Free Markets, Free People

Atlas Appears To At Least Be Warming Up

As you might imagine, the 5% (the taxable “rich”) are trying to figure out how to become a part of the 95% (the “tax cut” rest):

President Barack Obama’s tax proposal – which promises to increasetaxes for those families with incomes of $250,000 or more — has some Americans brainstorming ways to decrease their pay, even if it’s just by a dollar.

I’m sure this comes as a horrific surprise to those who have been clapping their hands gleefully in anticipation of the “rich” finally “getting theirs”. But the “rich”, or at least some of them, may have other ideas. The following anecdote best illustrates the most important points:

Dr. Sharon Poczatek, who runs her own dental practice in Boulder, Colo., said that she too is trying to figure out ways to get out of paying the taxes proposed in Obama’s plan.

“I’ve put thought into how to get under $250,000,” said Poczatek. “It would mean working fewer days which means having fewer employees, seeing fewer patients and taking time off.”

Generally it means being less productive,” she said.

The motivation for a lot of people like me – dentists, entrepreneurs, lawyers – is that the more you work the more money you make,” said Poczatek. “But if I’m going to be working just to give it back to the government — it’s de-motivating and demoralizing.”

Like the probable results of the Obama plan so far?

Fewer employees (that’s jobs for those missing the point), less money (which means a tax cut instead of a tax increase), less production (scarcity), less in taxes for the government and thus less in revenue with which to meet its spending goals.

She is, of course, exactly right – working to make the government’s coffers fatter is both de-motivating and demoralizing.  

So assuming that the majority of that percentage of the population now under the tax hike gun is successful in lowering their earning profile  to the “tax cut” category,  what alternative does that leave for a government hungry for revenue?

It can redfine “rich”.  

The cycle repeats with the “new” rich going through the same type of cutting back – letting employees go, doing less work and leaving government with less anticipated revenue.  The engine of commerce – the engine of prosperity and jobs – goes into reverse as each new attempt to secure the funding necessary to move the dream agenda forward is scuttled by selfish Americans not willing to work just to hand over what they earn to government.

I can’t imagine why people still wonder why I want to see the Obama agenda fail?


18 Responses to Atlas Appears To At Least Be Warming Up

  • Liberals never seem to learn that tax policies have consequences.  People do not sit idly by and simply pay more taxes.  Their behavior changes.  Pretty simple, common sense stuff.  Yet the liberals and MSM will scratch their heads in confusion when the eagerly anticipated windfall of new taxes doesn’t show up.  Then, as you said, they will redefine rich.  Man, I guess pretty soon I’ll finally get to know what it is like to be “rich”.

  • In 1971 when I was in Sweden, an acquaintance called me rich.  I had just gotten out of the military so rich wasn’t in my vocabulary.  I asked him why and he said that in Sweden, anyone who made over $12,000 was taxed at 70%.  So lower US taxes made me rich.

  • I once (Clinton era) had a difficult time getting my wife an appointment with a dental surgeon.  Not a normal checkup dentist, but a specialist in serious surgery.  I was asking the receptionist why it was so hard, and she explained that he only worked 5 months a year.  He and a partner shared a single office.  They each worked 5 months a year, and the support staff worked 10 months and had 2 months of vacation a year.  He apparently already concluded that 7 months off was more valuable to him than whatever after tax incremental revenue working harder would have brought him. 

    He was extremely highly regarded, my regular dentist suggested I do whatever necesssary to accomodate his schedule…he was apparently the best and by a wide margin.   And he was obviously partially shrugging before the recently increased disincentives were put in place.   What I found interesting was that he spent one month a year in Africa doing pro bono work as part of his Church’s mission in Africa…he obviously loved helping people, but was unwilling to put up with too much of the nonsense, both tax levels and insurance companies. 

  • And while he starts to destroy our economy, Obama hosts conga line parties in the White House.

    But at least his wife- the fashion ICON- has great toned arms.

    • To cut him some slack, it wasn’t like he inherited a booming economy.  Much of these changes are politically possible, because it is view as “conservative economics failed”.  You hear deregulation blamed, which it probably was to some extent (the incredible level of leverage).  Of course, the requirements of the FMs also messed up a lot of things as well, and those were problems caused by the regulation.  But at this point the cause isn’t viewed as government intervention, because the crash occurred while Bush was in office, so Obama has a lot of leeway to “fix it”.

  • “President Barack Obama’s tax proposal – which promises to increasetaxes for those families with incomes of $250,000 or more — has some Americans brainstorming ways to decrease their pay, even if it’s just by a dollar.”

    That’s odd.   Just to make the math easier, assume a 35% rate to 250k and a 39.5% rate over it.  On 250,000, one pays 87.5k; on 250,001, one pays 87.5k + 40 cents.  I can’t imagine why anyone would go to such trouble to avoid 40 cents in tax.  It sounds like they don’t undestand how tax brackets work.  It sounds like they think the tax on income (I) is a flat calculation of 39.5% x I, when the actual calc tax is (.35 x 250,000) + (.39.5 x (I-250,000)).

  • Actually, I need to correct my calcs: the increased tax due to the increased tax rate on income of 250,001 would be a whopping 5 cents (87.5k + 35 cents v. 87.5k + 40 cents). 

    • Yeah, that’s an extra 5% of every dollar over 250k.  And there is also talk of reducing the deductible percentage for itemized deductions and raising the ss tax threshold, and phasing out other deductions at this level.  So all in all it’s more than 5% of every marginal dollar. Quite a bit more.  Does anyone really think if the SS tax threshold is raised to 250k that benefits will be increased proportionally? 

      All that aside, hey, what’s another nickel?  5 years from now the rate can climb another 5%, because hey, what’s another nickel?  And so on.  Quit our complaining, right, it’s only a nickel! 

  • I took exactly this approach a couple years back on a corporate level here in Texas because they get regressive on corps when they make more than $150,000.  Rather than take the hit(and work MORE for the State), I scaled back and took extra time off to avoid hitting that number.  This will be the same.

  • I’m torn.  While I agree with jpe that the math doesn’t work out the way they think it does, I can’t knock people for wanting to starve the beast.  Unfortunately they won’t be starving it nearly as much as they think they will.

    • No, they will have to reduce their incomes much lower.  And if possible, they should.

  • So…   If I can work 20 hours a week, or five months a year, and earn $250,000.    Give or take $1…     why would I work 40 hours a week and make $500,000?   why would I work 11 months?     

    And is there really $1 that is only taxed .05%?    Because that’s what it would be to only have 5 more cents to pay for $1 greater income.

    $250,000 is pretty dang comfortable.    If I could make that much money, I might not try to make more *anyway*.     What would I do with it?

    • You’re moving your decimal points the wrong way.  5 cents on a dollar is 5%.

      As for what you’d do with it: whatever your heart desired.

      • Right, I see that.    Taxed 5% is  .05 out of a dollar.    But the tax rate is nearer 40%.   So where do those 5 pennies come from?

        Oh, wait… that’s the *increase* for every dollar, not the amount of every dollar taxed which is, of course, much higher already.

        If 5 pennies on a dollar more makes no difference…   tax everyone who makes any money at all.    Why not?    Who’d miss it?     Who’d miss 5 cents?

  • Wait until the govt takes over the 401k industry and starts taking an additional 5-10% out of everyone’s paycheck for “our own good”.

  • I think most of those who will reduce their incomes will do so on principle alone not because of the additional financial burden it will create.  Contrary to comrade obama’s belief not everybody wants to support the dregs of society.