month.
Now, the ice cream parlor business is somewhat inelastic from a price stand point — people won’t continue to pay higher and higher prices for an ice cream cone when the alternative is simply to do without. So, that increase in operating expense could not, in total, be passed on to the customers. Instead, my parents worked a few more hours themselves and trimmed back on the hours they had the part-timers working. When one of the part-timers quit, they didn’t hire a replacement for her.