The 1 percent vs. President Obama

By Chrystia Freeland
July 12, 2012

Why have the rich turned against President Barack Obama?

That has been a persistent theme of this campaign: We were reminded of it at the beginning of this week, when Mitt Romney’s team raised more money than the president’s for the second month running, and more colorfully in weekend reports of the Republican candidate’s lavish fund-raisers in the Hamptons.

If you were a Martian, or even a European, the animosity of America’s 1 percent toward the president might be rather mysterious. Although those at the bottom and in the middle are still suffering from the downturn that began in 2008, with unemployment above 8 percent, the affluent economy has bounced back quite smartly. The stock market has recovered, corporate coffers are overflowing with cash, and the luxury goods market is booming.

Even Wall Street, where hostility toward the White House is especially acid, has reason to be grateful. Bankers got the biggest government bailout of all – much more than laid-off workers or beleaguered homeowners received from this Democratic administration – and the president resisted calls from the left to nationalize the banks he rescued, as did the British.

Part of the answer is simple self-interest. As the economics writer Matthew Yglesias has argued, there is one easy and obvious explanation for the animosity of the rich toward the incumbent: He wants to raise their taxes significantly. That is certainly right. On Monday, Obama reiterated his support for letting the Bush-era tax cuts for household incomes of more than $250,000 expire, while keeping the lower rates in place for everyone else.

This is a powerful point. It can be tempting to imagine that the affluent might fret less about their tax bills than the poor, who are struggling to get by, but the elaborate tax avoidance strategies of superrich Americans suggest otherwise.

But this is about more than bank balances. Some of Obama’s most vehement critics in the private sector insist they are willing to pay higher taxes, if that’s what it takes to get the United States back on track. Their complaint, if you take them at their word, is instead with the president’s attitude toward them, toward their wealth and toward capitalism itself.

Their sense of insult is easy to mock: Do those testosterone-pumped Masters of the Universe really turn out to have the tender feelings of teenage girls? It is a mistake, though, to dismiss the outrage of the 1 percent just because it is so emotionally rendered. The truth is that Obama is telling a very different story about capitalism and its winners from the one Americans are accustomed to hearing, and it is no surprise that the rich don’t like it one bit.

Consider the two narratives on the campaign trail this week. In Colorado, Romney described those who make more than $250,000 a year with the Republican term of art — “job-creators.” And he warned that the president’s proposal to raise taxes at the top wasn’t bad just for the rich, it would hurt the whole country, too:

At the very time the American people are seeing fewer jobs created than we need, the president announces he’s going to make it harder for jobs to be created. I just don’t think this president understands how our economy works. Liberals have an entirely different view about what makes America the economic powerhouse it is.

Obama, meanwhile, insisted that “we love folks getting rich.” But his focus is different: “I do want to make sure that everybody else gets that chance as well.” One way to do that is to tax the rich. As a new television ad for the president argued this week, Obama’s plan is to “ask the wealthy to pay a little more so the middle class pays less, eliminate oil subsidies and tax breaks for companies that outsource.”

This is more than a fight about taxes. It is a fight about whether 21st-century capitalism is working for the American middle class and who should pay to fix it. The Republicans are telling Ronald Reagan’s story of trickle-down economics – the winners in the capitalist contest are “job-creators” whose prosperity helps everyone else. The wealthier they are, the wealthier all Americans will be.

The Democrats are challenging that win-win story of American capitalism. Their contention is that the U.S. economy is failing the middle class. They argue that those at the top need to contribute “a little more” to help rebuild the American middle. Even more threateningly, they point out, as in their critique of Bain Capital, that some of the business strategies that have enriched the elite have actually hollowed out the middle.

It is this last argument that most enrages the 1 percent – and it should. Obama’s most extreme critics delight in accusing him of being socialist and sometimes communist. That charge is not just overheated, it is plain wrong. But American capitalists are right to sense a challenge from the White House, which is about more than tax rates or bruised pride. The president is arguing that what works for the top of the United States isn’t working for the middle, and that is a criticism the country’s lionized elite hasn’t heard from its leader in a very long time.

79 comments

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The wealthy are not job-creators, they are merely hoarders. They aren’t risking their money to start new ventures, and if big companies are adding jobs, it’s not because of wealthy individuals.

Money that gets taken out of circulation, and put under a virtual mattress, is not only not creating jobs, but eliminating them. The wealthy have seen their taxes decrease over the last decade, and have not responded with increased investments in new ventures, only in paper trading activities that do not create jobs.

Romney calls the wealthy “job creators”, but that claim is never challenged. He needs to back it up with real evidence.

Posted by KenG_CA | Report as abusive

Excuse me, Miss Freeland, but my household only brings in about 50K, and we’ve all turned against the president. So what’s our problem? Do we get to join the 1 percent?

Well, as a matter of fact we know (as any fool can plainly see) that Obama is a true died-in-the-wool socialist. Not only that, but after his last exchange with his Russian counterpart, it’s not a real stretch to think he may be on the way to going communist as well. Our president should learn how to whisper when he has secrets to tell.

Posted by nikacat | Report as abusive

out of curiosity, as you state the wealthy use tactics to avoid paying taxes, what is your comment to the 52% who collect entitlements and pay NO taxes at all. Have not those on welfare found TACTICS to not work and pay taxes but to take from others? Why should the wealthy pay for MR. Obama’s desires to look good to others? Just what exactly did God tell you about all this? One, he told you to work or not eat, even Paul stated “we were not a burden to you, we worked with our hands as we taught you”. God also told us not to do “works” for others approval. Medicare for “learning disorders”, come on? Farmers do not have enough workers to pick produce but we have welfare people for “learning disorders”. Thank you. When I work I work for me and my family, when I have more I will hire someone to cut my grass or clean house. I DEMAND people work for substinance, not sit at the mailbox.

Posted by Incomewise | Report as abusive

Another poignant op-ed, Ms Freeland, as I’ve come to expect from you. There’s a point that your piece exposes that I find to be simply amazing, and that is that the 1%, .1% really, is so dang successful at holding off the other 99.9% and their best interests. Yes, I realize that’s a gross, over-simplification, but it’s not entirely untrue. Clearly, the policies that have been in place over the last 30 years, since Reagan first implemented trickle-on economics, the top .1% have been big winners and everyone else has been slipping behind, and yet the .1% have fine-tuned our system in such a thorough and advantageous way in maximizing their profits and keeping the rest of in our places, that a big chunk of the 99.9% has been convinced to support policies that are against their own best interests. They have been convinced to rely on hope and promises (and BS) rather than historical records. This is something that astounds me each and every day of my life.

And it’s not just how poorly the 99.9% have done over the last 3 decades and how well the remainder have fared. There’s the economic records of the pre-Reagan era that have been totally ignored in our public debate. It’s as if our past had never existed. Even in your piece you state, “…there is one easy and obvious explanation for the animosity of the rich toward the incumbent: He wants to raise their taxes significantly.” Historically speaking, raising the top tax bracket from 35% to 39.6% is not significant. The historical average is somewhere around 57%. And when you factor in all the clever tax-avoiding options the rich have open to them, as we’re learning from Romney, these marginal rates that are being discussed are almost meaningless. In the past, not only were the marginal tax rates REALLY significantly higher, but the rich didn’t have as many options for avoiding paying their marginal rates and so unlike today, effective tax rates were much higher as well, and that’s where it really matters.

The propaganda that we’re doused with is amazingly effective. It can convince millions of Americans that the best healthcare system is one in which 40 to 50 million Americans don’t have healthcare coverage and anything else would be vastly inferior. It can convince millions of Americans that global warming is a myth and that it’s wiser to believe oil companies on this matter than the world’s scientific community. It can convince millions of Americans that our own President wasn’t born in this country and is, therefore, a usurper of sorts. It can likewise convince us that to raise taxes on the wealthy is some sort of cruel injustice and instead they deserve to have their taxes lowered still further, because we’re beholden to them for everything, or so the narrative goes. I’m sure it’s just a matter of time before we are taught to believe that the rich shouldn’t have to pay any taxes at all and that our glorious past, when taxes on the rich were high and the United States, with its amazing Middle Class, was the envy of the world, was simply a figment of the imaginations of those liberal historians.

Posted by flashrooster | Report as abusive

The logic behind the abysmal gap between the middle class and the top 1% is rather simple: mega-rich people got there because of their greed; that universal and insatiable motivation of having more than anyone else, accompanied by the justification of all means to reach that end.
Once one of them reaches the top, like the current richest man in the world, they will not want to help others, because that is not in their best interest: instead, philanthropy could bring them down that purposeless ladder that they spent so much time and energy to climb.
By hoarding all that wealth, they weaken their countries, since no other citizens can progress when they are paid ridiculously low wages, and charged exorbitant interests. When the affluent have so much power, they can lobby their governments to outsource manufacturing jobs, leaving no other choice for the majority of workers other than service jobs.
This is the logic behind the fall of any empire, take a look back, and think twice before believing in that trickle-down economics fairy tale.

Posted by Dovico | Report as abusive

It is my understanding that Banking and Central Banks were designed to ensure that eventually the banks will own everything.

Poor people are poor. The middle classes will become poorer and eventually poor.

Most of the top 1% will be joining the poor too, you have to laugh. Hyperinflation will destroy most of the top 1% and finish off the middle classes too.

The fractional reserve banking system is the means to achieve this.

The banks need nothing but time to acquire everything.
The Government is of no real importance but could be troublesome. The people are of no consequence, they are just another resource to be exploited.

If you are one of the many, don’t worry. We massively out number the few.

Posted by DR9WX | Report as abusive

As long as we tolerate a government that blames ‘big business’ or ‘Wall St” for the nation’s problems instead of admitting its own shortcomings and missteps, we’ll remain a polarized nation. It’s time for government to apologize for it’s role in the nation’s problems; wars that have been entered for the wrong reasons, failed home ownership and lending policies, a post office that can sit back watch UPS and FedEx grow a hundred fold while it complains that it can’t make ends meet. Businesses and successful individuals are no more the ‘problem’ than the President. The ‘solution’ is to stop blaming and start fessing up. Then get to work.

Posted by PDXLou | Report as abusive

It always amazes me when someone needs to pull out the “socialist” and “communist” labels, without one stitch of evidence. To the contrary, there’s no policy of the Obama Administration geared towards socialism. Where there was an opportunity to gear health care reform towards that that of our military, i.e, completely and totally socialized, the lawmakers caved to Big Pharma, the health insurance industry, and the trial lawyers.
This economy is suffering from the reckless tax cuts and blind wars of the president’s predecessors, and not of any socialist policy.

Posted by Sarasota | Report as abusive

There is nothing wrong with being wealthy and there is nothing wrong with the wealthy paying more in taxes. As far as the 52% of Americans that pay no taxes, another way to look at that is that over half of this nations citizens don’t make enough money to pay taxes and need various transfer payments. In light of this, maybe those that do pay taxes should consider themselves rather fortunate.

Posted by Mostlysane | Report as abusive

Well-written article. I wish Obama would use simple English such as “create the right policy and inspire the American people” rather than “telling stories”. Perhaps then our monosyllabic conservative brothers might be able to understand?

Posted by JohnG-73645 | Report as abusive

The Republican lies that you enumerate, and the fact that so many followers of Fox television believe them, call to mind the practice of Joseph Goebbels, propaganda minister of the National Socialist regime in Germany. Simply repeat loud and long enough and people will believe it. Or, as Abraham Lincoln is quoted as saying: You can fool some of the people all the time (Fox news), all the people some of the time, but you can’t fool all the people all the time (let’s hope).

Posted by Stiefelknabe | Report as abusive

“The six children of Walmart’s founders … had the same net worth in 2007 as the entire bottom 30 percent of American earners”

“The top 10 percent of U.S. earners control two-thirds of the country’s wealth and the richest 400 Americans control as much wealth as the bottom 50 percent of Americans.”

http://www.huffingtonpost.com/2011/12/08  /walmart-heirs_n_1137492.html

Posted by DifferentOne | Report as abusive

It’s simply amazing to watch the greedy poor blame the wealthy for everything they themselves do. Consider the very definition of “poor” in today’s world (well actually nobody will give a true definition of “Poor” as that would be too embarassing!).

Most of today’s “poor” have A/C, at least two cars, many less than 5 years old. They mostly have big flat-screen TVs with all the cable channels. Virtually all of them has a cell phone, most have Smartphones. Go into a “poor” neighboorhood and look at all the “nail shops” charging $200 to $300 for a fancy nail painting job. Read the news about “poor” people standing in line for days to pay over $1000 for the newest Nike shoes.

Sure there are truely poor people out there, but until society (ie our fearless leaders) make a distinction betwen those that really are poor, and those that just “ride the free sh*t train”, I’ll maintain that there aren’t ANY poor! They’re all just greedy, wanting the good life but not work for it.

So, why should anybody that actually DID work for their wealth want to pay for them?

Posted by iq160 | Report as abusive

Greed, power & wealth for the very few elite has taken down every civilization throughout history. Period.

The elite have a good reason to fear our President, only for their own interests.

Mr. Obama might go down in history as the only truly intelligent and humanitarian President & world leader.
Whether he succeeds or not is immaterial as he faces the overwhelming power within his elite opponents. His second term, if he gets one, should give us a good indication of who he really is, as he will not have to be constrained with the burden of a reelection.

Posted by GMavros | Report as abusive

Chrystia, there is ONE way wealthy people can create jobs: pay 1945 to 1980 era taxes and invest the money in infrastructure (e.g. science, education, transportation, R&D). We know that creates jobs with living wages and a strong middle class.

We currently have three trillion dollars in unfunded infrastructure spending that has been delayed over the past thirty years. Surely returning to the 90% top rate of 1945, with a one-time tax to recover excess wealth left untaxed circa 1981 to date, would generate enough money for decades to repair infrastructure, create jobs, and position the economy to generate wealth for our kids and grand kids?

And lest you cry for the extremely wealthy, remember that $10 million in the bank earning 3% return generates $300,000 a year for breathing, or $25,000 a month, for doing nothing but breathe. If you limited extreme wealth that low, they’d still be in the top 1%. In two months, for doing nothing, they’d earn what the average person earns working for twelve months.

And I second @flashrooster: odd, isn’t Chrystia, how the 1945 to 1980 economy has been disappeared in the media and by pundits? It’s as if that era never existed. Yet we can easily compare economic results from 1945 to 1981 and 1981 to date. But no one in the media does it. Rather odd oversight.

And to @Incomewise, the truly sick part of the Reagan era has been how the accident and/or misfortune of poverty and ill health have been demonized. Somehow we’re only human if we’re rich, sexy, young, with a great job. Every one else doesn’t exist at the policy level. And certainly should not benefit (e.g. witness the scam of reducing the deficit by gutting Social Security instead of extending the payroll tax to cover all income, regardless of source). Yes, hatred of the poor, the infirm, the elderly, that’s somehow become truly American.

Posted by FredFlintstone | Report as abusive

Great article.

Of course way back in 1776, Adam Smith described all incomes in a capitalistic society as “enjoyed under the protection of the state.”

So, today in the year 2012, the current 1 percent class of Americans should keep in mind that their enjoyment of property in America is made possible by the state.

In their fit of hubris, the 1 percent might be wise to consider that there is a vital, primal Value created and maintained by the human community — the special conditions that allow them to enjoy property and call it private.

When called upon to help meet community maintenance expenses, the wealthy clearly owe a colossal portion.

Shall they inherit?
Of course the hubris of the wealthy is doubly ironic because the majority of existing wealth, in America or any country, was inherited. Yes, inherited. As Albert Einstein said, most of the books in the world’s libraries were written by people long ago dead. Most of the buildings of the cities we live in, and the streets and roads we travel on, were built by people laboring long ago, now dead.

Yet two classes of babies are born in America every day: One class of babies will have to struggle to pay rent, by their labor, by the sweat of their brow, for their entire lives.

The other class of babies will receive large flows of monthly rental income for their entire lives, without contributing any labor to the community whatsoever.

But these rent-receiving 1 percent babies, to show their gratitude to Heaven, will grow up to criticize the laboring rent-paying babies as lazy. They will malign, and criticize, and even imprison the rent-paying babies.

These rent-receiving 1 percent babies will inevitably grow up to tell us that they should not be asked to pay for community maintenance in taxes. They will, to use the term mentioned in Chrystia’s article, call themselves “job creators”.

Posted by AdamSmith | Report as abusive

I agree with Dovico to a certain extent, but not all mega rich are hoarders.

Take Bill Gates, for example. He has given 10s of billions of Dollars to charitable causes, as has Warren Buffet.

Interestingly, both were actually job creators.

Not so sure about the likes of Romney, who made perhaps 300 million Dollars. Is he a hoarder, or are his millions being used today to create jobs?

Posted by LoveJoyOne | Report as abusive

Thank you, Ms Freeland, for your excellent article. Thank you also, flashrooster and Dovico, for your factually based comments. In particular, as flashrooster pointed out, it is the top .1% that is the problem, not the 1%.

I despair that some folks still call President Obama a socialist – he is a moderate/liberal pragmatist. He has not nationalized or taken away from the rightful owners any companies. Therefore he is not a socialist.

I also despair that some folks keep saying 52% “pay NO taxes at all.” Nonsense, they may not pay income tax on a 1040, but anyone who works pays social security tax on income earned at a job, sales tax, and property tax (indirectly included in rent). Indeed, the tax rate on earned income for the lowest paid workers is temporarily 13.3%, half of which is paid by the employer to hide the fact that it is still a tax on the earnings of the worker. However, the historic rate on earned income is 15.3%, which is higher than the total rate Mitt Romney pays in total on his huge income.

Posted by QuietThinker | Report as abusive

This is a call to all Americans to stop this partisanship once and for all. I will start with the facts. Who pays the vast majority of taxes in this country? Who funds all these social programs that the population now regards as “entitlements”? The subset of the population this president and now a majority of Americans continuously disparages, the so called “rich” or “1%”. The inconvenient truth in this whole debate is that this group already pays an onerous portion of their incomes in taxes. And for what? I’ll get to that in a second but first the numbers. The top 5% of earners pay well over half of all income taxes in the United States. Just as inconvenient to this argument, when the idea of “fairness” and “everyone paying their fair share” is brought up is the fact that the bottom 50% of earners pay no income tax whatsoever.
So where is it all going? Are all these taxes improving our education system? No. We rank staggering low in math and science scores world wide as compared to other developed countries (World Bank, 2012). Is it improving our infrastructure? No. Unbelievably, the United States ranks 23rd in terms of quality of infrastructure according to the World Economic Forum. It must then be going to improving our healthcare standards? Wrong again. The U.S healthcare system doesn’t even rank in the top twenty worldwide. (World Health Organization, 2011.)
So then, the question is; does it really make sense to burden this portion of the population with increased taxation? The answer of course is no, and it’s not because of “trickle down economics.” It’s due called proximity to opportunity and the intelligent allocation of capital. The people with access to capital above and beyond what they need to survive possess the unique ability to apportion it toward problems with which they have a deep understanding, are in close proximity to and that will have a deep impact on us all. The entrepreneur who needs capital to expand his business and create jobs. The doctor or attorney who wants to grow his practice. The biotech investor who wants to invest in a novel treatment device or pharmaceutical that could save thousands of lives. The real estate developer wants to purchase a tenement and thus transform a crumbling community. So on and so on. Being close to an issue or opportunity gives one the ability to understand it on a level not available to the leviathan of our government. When we pay taxes, they are sent through the IRS, pooled, and broken down into tiny pieces to be allocated toward public sector wages, infrastructure and entitlement programs. This makes for an incredibly inefficient use of capital and we all suffer for it. However, if, say a sustainable energy venture capitalist or biotech investor, who reads about and analyses investments in his area of expertise all day-everyday, sees a real opportunity to invest in a business that has the real potential to change the world, he can use the capital at his/her disposal to do so in a way that is far more efficient than anything the government will ever be able to. I ask you then; does it make sense to take more from this person? To tax the man/women who is closest to the problems/opportunities and transfer that capital to the treasury where it is sliced and diced 10,000,000 times before being lost in the abyss? For what? So we can all feel warm and fuzzy? This is 2012. We need to start approaching these issues not with an emotional irrationality, but with an objective, intellectual, contemporary way of thinking.
Lastly, and this is for all Americans up to and including The President, a call to action; Please stop blindly vilifying this group once and for all. Contrary to (idiotic, naive) belief, these are not cigar smoking, brandy sipping “fat cats” who sit around in mahogany paneled rooms talking about how to “hold down the little guy.” If you actually believe that, I’m sorry to say it, but you are a moron. Shame on you for falling for such obvious propaganda. These people are (for the most part) incredibly hardworking, educated, intelligent and generous. They contribute a high level of their income to charity (and before you try to rebut with the oh-so-convenient “it’s because they get tax breaks!” just don’t. That assertion is unfounded, sad and downright insulting). They help run our local governments. In many ways, they are responsible for the very lifestyle we take for granted. They are the inventors, doctors, lawyers and yes, bankers, who create the communities that make America what it is. They are the people who have given use the ability to instantly access unlimited information via the supercomputer in your pocket. They are the surgeons who’ve created new ways to operate and thus, save lives. They have invented novel treatments for an incalculable number of diseases. They make things and give back. Think about all the things around you; the dishwasher in your kitchen, the t.v in your living room, the GPS in your car, the computer you are using to read this. All of these innovations were created by people who had a financial incentive to do so, did, and are now being shunned by our society for taking the initiative to make the world a better place.
On a personal note, and what I hope will be a wakeup call/source of inspiration for everyone reading this, my father emigrated to this country with absolutely nothing and before he passed away, had built a successful business for himself off his own determination, self reliance and grit. He wasn’t looking to anyone for a handout of a leg-up. He made it happen for himself. So the last blind assertion that there is this stratum of pinstriped white-guys sitting on the top of the economic ladder kicking everyone down a rung as they try to navigate upward is absurd. You can make it happen if you are willing to work. The socioeconomic spectrum in the U.S is not set in stone. The so called 1% or “wealthy” or “those making more than $250,000” changes every year. Believe you can get there and you will. Sit back looking for a handout and believing this type of nonsense and you won’t.

Posted by DH99 | Report as abusive

What a bunch of “I don’t have enough and I don’t know why, so I want to take some of yours” people! It’s been too long since many people have made the connection between hard work and taking risks (and being smart about which risks to take) and the rewards that can come from that. What we have instead is a bunch of lost sheep whose only thought is to figure out how to steal from others rather than earning their own.
I am far from the 1%, but I am much, much better off under the policies of the last 30 years than I would be under 30 years of the current administration’s policies.

Posted by Randy549 | Report as abusive

Nikacat, I clearly see why your household brings in 50k a year. You appear to be as dumb as a dish of sauerkraut.

Posted by gfranzen | Report as abusive

Thank you, flashrooster. A breath of fresh air.

Posted by chadem311 | Report as abusive

“mega-rich people got there because of their greed; that universal and insatiable motivation of having more than anyone else, accompanied by the justification of all means to reach that end.”

Precisely. But the Republicans will have you believe they got there because they are smarter, better, the superior businessmen and women. No, it’s because their desire to reach an exorbitant level of wealth is much greater than most. In addition to working hard (I will give them this), many of them will lie, steal, cheat, hurt, do whatever it takes to get rich. And like you point out, once they get there, they aren’t going to let anyone do anything to challenge their hold onto that rung on the ladder.

The smartest people I have met have not been millionaires, but modestly paid teachers/professors, various members of academia, and other middle class workers. People that could probably make billions if they had that same insatiable desire for wealth. But they don’t. They also have a higher level of empathy for all fellow humans. But unfortunately many of these lowly but brilliant folks, in addition to having a very limited if not nonexistent voice in this “democracy”, are struggling. Struggling while the tricklers at the top reap the benefits of their immeasurable greed.

I support President Obama and anyone else who challenges their stranglehold on our economy, our democracy, our very way of life.

Posted by chadem311 | Report as abusive

Historically, the wealth is either redistributed peacefully, or at gunpoint. You decide.

Posted by urownexperience | Report as abusive

Regarding the rich hoarding money: It is actually worse for us than that. They invest their money where it likely will provide highest returns. And, that is not here. Rather, they invest in our competitors. Money they made in the US, now they invest it in the BRICs. This is the way neoliberal capitalism is supposed to work. Unless you are the 1%, or a total dupe, you will want to control this ripoff.

Regarding socialism: As is clear to anyone giving it a thought, we are a hugely socialist country already. Roads, police, war machine, security apparatus, schools, not to even mention medicare. (Social security is nominally already paid for by the recipients, so is not quite so socialist). At any rate, we (the 99%) would be crazy to give up these socialist efforts. First off, we can’t afford our own individual security forces. Also, a a free-for-all, unmanaged country doesn’t have a chance in this world. What we need is a good balance, for the 99%. After all, we live in a democracy so it seems reasonable to look after our interests, not those of the 1% (they can handle that).

For those who think that support of the interests of the 1% should be the number one priority interest of the 99%: tell it to Middle Age serfs.

Posted by xcanada2 | Report as abusive

Get the fish hook out of your mouth Mrs. Freeland. This has nothing to do with capitalism or tax policy. It is about political arithmetic. If the President convinces most of the 99% that he is on their side he wins. Some if not most of the 1% will get donations to him to cover their bases. How raising taxes on the wealthy increase the opportunities for the low and middle income is beyond me. I think the higher income people should pay more taxes because we have hugh deficits and somebody needs to pay for it. But it is absurd to suggest that anyone will be more likely to prosper because someone else is paying more taxes.

Posted by marden08 | Report as abusive

#250,000 may sound like a lot of money, but it is not wealthy anymore. It was once, many years ago. A couple both working with one or two children in a city like San Diego, NYC, or Boston, live a very middle class life.

The real culprits of our economy date back to the murder of private farming and the dismantling of manufacturing with NAFTA; the advent of globalization. The belief that we no longer needed to manufacture here was the death of the middle class.

Large corporations shipping jobs overseas for heap labor and paying executives seven figures per year hurt American capitalism. Deregulating banks turned financial institutions into casinos, the result of which wiped out 40% of middle class wealth.

Legislation to move jobs back to the USA will build incomes and a larger tax base. “Real” regulation of banks and the financial markets for a conservative foundation are two fundamental areas to focus on.

We are no longer the leader in technology. China filed more patents than the USA last year. We’re losing in renewable energy and other emerging technologies. Tax big oil and give tax credits for R&D of new energy technologies developed and built here in the USA.

When the Democrats had control a few years ago, why didn’t they fulfill those promises? President Obama and the democrats were going to end the war, close Guantanamo Bay, and make us the world leader in sustainable energy. We got out of Iraq no sooner than expected, escalated Afghanistan, attacked Libya without Congressional authorization,and lost a fortune of taxpayers money on solar energy because the Chinese undercut us with protectionist support of “state” owned manufacturers.

We should clean house. Send a message to our fearless leaders in Washington that we have the power to hire and fire. Yes, they are fearless. The run for a term, get paid a fortune, have the best medical care, and are virtually set up for life. The finger should not be pointed at a couple “earning” $250k.

Posted by GSH10 | Report as abusive

The complaints from today’s top 1% sound a lot like the complaints offerred up during the debates over the Federal Income Tax law of 1913 in how progressive taxation will hurt the job creators. They did quite well during periods of 60% marginal rates and the Depression. Their children and grand-children must have sufferred immensely.

Posted by TIREDINPHILLY | Report as abusive

No one cares about those poor idiots in the 99% that say they have soured on the President.. these are the selfish, cynical, under educated and maybe even racist prols who would not know whats good for them if you force fed them.

Posted by Valmach | Report as abusive

Thank you for an analysis that is, pardon the expression, right on the money. I think, too, that many very wealthy people worry they’ll lose it all and must constantly protect themselves from the angry hordes who want to take it all away from them. Some may even consider themselves to be “middle class” (a man I worked for years ago was paying me $6/hr with no health benefits, while he made over a million, plus a house, car and driver, housekeeper, travel and medical expenses, and considered himself to be “middle class.” Very pleasant man; definitely saw things from a different angle than I did.). Others fear anyone they feel to be not like them, and are easily convinced that their financial security lies with the very rich of “their own kind” (look at white workers who have often had more in common economically with black workers, but historically aligned themselves with plantation owners, factory owners, or venture capitalists), and further decide that anyone who questions excessive accretion of wealth must then be dangerous and Communists. Conversation with them becomes impossible; it’s very scary and just plain depressing.

Posted by jlj | Report as abusive

The law that made hedge fund managers’ annual pay contorted to be capital gains is simply wrong. The Republicans ought to concede that point agree to change it and then point out that Obama’s taxes on the wealthy don’t amount to even 5% of the annual shortfall, so is a vacuous attack that only serves to obfuscate the issue for most voters (just what Obama wants). Lastly “Rich” is not a 4 letter word and shouldn’t be used that way. We can all be equal, but only if we are equally poor. The fact that there are wealthy people means others can become wealthy.

Posted by Truth_Teller | Report as abusive

America is discovering socialism! It was about time, for the rest of us this is a lesson of the early past century.

Posted by Qeds | Report as abusive

The political and even intellectual(!) animosity towards Obama – first non-WASP to occupy WH – is not because America is a fools paradise of socalled Capitalism, going all the way back to T-Ford assembly line – but principally because Globalization has marginalized not only manufacturing factories but outsourcing has rendered the middle-class jobless during the same period, while mainland China and India have become export miracles! Why? Because US Capitalism found out under WTO paradigm change in trade and development, they’re better off manufacturing in China and India and exporting it back to mainland US. That’s exactly what Clinton’s Admin achieved by ending GATT and introducing globalization of finance without frontiers under WTO.

Moreover, me thinks, GOP animosity towards the first blackman in the Oval Office is a historical reflection of southern racism in American politics. What they seem to forget is simply that Obama may turn out to be one of the most intellectual holder of the POTUS office.

Posted by hariknaidu | Report as abusive

What is really amazing is how you can hypnotize the middle, and lower class to believe that they should except what margin of the pie we are “deserving of’ when our actions(work,consumer spending,investments, and deprivations) are what keeps making money for the wealthy.
It is no surprise that education is being down played, and being covered over with mud, because that is what would allow all the cover-ups to be uncovered.
People are so trusting of what they hear on television( the sound bites,and the news clips in the papers) that they no longer check the sources of every story, but wait for the networks to tell them when it is time to do so. All the signs could say ” the treasure is under the oak tree’ but the media will tell everyone that the oak tree is extinct , and no one will go to a library, or even google it to see what an oak tree looks like. And, on top of that be so willing to accept the picture of the maple tree that the networks have placed on the screen to search under for the treasure.
In terms of memory , and the masses forgetting why they are in the predicaments they are in; this is another reason why confusion is carefully created to make the masses forget who the real perpetrators are.
So, four years ago(during the last election) the person who robbed you had on a white shirt, and red pants with a yellow scarf, and wasn’t wearing a mask that time. Now after four years the person with the red pants, and white shirt, and yellow scarf comes before the masses again and his only facial change is he now has sideburns, and nobody can recognize him because instead of saying “stick em up” he says “money please” in the same tone as his last phrase, and what happens; they give him the money.
Okay, so I took the long road to get to that point, but the point is the masses forget who kicked them in the butt the first time, and they rally behind the superficial facts, and propaganda that is laid out there, and they forget all the reasons why they didn’t want that person four years ago.
If you go to dinner with 5 people, and they all make more money than you why do you have to pay 80% of the tab? And why would you? This is not rocket science. This is common sense. Yet, certain news networks say that it’s anti-american if you don’t. And the masses swallow this crap, and ask for seconds.
The elephant in this room clearly is the color barriers that many say they don’t possess anymore. Racism is dead, but yet the puppet strings with those same labels motivate them to pay the 80% tab, and be proud of it.
Those same puppet strings allow them to be associated with all the rhetoric that comes out when in fact the same things that President Obama, and the first family are receiving are no different than the 43 Presidents Of The United States have been entitled too before them. Why is he being scrutinized more than the earlier ones? We could say it’s the suit he wears. Maybe he’s from the state where the Chicago Bears play? Maybe it’s his height? Maybe it’s because he plays basketball? It just really couldn’t be his color , and ethnic origin? No way; the american people just aren’t that shallow. Especially since we are in the twenty-first century. *I’m stretching my arms* there goes my alarm clock.

Posted by roylee47 | Report as abusive

Ms. Freeland, if only the super rich had your intelligence.

They revel and bask in the lies of the far right. They repeat
them as truths without caring that they are lies.

As with many of your articles, you are spot on!

As Louis D. Brandeis said:”We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”

Democracy is dying more quickly that we all thought. The wealthy own the legislators who make the rules. The rules favor the wealthy.
There will be a revolution. I only wish we knew the time and the nature of it.

Posted by propensity | Report as abusive

“Ask the wealthy to pay a little more so the middle class can pay less”. So is Obama proposing a middle class tax cut as well? No, of course not, they will still pay the same- another lie that the writer leaves unchallenged. Nice work, shill.

Posted by johnathan58 | Report as abusive

Of course, I agree with the President on principle, but I don’t think his policies match the principles. Prior to 2008, the middle class has sunk both in opportunities and capital reserves. While the President might have achieved less for the middle class, he would have faired better if he started the argument for a policy change early in his term. Notwithstanding, i will still vote for Mr. Obama, even, if tepidly.

Posted by 0okm9ijn | Report as abusive

Why have the rich turned against President Barack Obama?

Really…lemming…he started this 99% vs %1 class warfare, the RICH,just as you put it, vs the poor for whom he claims to fight for. Maybe if he ran on his record rather than demonizing the RICH the RICH wouldn’t be um turning against him. What if Romney weren’t RICH?? Obama would get it handed to him in November

Posted by Crash866 | Report as abusive

Right on, flashrooster. Politicians and their writers know exactly who they are targeting when they write their speeches. They know who is listening and how many people are all too ready to buy their nonsense.

I will never be a one-percenter, however, I am sick and tired of hearing about them and the other 99 percent. One of the major ironies here is that our esteemed elected leaders in Washington, D. C. are most definitely among the one percenters.

The use of catagories such as middle class, the poor, the upper-middle class, the lower-middle class, the affluent and the one percenters is Washington D. C.’s way of getting the majority of votes because they made it sound as if they speak the language of an average lay person. And, know what? It works.

Posted by alwayslearning | Report as abusive

What amazes me is how continually near sighted Ms. Freeland is. Nary a thought or column about what President Obama is or is not actually doing, just the week in and week out liberal shilling that she does on these pages. We are slowly becomming a true nanny state of a country and the continual demonizing of the free market and capitalism appears to not be subsiding in the mind and writings of Ms. Freeland.

Posted by MitchS | Report as abusive

Chrystia, an excellent article. I think history will support the President’s point of view as a step well taken or an opportunity missed depending on the election results. I fear the building concentration of wealth controlled by the top 1% in our country and hope the average American is smart enough to see how they will really fare in each candidates vision. We are already witnessing manipulation of democracy itself by “Super Pacs” and their advertising propaganda supporting Romney and displaying his party’s ties to the wealthy and their fear of change!

Posted by abkisa | Report as abusive

Obama tells the truth, although much too timidly for my tastes.

Yet the polls are close.

If Amercans vote for the interests of the 1% above their own, they really will get what they asked for.

God help them to see sense!

Posted by Urban_Guerilla | Report as abusive

The author completely ignores the fact that very many individuals with a $250K annual income are, in fact, job creators. Romney’s point is very valid because most privately held small businesses are chartered as S corporations, meaning that the businesses’ profits are taxed as personal income to the owners (whether they take the profits or reinvest them). Therefore, increasing the tax on high earners increases the tax on the small businesses they own.

Two thirds of the working population works for small businesses, according to a University of Chicago School of Business Survey in 2006. Small businesses are really the lifeblood of this economy and need to be treated as such. Obama is encouraging discord and a dislike of the rich in this campaign while knowingly ignoring some very basic facts.

Posted by Nichols73 | Report as abusive

to incomewise:

apparently you choose to ignore the many people who receive some help from programs which are Not Welfare ~& which we paid for with our own previous taxes~ and who work also not only to supplement the amounts we receive (far less in comparison to the former jobs we’d certainly prefer to still have), but also because we still retain our work ethics and want to continue to contribute to the many others in the world who need our help… if only to mow lawns and clean houses… oh yeah, i already do those things, among others.
I welcome you to keep quoting your choice of religious literature… but, i think you may want to read more of it than just the parts that justify your narrow-mindedness; i think that already qualifies you for your wish for membership in the 1%.

Posted by LikeItIz | Report as abusive

It can likewise convince us that to raise taxes on the wealthy is some sort of cruel injustice and instead they deserve to have their taxes lowered still further, because we’re beholden to them for everything, or so the narrative goes. I’m sure it’s just a matter of time before we are taught to believe that the rich shouldn’t have to pay any taxes at all and that our glorious past, when taxes on the rich were high and the United States, with its amazing Middle Class, was the envy of the world, was simply a figment of the imaginations of those liberal historians.

Flashrooster
The 1%, as you refer to them because you were trained too, pay most of the taxes in this country not the 99%. This is all about class warfare that was start by the left and OWS. This was all planned a long time ago. It’s no longer about the best man or woman for the job. Divide and conquere. High taxes on the rich means a thriving middle class…priceless. How much revenue will be added by doing so? Will that dramatically reduce the deficit? What is being done to reduce the deficit by reducing spending….yeah thats what I thought. Demonize the RICH!! It’s all their fault…lets get em!!!

Posted by Crash866 | Report as abusive

If Obama Demonized you for the wrong reasons wouldn’t you fight back?

Posted by Crash866 | Report as abusive

Is’nt it the second case of an “inconvenient truth” for true capitalism?…It does not work as the followers of laissez-faire make us believe….to the contrary, we are, through it’s workings, robbing ourselves of our future.

Posted by Checksbalances2 | Report as abusive

@ Urban Guerilla

“Obama tells the truth, although much too timidly for my tastes”

That’s probably his main problem, he is (too)civilized compared to the “framing” by the opposition(and nothing else..they have got no productive answer to todays problems)

If they had, that would mean that they would have to cut in their own meat (the -too- free market economy).

After all it should be clear by now that there is a big difference between the interests of the financial economy and those of the real (the social = society)economy..as a matter of fact there is a clear conflict of interest between the two.

When will we introcuce policies to balance that out!

Obama, here lay your chances as a democrat (…the will of the people…) the 99%?

Posted by Checksbalances2 | Report as abusive

I can’t believe a lot of what I am reading in these comments. The simple fact is that a sitting President should run on his or her record. This President can’t do that because the record stinks. That is why he is attempting to divert attention to anyplace he can – except his performance.

As to wars causing the deficit, I don’t see how 1 trillion deficit per year, with only the Afghanistan war to support, is better than the 400 billion a year for a major Iraq war under GW Bush. Where is that money going – certainly not military operations? I could allow for the one time deficits in 2009, but they have continued since then. We won’t need to worry about any percentages when the country defaults because of debt.

I don’t think this President understands capitalism at all. But I do recall him speaking in 2008 about “redistributing wealth”, which is a socialist and communist idea.

Posted by stevedebi | Report as abusive

@Stevedebi

His or her record is – in my opinion- in this case …..the record of the opposition.

Would the GOP have accepted the presidents plans about infra structure and green energy as he laid them out at the start of his term, a lot of Americans would actually have benefitted by the money printed by the Fed., there would have been more jobs.

That would have been far better then as basically happened now, beafing up the trade deficit in the favor of others and so looking after the profits of the 1 percent (and a lower cost price of luxury goods,..if that is an advantage,.. one might doubt that) in stead of creating jobs.

Then, he (like the current UK government always blaims the labor predecessors for which is mainly a flaw in the capitalist system…recreated by the extreme liberties regiven to the banking sector by Reagan and Thatcher..) cannot be blaimed for these systemic failures, nor can any current politician, the main reason is within the current primitive system, greed.

He cannot help that, by means of subprime mortgages and their derivatives, the casino capitalist system has made all democracies pay for their (the 1 percent) errors. Add to this the foul play of banks which becomes more and more apparent and it is very clear for me which side I should definitely not vote for.

The total cost of Iraq and Afghanistan were until recently about 2000 billion dollars, still quite a bit of money if you put that against the money that the president was going to spend on infra structure and a fairer health system.

Redistributing wealth is probably the right word, if you give society back what GWB took out of it by handing out large tax deductions to the super rich, whom do not seem to have spent there money here……and which Romney even seems to want to increase…..

Posted by Checksbalances2 | Report as abusive

NO-BAMA!

Posted by Ray07 | Report as abusive

Well, my husband and I own a “small” business. We employ 15 people on a full-time basis and we’re in our early 50′s. I guess we fall into the super-rich category because we end up with taxable income around $300k. Between the self-employment taxes and federal taxes, we pay about 45% of income in taxes not counting flow-through sales taxes or personal property taxes.

Not going to say which candidate is right or wrong, but we’re sitting on 2 business plans for 2013 right now; one has 2 new positions to generate additional sales and provide support for new accounts; the other plan drops our 5 least profitable accounts so that we can reduce headcount by two positions to bring that taxable income under $250k. The positions impacted either way have salaries between $30k – $40k. Depending on how the tax ball bounces, we’ll implement plan a or b.

At the end of the day, we’ll personally be in about the same position but we will either employ 2 more people or 2 less people.

Would be interesting to know how many other small businesses are doing the same math.

Posted by TheWiseOne | Report as abusive

Never underestimate human emotions – no one likes to be demonized, be called evil, unpatriotic , have their successful efforts denigrated – it is a completely normal reaction. Having said that, it remains unexplained how the act of raising taxes will “improve” the economy – a demagogic policy based on envy and jealousy does not seem very uplifting. Moreover, it is very curious why progressives see enormous problems with the “rich’, like Romney, who made his money by working – the progressives seem to prefer having it handed to you – inherited like JFK or FDR – or better yet, marring it, like Kerry (all of whom far richer than Romney).

Posted by SayHey | Report as abusive

Most important….jobs should be created not shipped away,(see the Obama plan), and, of course, cancel out the benefits given by Bush to the higher incomes, that resolved nothing.

It is unimaginable that a millionare pays a smaller part of his income to taxes than Joe the plumber.

Romney made his money by working? …or did he do that by exporting jobs..and so, like too many companies now, act unpatriotic.

You cannot compete with incomes of a tenth of the going rate here at our cost level.

The only alternative, ….devalue the dollar by 50%? But then, outsourcing would be less profitable, would the import lobby allow that?

Posted by Checksbalances2 | Report as abusive

@TheWiseOne
Good to hear that you may be able to employ more people, as far as I know that means, that that would mean a positive track in the Obama plan…after all you will be employing people in the US….

If these jobs would be outsourced that would of course be a different picture.

Posted by Checksbalances2 | Report as abusive

Having lived many years in a “classless society” i.e. a communist country, I cannot believe our country is being pushed by an ideology on that path. That system was a failure that kept millions of people working hard without ever benefiting from their labor. The seeds of class warfare have been intentionally planted and they will bear fruit if this shameless rhetoric continues. What happened in the communist countries 50 years ago was the result of a national policy of intimidation and fear. What is happening today is the result of an elitist, power hungry president who wants to keep those who elected him dependent on his hand-me-downs. The percentage of people on welfare went up not only because of the terrible state of the economy but also because to have your basic needs fulfilled by the government requires little or no effort. Is this what we are aspiring to?
Getting rich 101: somebody had to have started somewhere, whether it was your great-grandfather or you, and future generations not only in your family, will benefit. I have attained the American dream through hard work and I know many of the “1%” have done it the same way. Since when are we begrudging another fellow American his success?
It’s been said that Americans are gullible. If the 2012 elections will not change anything we deserve that label and moreover deserve our fate.

Posted by LianaB | Report as abusive

It’s interesting, Chrystia, how most of the comments/responses above (54 as I write) come from readers who seem to miss the main points you make in this well-argued essay. You write of the how and why the 1% have “turned against President Barack Obama.” Most of the hostility toward the White House comes not from “laid-off workers or beleaguered homeowners,” you suggest, but from bankers who “got the biggest government bailout of all,” even though “the president resisted calls from the left to nationalize the banks . . . as did the British.” Why would this “bailed out group” be so hostile to the chief executive of the govt. that bailed them out? Part of the answer is, you note, “simply self-interest.” “He wants to raise their taxes significantly. . . . On Monday, Obama reiterated his support for letting the Bush-era tax cuts for household incomes of more than $250,000 expire, while keeping the lower rates in place for everyone else.”

That’s pretty straightforward. The “Masters of the Universe” of Tom Wolfe’s seminal 1987 novel BONFIRE OF THE VANITIES — the mostly white affluent males banksters who have employed such “elaborate tax avoidance strategies” to evade paying their fair share of the tax burden over the past 30 years — would prefer that President Obama continue to let them get the tax breaks to which they have become accustomed. What’s mysterious about that?

Well, you suggest, it goes beyond just putting an end to the tax breaks that have fattened their (offshore) bank accounts. They are angry because President Obama has the temerity to challenge their (master) narrative. As “job-creators” — “the Republican term of art” used to describe “those who make more than $250,000 a year” — “the president’s proposal to raise taxes at the top wasn’t bad just for the rich, it would hurt the whole country.”

In other words, “if you take them at their word,” it’s the president’s attitude “toward them, toward their wealth and toward capitalism itself” that is actually creating the animosity.

Yes, as bizarre as it seems to many of us, the “NO-BAMA” people continue to use the same old supply-side, trickle-down master narrative to defend themselves and the tax favoritism they received under previous administrations. If the president refuses to supplicate himself before the “business strategies that have enriched the elite [and] hollowed out the middle [class],” he is “either a socialist or a communist.” If I were a Martian — or an unemployed dittohead sitting at home cleaning my assault rifle while listening to Rush hold forth on race, class, economic theory, etc. — “the animosity of America’s 1 percent toward the president might be rather mysterious,” but it isn’t perplexing to me. It’s pretty obvious. It’s pretty straightforward. Thanks Chrystia.

Posted by rhknott | Report as abusive

It’s interesting, Chrystia, how most of the comments/responses above (58 as I write) come from readers who seem to miss the main points you make in this well-argued essay. You write of how and why the 1% have “turned against President Barack Obama.” Most of the hostility toward the White House comes not from “laid-off workers or beleaguered homeowners,” you suggest, but from bankers who “got the biggest government bailout of all,” even though “the president resisted calls from the left to nationalize the banks . . . as did the British.” Why would this “bailed out group” be so hostile to the chief executive of the govt. that bailed them out? Part of the answer is, you note, “simply self-interest.” “He wants to raise their taxes significantly. . . . On Monday, Obama reiterated his support for letting the Bush-era tax cuts for household incomes of more than $250,000 expire, while keeping the lower rates in place for everyone else.”

That’s pretty straightforward. The “Masters of the Universe” of Tom Wolfe’s seminal 1987 novel Bonfire of the Vanities — the mostly white affluent male banksters who have employed such “elaborate tax avoidance strategies” to evade paying their fair share of the tax burden over the past 30 years — would prefer that President Obama continue to let them get[enjoy] the tax breaks to which they have become accustomed. What’s mysterious about that?

Well, you suggest, it goes beyond just putting an end to the tax breaks that have fattened their (offshore) bank accounts. They are angry because President Obama has the temerity to challenge their (master) narrative. As “job-creators” — “the Republican term of art” used to describe “those who make more than $250,000 a year” — “the president’s proposal to raise taxes at the top wasn’t bad just for the rich, it would hurt the whole country.”

In other words, “if you take them at their word,” it’s the president’s attitude “toward them, toward their wealth and toward capitalism itself” that is actually creating the animosity.

Yes, as bizarre as it seems to many of us, the “NO-BAMA” people continue to use the same old supply-side, trickle-down master narrative to defend themselves and the tax favoritism they received under previous administrations. If the president refuses to supplicate himself before the “business strategies that have enriched the elite [and] hollowed out the middle [class],” he is “either a socialist or a communist.” If I were a Martian — or a unemployed dittohead sitting at home cleaning my assault rifle while listening to Rush hold forth on race, class, economic theory, etc. — “the animosity of America’s 1 percent toward the president might be rather mysterious,” but it isn’t perplexing to me. It’s pretty obvious. It’s pretty straightforward. Thanks Chrystia.

Posted by rhknott | Report as abusive

@rhknott
” the same old supply-side, trickle-down master narrative to defend themselves and the tax favoritism they received under previous administrations”

Nobody seems to realize that this system cannot work in a supply side, financial and commercially fully laissez faire (of the “old” capitalist countries’) globalized economy.

After all there is more return on investment in emergeing markets, the result of investing there or here should be more in balance with the cost of living there or here, otherwise the influence of the inbalance is too great on our changes (jobs) here and, not to forget, their changes over there to really leave poverty behind.

There incomes should be raised considerably, so that they can also afford the things they produce, giving us a break to restart some of the industries that were moved or have never been (from) here.

(see the IT production industry (Foxcom/….)

Posted by Checksbalances2 | Report as abusive

The 1% only care about money and their lives.

Posted by Parachute | Report as abusive

The logic used by TheWiseOne is severely flawed. One alternative supposedly being considered will “bring that taxable income under $250k” (from $300k). Why would you deliberately want to throw away your after tax income? Under Obama’s proposal you would be taxed at the current, historically low rates on the first $250k either way. If you made $300k (or more), taxes would be raised (but to rates still very low by historical standards) only on the portion over $250k – you would still get a significant amount of after tax income. In fact, your income on the amount over $250k would not be subject to the social security portion of the self employment tax, yielding a marginal tax rate at $300k potentially lower than the marginal tax rate at $250k!!

I think it is most unfortunate that some small business owners are so busy with the considerable day to day effort of running a business that they are unable to take the time to see through the flawed logic being propagated by the right wing about tax rates and small business employment.

Posted by QuietThinker | Report as abusive

@LianaB: Tax rates on the rich in the US were much higher during the 20th century, the middle class was much stronger, and we outlasted communism. Interestingly enough, about the same time communism fell, the US began deregulating as we embraced trickle-down economics. And we are obviously worse off for doing it. So, your argument that returning (emphasis on returning) to higher tax rates for the rich is a step towards communism doesn’t pass muster. History proves that.

Posted by dasein | Report as abusive

@quietthinker – every time you add staff, you create more risk for your company, which is basically creating personal risk. If we choose to not grow and reduce income to keep us below the threshold, we may have less net income, but overall avoid potential other costs and risks. All I’m saying is that at this point in life, if there is no perceived reward for doing taking this on, his, why even bother?

Posted by TheWiseOne | Report as abusive

Very well written.

It will be sad if the American people fall, again, for the false promise of Reaganomics. But, don’t be surprised….

Posted by JoeOvercoat | Report as abusive

Hola TheWiseOne – for what it is worth, your case would have more appeal to many of us if one of your plans called for hiring more people to actually create something to sell, as opposed to hiring two sales reps (if I understood your post correctly).

Posted by JoeOvercoat | Report as abusive

Obama and the rest of the hypocritical 1%’s on the left supported the foul-mouthed and bigoted OWS protesters, and Obama still has plenty of rich leftists supporting his socialist cause.

Oh sure, Obama laughs at and denies the “socialist” label and pretends he respects the great wealth which capitalism and only free-market capitalism has brought to modern society, but his true colors shine through every time he opens his mouth without his teleprompter.

Posted by Parker1227 | Report as abusive

What O has never explained is the rationale for his proposed tax increases. The sum total of the argument is that it’s “fair”. What will his government do with said funds? Well, spend them of course! On what? You won’t know until they’re doing it. But I assure you it won’t be on deficit reduction.

Posted by BigBlueFan | Report as abusive

To “TheWiseOne”:

The increased tax rate will only be be applied on the part of your income above $250,000. Your tax liability will be the same as anyone else’s for the first $250,000.

Posted by stanscript | Report as abusive

Obama’s upcoming budget has already been released, so what he plans to do with the money is readily available and common knowledge. Republicans are already complaining about it–money to keep fire, police and teacher salaries in place nationwide, programs to help returning veterans, infrastructure projects for roads, bridges and rail. And yes, the entire budget is balanced and leading to deficit reduction.

Posted by Nora22 | Report as abusive

I have to laugh at the ill-informed people who use the term “trickle down” to attack the most successful economic policies ever implemented in the United States. President Reagan inherited an economy in much the same shape as the one in 2008. Yet his polices produced an almost immediate improvement and by this stage in the recovery we had 8% growth (compared to a paltry 1.5% now!) along with lower inflation, lower unemployment, lower poverty, etc. The average income for all quintiles rose as did the net worth of all groups (as a whole). Anyone who claims it “didn’t work” or “only benefited the rich” is ignorant of history.

Posted by RealityHammer | Report as abusive

The premise that the 1% is lined up against Obama is laughable. Just who do you think attends his $50K per plate fundraisers? Do you know who George Soros is? And those “companies that pay no taxes” would be GE, headed by Obama’s very own “Job Czar”, Jeffery Immelt.

Stop being such a lying hypocrite!

Posted by RealityHammer | Report as abusive

Everyone keeps forgetting that married couples who make $250k are NOT in the 1%. These people are just hardworking, successful middle class folks. They aren’t sitting around living off dividends or other income from investments. Why does Obama hate successful women so much? These are the ones paying for childcare and for people to clean their houses because they don’t have time to do it all. They aren’t rich. They are just getting by, too. Oh, yeah… and employing other people to help them get things done. Hmm…

Posted by duh1977 | Report as abusive

@parachute – the 1% care about their money and their lives? – and that makes them different from everyone else because…??

Posted by SayHey | Report as abusive

@TheWiseOne This is what I don’t understand (partly mentioned by other commenters): As taxes are always a small fraction of additional income, why is it ever a good idea not to pursue additional income, the vast majority of which you’d keep?

Your subsequent reply — the additional costs and risks which come from any expansion — don’t apply to your initial point, which was that on a purely financial basis you wonder “how many other small businesses are doing the same math.”

The math is in your favor, unless you were going into a higher marginal rate (and even then it would still be in your favor to a somewhat lesser extent).

The best investment advice I ever got was, never make a decision based on the tax consequences. I wonder how many small business people are obsessing details which is at odds with their common business sense.

Posted by johncabell | Report as abusive

Back to the “married people who make $250k together are not necessarily in the 1%” comment.

Two people who each make $125k/year (“top 14%”) (think nerdy, hardworking engineers) by virtue of marriage get promoted to the “top 4%”. They are not in the top 1%, but Obama hates successful women and thinks that as a married “14%-er”, she and her husband should pay their “fair share.”

How dare two successful middle class people get married! That is something society should discourage. According to Obama, apparently women would be better off at home than working at productive jobs.

Posted by duh1977 | Report as abusive

@RealityHammer 30/7 1.38

Reagan was in a far better global position as anybody else since. In his (and Thatcher’s)days, during the end of his term in office the European east block turned just away from communism , China was still blocked from western influence, India was still a classic society. In short the BRIC did not exist.

This means that the West and Japan were the only mass producing modern economies in the world. So the supply side was still the west and Japan, with a fairly equal income level.

That has changed dramatically since the mid nineties (Internet and Laissez Faire supply side economics are to blame for that..

See today’s item about the new treaty with South Korea, that will not work, because American (as well as European) businessmen find it much more profitable to export work and import goods than to keep jobs and export goods.

The difference in cost level is too high, that’s why, That difference should be eliminated and the only way to do that is by means of (heavy..fully compensating..) import duties (Lost Jobs tax)

Posted by Beobachter | Report as abusive

@RealityHammer

Actually Reagan got 8% growth with massive amounts of government spending. Of course you won’t believe me on that because Reagan is your demi-god.

http://en.wikipedia.org/wiki/File:Budget _Deficit_1971_to_2001.png

Wanna hear something else ironic, Obama-care was first proposed by the Heritage foundation and was Bob Doles plan on how to control health care costs with the individual mandate being being pumped as the ‘no free rides’ idea.

http://www.forbes.com/sites/aroy/2011/10  /20/how-a-conservative-think-tank-inven ted-the-individual-mandate/

Posted by JulsMan | Report as abusive

@RealityHammer

Reagan grew the economy with massive amounts of government spending. Same formula you accuse Obama of using. Only Reagan didn’t have a EU meltdown dragging things back down.

http://en.wikipedia.org/wiki/File:Budget _Deficit_1971_to_2001.png

Posted by JulsMan | Report as abusive

{As a new television ad for the president argued this week, Obama’s plan is to “ask the wealthy to pay a little more so the middle class pays less, eliminate oil subsidies and tax breaks for companies that outsource.”}

Is that all. Just a little more?

Let’s consider how much the OnePercenters have been getting over the past two decades, whilst average household incomes have stagnated:

Year Top 1% income share
1990 12,98% (of Total Income)
1991 12,17
1992 13,48
1993 12,82
1994 12,85
1995 13,53
1996 14,11
1997 14,77
1998 15,29
1999 15,87
2000 16,49
2001 15,37
2002 14,99
2003 15,21
2004 16,34
2005 17,68
2006 18,06
2007 18,33
2008 17,89
2009 16,68
2010 17,42
(From Global Incomes Data Base, Paris School of Economics)

And they are afraid we might ask them for a “little more”? We should be asking for a helluva lot more.

We should take the Tax Code, dump it, rewrite it and place Marginal and Capital-Gains Taxation back up to where it was before Reckless Ronnie brought them tumbling down from levels above 70%.

Then, just maybe, they might begin then to pay a fair share of the tax burden.

Posted by deLafayette | Report as abusive