Spreadin’ Love 472

Great Double X commentary on the Goldman Sachs sexual discrimination lawsuit. "Zehner, is just the latest entry into the long tradition of women coming
forward to excuse, rationalize, defend, and deny the sexually
objectionable at the office, all under the guise of helping women."

Manic Monday. As someone who has bouts with manic energy, I found this article about the pros and cons of manic entrepreneurs really interesting. 

"And among the undeniably rich, a belligerent sense of entitlement has
taken hold: it’s their money, and they have the right to keep it."

12 thoughts on “Spreadin’ Love 472

  1. Yeah, it’s hard to give up money that you think you’re entitled to. It’s a pay-cut, even when you’re working harder. I’m not surprised that people whose spending plans would be affected by tax rates (not Buffet or Gates, but the regular rich guys who make a million a year, and don’t actually have income producing assets) would be upset.
    My beef is the focus on taxing earned income and not unearned income. It just doesn’t make sense to me, and never has, that dividends should be taxed at a lower rate than the money you earn flipping burgers or babysitting, or selling the artwork, food, or bags you make.

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  2. “Yeah, it’s hard to give up money that you think you’re entitled to. It’s a pay-cut, even when you’re working harder.”
    Don’t people in the professions (especially the younger generation) tend to have six figure student loans (one for him, one for her) to go with their six figure incomes?
    I’m not saying that this is optimal financial management, but high earners tend to have a burn rate to match the income–big mortgage, big car payments, big federal tax, big property tax, big toy payments, big student loans, big nanny expenses, big college expenses, etc. In all too many cases, the money isn’t lying around waiting to be scooped up–it’s already been promised to Sallie Mae, GMAC, Visa, etc. To squeeze those “rich” people harder might easily lead to a cascade of loan defaults, foreclosure, and bankruptcy, all of which taxpayers will wind up paying for, sooner or later. Again, I’m not condoning the irresponsibility, I’m just pointing out that a lot of “rich” people are pretty vulnerable to small changes in their circumstances.

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  3. Amy, I don’t think that Henderson’s past and ongoing financial mis-management should serve as an argument that he should be absolved from tax increases. At least not a successful one, anyway.
    While nobody’s got money just laying around, I think that you’d be hard pressed to argue that squeezing someone who sends their K-12 children to private schools and hires a weekly maid service is going to cause more cascading failures that will haunt the taxpayer than squeezing someone on the opposite end of the spectrum.

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  4. “Amy, I don’t think that Henderson’s past and ongoing financial mis-management should serve as an argument that he should be absolved from tax increases. At least not a successful one, anyway.”
    Although high-earning people can be pretty dumb (the worst personal finance radio calls I hear are from people making about $140k), I don’t think you can get around the fact that these days, the people who make around $250k (doctors in particular) have student loans, loans from setting up practices, live in San Francisco and have horse-killing mortgages, etc. As a number of people have pointed out (can’t dig up the quotes right now), the funny thing is that the Obamas were exactly in that high-earning tier and they have complained bitterly about how hard they struggled to get by with all their student loans, etc. I guess that 1) the Obamas weren’t actually struggling as much as they say they were or 2) Obama has forgotten what life used to be like.

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  5. I think we both know what Dave Ramsey would say about huge education loans — this particular Everyman family apparently has half a million in school debt. However,, does their budget have more flexibility or less than that of someone making 60K who has school loans at 1.5x their income?
    Let me add a third option to your list: that Obama’s proposing a targeted tax increase (which will prove inadequate to cover our obligations) because it’s the only increase with a chance of political success.

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  6. “Let me add a third option to your list: that Obama’s proposing a targeted tax increase (which will prove inadequate to cover our obligations) because it’s the only increase with a chance of political success.”
    That sounds plausible. I guess I have an instinctive revulsion to the “We must sacrifice–let’s start with you” attitude.
    (I’ve just started a little babysitting venture and I’m very curious to see how much of my business income I get to keep in our bracket after doing federal income tax and all the little payroll taxes.)

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  7. “(I’ve just started a little babysitting venture and I’m very curious to see how much of my business income I get to keep in our bracket after doing federal income tax and all the little payroll taxes.) ”
    Yeah, why, why, do you get to keep so little of that money, compared to the person who’s inherited the 50K from Aunt Mabel and is able to put it into dividend earning stocks? Is there really some sound economic reason why the tax code should encourage the dividend investment and not your labor?
    I think the people targeted by the current tax increase plan won’t be driven to failure by it (on the whole), even if they are spending all their money, because they are more likely to have expenses they can actually give up. Having someone clean your home is wonderful, but it can be given up if you have to. Even if those folks have lots of fixed costs, they usually have lots of un-fixed costs, too. They can give up 1) expensive vacations 2) nannies/maid service 3) expensive clothes, and other expendable goods. And those kinds of things will pay for the small tax increase for most people. They won’t like it, but those are the kinds of things that eat up 3% of your income, and can be changed (and that’s assuming that it doesn’t cut into their savings rather than their expenditures).

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  8. Yeah, why, why, do you get to keep so little of that money, compared to the person who’s inherited the 50K from Aunt Mabel and is able to put it into dividend earning stocks?
    Because they have to keep up the illusion that SS retirement is a more like a pension than welfare and because your Aunt Mabel already paid taxes on the $50k when she earned it.

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  9. I’m not sure how I feel about the estate tax for smallish amounts like $50k. I’m for it for the big estates (say anything over a couple of million).

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  10. because your Aunt Mabel already paid taxes on the $50k when she earned it
    But bj isn’t talking about the estate tax (which would be nil unless Aunt Mabel is fabulously wealthy but doesn’t like you very much)– it’s the tax rate on dividends that’s problematic.
    It all depends on what sort of activities the government wants to incentivize. Lower tax rates on dividends and capital gains should in theory boost investment. The moral argument might be that the lower rate rewards savings. Of course, there are states like TN which only tax investment income — one presumes they’re making a moral distinction between earned and unearned income.

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  11. bj,
    You’re kind of hard on nannies and maids–those people need work, too. Ditto pizza delivery people, Starbucks baristas and lawn care guys. One person’s frivolous expense is another person’s paycheck.
    Private school is another example of unnecessary expense that people tend to bring up in these discussions, and it’s even more problematic, I think. 1) Well-off families subsidize scholarship families. 2) If a child leaves private school, they will probably enter a public school, meaning substantial expense for the local government.
    My feeling is that a lot of government activity is equivalent to taking money out of one pocket and putting it in the other. So, on the one hand, we want to tax high-earners more, and on the other hand, we want to give them (it would probably be them) a special small-business lending fund of $30 billion, which will leverage up to $300 billion.
    http://www.americandrycleaner.com/article.cfm?articleID=18216
    Maybe we should just small businesses alone and they can use their own cash money to buy stuff?

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