The party of ideas

I was reading this article which makes reference to something I just had to look up.

Ahh, yes! The unlicensed monkey with the plunger telling me that a 3% increase in the marginal tax rate is somehow equivalent to collective ownership. Oh so amusing…

Graphic and text from SadlyNo:

Obama’s proposed hike of the top marginal rate to 39.6 percent doesn’t represent the highest it’s ever been, not by a long shot. Joe the Plumber might be interested to learn that, in fact, when the top marginal rate was lots and lots higher, America did all sorts of cool shit, like win two world wars, invent the Internet and play golf on the Moon.

Now it may be that Joe the Plumber, John McCain and Sarah Palin don’t like kicking Nazi ass, cheap porn, and Tang. But real Americans do, even if they sometimes forget how we got to do and have those things. It took tax money to achieve the national greatness we all know and love. Conversely, when we stopped taxing rich people, lots of terrible crap happened

Favorite comment:

I’m worried about being taxed more under Obama, because I was planning on winning the lottery in the next couple years.

5 thoughts on “The party of ideas

  1. Interesting points… yes, during that period of *much higher* tax rates, the US did win two world wars, invent the Internet and play golf on the Moon… but I think you’ve missed the point.

    Those are all things that the US *Government* did and/or orchestrated. None of those things were accomplished by the middle class that Obama claims to love and support. I think you’ve further supported the point that when taxes are higher, the US (Government) can do huge things.

    I guess if we’re looking to have another world war, Obama will be ready?

  2. [Donny, I deleted this comment because it is PHP related and should be put on the PHP-related threads instead of the political ones. You’ll get much more traction there, and it looks like spam here. I’ll be posting a lot more PHP after the election. ;-)]

  3. Keith,

    Hmm, we didn’t win world war 2 and the cold war because our industry powered by the middle class didn’t outproduce and outfinance our opponent? All the engineers who sent man to the moon are super rich? Everyone in the internet wealth creation is as rich as Larry and Sergei? Seems to me the middle class in the form of blue collar work accounts for the first former two, and the middle class in the form of white collar work accounts for the latter two.

    The Great Depression occurred before World War 2, and the lowering of the top tax bracket occurred five years before the depression. The S&L debacle/recession occurred after the end of the cold war and the lowering of the top tax bracket occurred two years before that. There were no wars during the internet boom and yet during those years the top tax bracket was held at exactly 40% until the year of the crash when it was cut in order to stimulate growth and the cut again.

    In other words, the raising of the top tax bracket above 40% is clearly not causal with war. Quite rather, it is the reverse (you can see the increase in taxes in response to the Vietnam war in the chart, you can even see a tiny small blip after the first Gulf War). The reality is, middle class or not, the justification for lowering taxes recently was the same “trickle down” economics that failed in the 80’s and failed again this time.

    As for the middle class, the creation of that class that Obama “claims to love and support” occurred during the FDR years. That class grew in proportion until around 1978 after which time it has steadily eroded. I might mention that you and I are part of that class even though we’re white collar workers and back at the start of its creation the class consisted mostly of blue collar workers.

    On the spending side. It is common sense that the Republican idea of “starving the beast” has failed (just superimpose a graph of federal spending on the one there and you can see that spending did not go down when taxes when down). To give you an idea of how failed that policy is: the only solution on that side presented by the Republican Party is one of eliminating earmarks which they generously estimate as being $100 billion dollars in total (If it is that much, it is only because of the earmarks in the recent $700 bailout package almost all of which went to Republican districts! For reference the Iraq War costs the government about twice that total). The federal government spends $2.45 trillion dollars! We’re talking that the best idea we see on the spending for the Republican will reduce that amount by 5%.

    You could do much better if you just ate into the military budget which accounts for 20% of the budget by base (i.e. not including the Iraq War, R&D, V.A. etc.). If you bundle that in, you are looking at almost half of the entirety of government spending! Even if Obama is elected and we draw down in Iraq, it is politically infeasible to decrease spending by more than 10%.

    That’s the reality on the spending side.

    Therefore the money to support that spending has to come from somewhere: The choices are the poor, middle class, rich, or the future (in terms of debt).

    The poor don’t have any money and the “spending” side of that was cut by Reagan in the 80’s (welfare queens) and again by George W. Bush recently (revised bankrupcy laws). We squeezed that stone dry.

    For the last six years, we’ve solved this problem by financing that against the future (deficit spending). This comes by borrowing money. Now the credit markets are frozen. Basically the world credit market is saying that any more debt is blood money. The more we load that system the more it collapses.

    This leaves either the rich and the middle class.

    The tax rate we’re talking about only affects the rich since we are talking marginal tax rate.

    This isn’t rocket science.

    When we are talking taxes: we are now talking zero-sum since we can no longer borrow against our children. It’s either the rich or the middle class. There was a time the rich didn’t mind the “sacrifice” on their last dollar. But that was before they stopped reading the New Testament and started reading Ayn Rand started to believe that making money is a fundamental good in of itself. They started acting as if they never went to a public school, or drove to work on a public road, or are protected by police, or have themselves and their business protected abroad by a publicly funded military, or have social security, or went to the emergency ward, or got vaccinated, or threatened to take legal action, or sent a letter over the U.S. Postal System, or had their garbage taken out every week, or enjoyed the security of one of a zillion small social protections government engages in because they fall through free market cracks.

    Now if you were to say, that 2% tax increase is not even close to dealing with the problem. Or if you were to say that there is a fundamental difference between borrowing money to purchase goods and real estate (spending our way out of recession in 2001) and borrowing money to build a road or school or bridge (like FDR did). Or something like that, then I’d agree that maybe this won’t be enough.

    Maybe what we do to stop global warning won’t be enough either.

    I don’t know if it is enough, but I do know it’s a start.

    And I’ll add that because I’m the software architect and one of those black swans of startups (a profitable one) and my Plaxo shares vested because of the Comcast purchase, my capital gains may just put me close to that top tax bracket. But even if it does, Obama’s taxes will only cost me lass than $100 extra at most (marginal tax rate hikes leading up to the top bracket). I think I can afford 100 bucks. Heck, I can sell one of my three year old macintoshes that I’m not using and make 7x that—I know I just checked eBay.

    But if you’ve just lost your job. Or you were depending on the Christmas rush to get you extra income that won’t materialize. Or you have a huge payment because of the way these snake oil salesman wrote your mortgage. My $100 saves them $1000. Well if my $100 now or $300 when I’m pulling in $250k/year, if that helps that person get a job, or a little extra income which they might use to buy my services, or make that payment on their home.

    I think I can live with that.

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