The Observation Deck

Joe the Plumber says Obama's tax plan will prevent him from running his business. Obama would restore America's traditional progressive income tax system.

I'm not sure it would hurt the business Joe the Plumber wants to run.

If I remember High School accounting class right, profits are taxed, not revenue. Wages paid to employees are expenses subtracted from Revenue.

That's why Bob Hope started corporations to claim his income and only get stuck paying the lower business tax, rather than the higher personal income tax. That's why Harry Truman paid 2/3rds of of his 670,000 dollar pay check for his memoirs back to the IRS.

A 39 percent rate on personal income over 250,000 dollars is pretty modest compared to the good old days. Eisenhower would probably support it. It was progressive income taxes that paid for John McCain to attend the Naval Academy and be a career naval officer.

It would be great to not need progressive income taxes. We could get rid of progressive income taxes once the following occured:

No U.S. military bases outside of North America and Iceland.

drastic downsizing of the Interstate Highway System

No more Disney World

No more mission to MARs

much smaller portion of population going to college

10 to 15 percent of population living on farms

average Tariff rate of 20 percent

somewhat smaller portion of population graduating high school

About 500,000 fewer Americans in prison

a seriously downsized war on drugs

http://www.bloomberg.com/apps/news?pid=20601070&sid=aWDHvDjnDnTs&refer=home

``Joe the plumber,'' the Toledo, Ohio, man whose complaints about Barack Obama's tax plan were featured in the final presidential debate, owes the state of Ohio almost $1,200 in back income taxes.

According to records on file with the Lucas County Court of Common Pleas, the state filed a tax lien against Samuel J. Wurzelbacher for $1,182.98 on Jan. 26, 2007, that is still active.

http://www.nypost.com/seven/10172008/news/nationalnews/unlicensed__say_it_aint_so__joe__133989.htm

"Joe the Plumber" has sprung a leak.

Joe Wurzelbacher - an Ohio plumber who was thrust into the national spotlight after he was mentioned two dozen times in the final presidential debate - isn't even licensed, it was revealed yesterday. His credibility was flushed down the drain after state and licensing agencies in Ohio showed no plumbing licenses listed under his name

And yet with all of this, I still think he would make a better VP candidate for McCain.

And he has been vetted more by the media.

So apparently the least of his worries is an Obama tax plan (since he wouldn't pay it anyway). Now he has to deal with license issues, customers complaints, city ordinances, tax liens and all the media residue left on his lawn. Poor guy.

We have no reason to believe Joe is not a competent plumber. He is a victim of the bad information the hard Right passes about economics and tax policies. Perhaps the hard right are victims of simply believing America can pay for anything by virtue of being America. The precedent for pretty much every other war since 1800 is that taxes were raised during wars. They were raised to build the interstate highway system. They were raised to go to the Moon. Most of those tax increases were progressive or levied on imports, or Goods and activities closely related to the government service that enabled those goods and services.

There has certainly been a rush to out Joe the Plumber.

The most recent information I have seen, from the paper in Toledo, is that there is an outstanding lien for property tax, not income tax. I don't know how one underpays property tax, since for most of us that is realty taxes, and for those of us with mortgages, the bank is very careful to see that property tax is paid. It is certainly possible that the lien was filed, but has not been cleared through administrative error or delay, and since the State of Ohio has apparently gone over a year without taking any action, I would be reluctant to conclude that the property tax, and certainly income tax, has not been settled without more information.

As to being a plumber, the biggest stink is being raised by the union (probably not related to their having endorsed Obama). The Toledo paper reports that, while Joe the Plumber has no license, he apparently works for someone who has a license (reports that his employer has no license are apparently incorrect, but he does not have registration to plumb in the City of Toledo, which means he can work only in other jurisdictions. Its asserted that an unlicensed assistant can work on jobs where the licensed plumber is present. I don't know if that is true, but on occasion when I have hired a licensed plumber, he has had helpers that did not, to my unpracticed eye, appear to be capable of passing the licensing tests.

But I think that those who are yahooing about the lack of some qualifications of Joe the Plumber miss the point: Joe the Plumber is not running for office. Regardless of whether he is well qualified, or even a Republican plant, he did trick Obama into a rare moment of honesty, when Obama volunteered that his ideal is redistribution of wealth from those who have it, or who have earned it, to those who have not.

I think most Americans are uncomfortable with government programs that redistribute wealth; I know I prefer private charitable programs to government programs, as a private program has the ability to judge all aspects of the claimant, while a government program does not. Like most people, I understand that some people are in dire circumstances and deserve help. But I think the people who work in government programs soon notice that there is not enough help for some claimants, but that others are gaming the system and are not really deserving. Obama has a history of supporting such entitlement programs, and has managed to keep that history very quiet in the campaign; his statement that he favors redistribution of wealth is consistent with his history, but inconsistent with the facade he has maintained in the campaign, so it is certainly understandable that he wants to discredit the messenger, rather than be outright about his redistributive plans and try to convince us that a free ride will somehow inspire the needy to make the effort to improve their own lot.

McCain suggests Obama's support for progressive income taxes is "Class Warfare". it is not class warfare. Progressive Income Taxes have been a fact of life since the american Automobile Age took off in the late 1910s. The Reagan administration skewed this toward massive budget deficits being a fact of life. It is easier to not pay attention if you are too busy making money.

The suburban strongholds of Republican voters were enabled by one of the greatest wealth distribution operations in history, the Interstate Highway program that took off in the 1950s. Union victories raised the wages of non-union workers also. They had enough money to move to the suburbs and have kids or grandkids that became republicans. The suburban strongholds got much more populated during the artificially low-interest rates of Greenspan's tenure at the top of the Federal Reserve.

Most high tech breakthroughs were only possible after years of federal spending. rockets, jets, computers, radar, the internet.

At this point, if your parents or grandparents were Democrats, your best bet is to return to voting Democrat.

The accepted mainstream Economic ideology behind free trade is itself based on the assumption that the "winners" compensate the "losers. Nobel Prize Winner Paul Samuelson won a nobel prize for developing a rigorous mathematical proof that free trade benefits all nations. Like most economic proofs it is based on conditions and assumptions. Here are some of Samuelsons:

1. There is no government in the economy
2. Gainers compensate the losers from trade
3. Capital or industry stays at home and does not chase low wages abroad.
4. wages at home are equal in all industries
5. the country has no trade deficit

Great American Deception, page 81.

The GDP growth rate generally fallen with decreases in top bracket income taxes from 1950 through 1995:


Decade Avg.Annual GDP growth Top-Bracket Income Tax Rate
Range--------Average

_____________________________________________________________
1950s 4.0% 84-92% 89%
1960s 4.4% 91-70% 80
1970s 3.2 70-70 70
1980s 2.8 50-28 39
1990s(1990-95) 1.7 31-39.6 35

source: Economic Report of the President, 1988 and 1996, The Council of Economic Advisers, Washington, DC, PP.251 and 283; Historical Statistics of the United States: Colonial Times to 1970, 1975, U.S. Department of Commerce, Washington, DC, p. 1095; Statistical Abstract of the United States, 1981 and 1995, U.S. Department of Commerce, Washington, DC, pp.260 and 349. (Great American Deception, page 60).

It is reasonable to conclude that higher corporate tax rates and top bracket income tax rates prevent too many companies from merging into giant companies. Giant companies don't have to compete for workers so vigorously, and so don't have to pay as much. Giant companies have much greater lobbying power, and get more great government contracts and steer more government policy. They may even have enough pull to start wars.

Social security taxes have risen drastically over the years. They are an ultra-regressive income tax. The revenue is pilfered to fund other programs. If I remember my annual income tax returns correctly, the deductions and write-offs only apply to the official "income tax" and not the social security taxes.

[quote]

Year First Bracket Social Security Wage Base
Tax Rate Combined Tax Rate

_________________________________________________________
1970 15.0% 9.6% $ 7,800
1980 14.0 12. 3 $ 25,900
1985 11.0 14.1 $ 39,600
1990 15.0 15.3 $ 51,300
1993 15.0 15.3 $ 57,600
_________________________________________________________
source: Statistical Abstract of the United States, 1981, p. 328: 1991, p. 328; 1995, p.379; U.S. Department of Commerce, Washington, DC.(Great American Deception, page 65).

I'm willing to accept Republican or Liberterian arguments for cutting taxes. But most of the financial services jobs, government contracting, health care administration, CPA, and lawyering jobs wouldn't exist in the context of the small government past.

Republicans try to snag the "pro-life" vote. In the small government past it was also possible to have an abortion. Forensic Police work was often not up to the task of collecting evidence of whether a woman had had a baby or aborted a fetus recently. The topic was frequently taboo in newspapers, beyond the classifieds section which listed "remedies" for "women in circumstances". It was much easier to abandon the baby after it was born. and old people frequently died in squalor or before they hit 60. On the other hand, Babe Ruth was raised in an orphanage, and he turned out alright. We can get rid of social security if old people start killing themselves when it gets too hard to live. The church can deliver rocking chairs, a needle of Opium, and some whiskey.

The Republicans exploit whatever racial and generational aggravation working class and middle class whites are caught up with. Then it continually pulls the rug out from under working class and middle class whites.

http://www.nytimes.com/2008/10/20/opini ... d=facebook

turns out joe the plumber might not even want to open that business he wanted to open, instead he wants to run for his district's congress seat in two years.