And here’s another article about which I didn’t know whether to laugh or to cry, this time from Richard Reeves and Christopher Pulliam at the Washington Post. Their op-ed is about something I’ve been pointing out for decades:
The most formidable political class in the United States now is not the oligarchic 1 percent. It is not the struggling middle class. It is not the suffering poor. It is the upper middle class, strong in number, loud of opinion and fiercely determined to protect its interests.
It’s the upper middle class that candidate Joe Biden was attempting to appease when he promised not to raise taxes on anybody making less than $400,000 a year. Upper-middle-class Americans — those with household income in the top 20 percent — may not have incomes reaching quite those heights, but they are comfortably into the six figures. They also have solid retirement accounts, kids for whom four-year college is a given, good health care and valuable homes in good neighborhoods.
But they don’t come by all these things solely through their own hard work and brilliance (though they really do like to think that). Every step of the way, the government is there to help. Their affluence — perhaps your affluence — is plumped up with generous tax breaks and restrictive zoning laws. This is welfare for the prosperous.
Remember how Bill Clinton promised to “end welfare as we know it� He made good on that promise in his 1996 legislation, which famously provided the poor with a “hand up, not a handout.†But that philosophy died in Congress this year, with the introduction, as part of the pandemic stimulus, of unconditional cash transfer to families with children — which Democrats want to make permanent.
Good: Giving handouts to those most in need is both economically rational and morally right. But giving handouts to the affluent is economically wasteful and morally repugnant.
Their candidates for “upper middle class welfare” include the deduction for state and local taxes, the home mortgage deduction, and 529 educational savings accounts. 80% of the benefit of those go to the top 20% of income earners. They also touch on restrictive zoning.
I notice that they don’t touch on the sources of income for a lot of the top 20% of income earners which as it turns out, is the government. Here in Chicago, for example, teachers, police officers, and firefighters are all in the top 20% of income earners.
Strangely enough, the top 1% also benefit from all of those tax exemptions, plus a whole bunch more. 80% of the benefits go to the top 20% but how much of that goes to the top 1%? Also, when you look at the rate of taxes actually paid, it is that group right below the top 1% that usually pays the highest tax rate.
Anyway, the home mortgage deduction can go away, or we can limit it to the first $150,000 of a loan or whatever we want. Do away with the 529s. But, let’s not pretend that the below $400,000 has anywhere near the influence of the top 1%. You wont see a single person in the below $400k group financing almost singlehandedly a primary campaign. Making $300k a year doesnt get you a meeting with your senator whenever you want.
Steve
Stung a bit Steve?
You sound like one of the top 10% trying to point up to the power and misdeeds of those who out earn you. That’s natural, I expect I’d do the same in your bracket. There’s just not much in the way of comment I can muster to this post. That’s life. Power is power.
Saw a mob documentary couple days ago. 1925. Capone. Standing behind Chicago’s mayor at a press conference as the mayor spoke out against the speakeasys.
Capone whipped out a blackjack and beat the mayor bloody in front of the press and the police. Now, that’s power.
I think you’re confusing the 1% with the .1% or even the .01%. Just to take one familiar example I would calculate that Drew is among the top .5% of income earners but probably couldn’t summon his Congressman to a meeting. On the other hand I’m pretty sure that Mike Quigley, my Congressman, would hurry to a meeting if summoned by Mary Kay Henry.
“I think you’re confusing…….”
I think that’s correct. And I would probably have to make a hefty donation to Nancy Mace first. As some observations on taxes:
I don’t dissect the numbers, but I suspect its been from upper .5% to maybe even close to upper .2% in certain years. But I’m not a Kennedy, Bezos, Henry or Pritzker – or now an Obama, Biden or Clinton using public office to get filthy rich. That said, with the portfolio rolling off income is becoming more episodic. In 2020 my work related income was probably less than a big city cop, fireman or teacher. However, and this is the point and a delicious irony, this year I have already made enough to be top .5%, and with an expected portfolio company sale towards the end of the year it will be top .1%. In one deal, more than some people make in a lifetime; and will increase my net worth 15%. Boom. This portfolio company would have done well in any event, but why is it off the charts right now? Read carefully lefties: its residential construction related and knocking the cover off the ball due to the Democrats reactions to covid – lockdowns and the like. Building in the SE is off the charts.
People are leaving the NE and upper Midwest in droves. Thank you Pritzker, Cuomo and the idiots in NJ, MN and Canada. Its why I know of what I speak when I point out the exodus from blue to red states.
My bank account truly thanks you, lefties. Talk about unintended consequences…..
As far as tax policy, unintended consequences is what you get in spades. On the specific issue of capital gains taxes, few understand that its double taxation. Your income is taxed when you receive it. If you put it into capital assets and incur a gain you are taxed again. The point people always miss when they view this as unearned income or some other strange argument, is that to incur that gain YOU ALSO INCUR RISK to achieve that gain. I can reduce my capital gains tax to zero very easily, no matter the code or the politics of the day: put my money in a mattress. But imagine the cost to society if capital did this. This is why we have two rate tiers in the code. (Wage income has no such dynamic – you work or you don’t, but you don’t put capital at risk of loss.) The real game is to balance the income of employed capital and its projected capital appreciation, net of tax, vs risk.
Joe Biden and his fellow idiots are monkeying with this again. The ultra rich will exempt themselves. People like me will pull in our risk profile, and be just fine. The beneficiaries of capital investment will take it up the ass. Politicians will get votes from the clapping seals, ever bitching about income inequality but letting their juvenile jealousy get in the way of rational economic policy. Joe is too dumb to understand, his advisors are not. A pox on them.
Drew sidesteps the question. Of course he would have to make a donation, but the point is he could afford to do that. At the state level if he donated say $100,000 he could become the 2nd or 3rd highest up on the donor ladder in South Carolina. In NewHampshire that would be about 20% of all the money spent on the state elections. No single person in the $300k range can do that. (Also, wanna bet he wont pay much in the way of taxes on his windfall this year? Remember that those folks at the top get special deals that only benefit people making the most money.)
https://ballotpedia.org/State-by-state_comparison_of_donations_to_state_house_campaigns
“Stung a bit Steve?”
Nope. I have long been in agreement that the mortgage deduction should be severely reduced or go away. Hadn’t thought about 529s but not bonded to those. I just find it absurd to suggest that a person making $400,000 has just as much influence as those making millions. Not how things work in real life. Besides the ability to make large donations to directly affect elections and policy, the wealthy have lots of other ways to influence politicians.
Steve
It would be if anyone were making that claim which I am not. What I am saying is that the professional organization of a half million people with average incomes of $250,000 has a lot of clout, at least as much as a high net worth individual and possibly a lot more.
Similarly, the president of a union with a membership of 2 million people with average incomes of $45,000/year has a lot of clout even if she isn’t among the top 1% of income earners.
No, steve, I wouldn’t pay that $100K if for no other reason than I can’t imagine what it would get me.
“Also, wanna bet he wont pay much in the way of taxes on his windfall this year?” Let’s each bet our entire net worths. My “windfall” will be taxed at the highest prevailing federal and state O/I rates. Nothing special. You are just wallowing in your ignorance and grasping at straws.
Back to the your stool at the end of the bar and your sloppy, whiskey addled rants now………
@steve
Remember that those folks at the top get special deals that only benefit people making the most money.
Kinda like those much beloved SALT deductions? It’s funny. All the rich assholes whining about paying more taxes could just take the standard deduction. There is no law requiring you to itemize your tax return.
… person in the $300k range […] person making $400,000 […] those making millions …
NEWSFLASH: @steve, you are rich. You get benefits that the rest of us would get slapped silly for thinking we were entitled to get then as well. You and @Drew are like “kittens having school girl fights” (thanks, @bob sykes).
With @Drew, I know where he stands. He does not to try “blowing smoke up my ass”. He is rich. He wants rich people benefits, and he is mostly unapologetic.
On the other hand, Warren Buffett, Mark Zuckerberg, @FamousFictionWriter, and you want the same benefits, but because of the Republicans, you all can whine about how you do not pay enough taxes.
???? Those SALT deductions also affect those at the very top who benefit from them much more than those in the $400k range. What i have advocated here and elsewhere is that we have them we limit them like I suggested for mortgage deductions.
” You get benefits that the rest of us would get slapped silly for thinking we were entitled to get then as well. ”
“you are rich.”
Never said I wasn’t, but nice try at changing the argument. My contention is that people in the $100k-$400k simply dont have the power or influence that hose in the top 1% and even more the top 0.1% have. I cant finance a primary election for POTUS by myself. I cant consistently donate enough money to influence policy/politicians.
If you want to argue then make it over what I am saying rather than something made up.
Steve
@steve
First, I do not care how much or how little money you, @Drew, or anybody else has. Second, I really do not care how much or how little taxes you all pay. I do care that you are not stealing to obtain the money or cheating on your taxes.
You want to get your benefits but deny them to people you deem too rich. My solution is simple. Just eliminate all tax shelters, and we all get the standard deduction. Problem solved.
When your son is arrested, you can call the DA and have the charges dropped or reduced. You can call your council person and have your neighbor’s dog thrown into the pound. Most importantly, you can hire a lawyer, and if all else fails, you can move.
@Icepick, @Grey Shambler, and I are “little people”, but still, we are better off than other people. I would rather elevate people, but for some reason rich people would rather lower people. I guess “it’s a rich person thing.”
As to changing the argument, now it is financing a POTUS campaign. Let me guess, you figured out that $100,000 is doable for you, and you “could become the 2nd or 3rd highest up on the donor ladder” for your state. I may not be rich, but I ain’t stupid.
In any case, you have a cartoonish view of how infuence works. As our host often quotes Rep. Dan Rostenkowski, ” give them your business card.” You buy their books. You lose at gambling. You buy a newspaper.
I will quote myself:
So, @Drew gets a few more benefits than you. Suck it up. You get a hell of a lot more than most people, and if you ask him nicely, he might give you a few tips to make more. Since he is a fat cat, he might like the challenge of fattening up another cat.
(If it makes you fell any better, I suspect @Drew is an asshole, and after the first 5 minutes, he would be tossed out. How many golf references can a person take?)