Layoffs--Unamerican?

So 100,000 Americans have lost their jobs since 9-11 with more layoffs on the way. Here in Seattle, Boeing announced that about 30,000 people would lose jobs. This 2 months after the company moved its headquarters out of the region. Nowhere in the media have I heard of one CEO, CFO or other executive taking a pay cut, giving up some options or otherwise sacraficing personal gain to "help us return to normalcy" in this time of "war". CEO compensation is at record levels while many states experience the worst uemployment rates in decades. So America suffers and who pays--looks like the working class once again. The rich are getting richer, the most wealthy are getting the biggest tax cut in history, airline companies are getting bailed out but still laying people off and the gap between rich and poor gets bigger. But hey, lets not let a terrorist attack affect our way of doing things. God Bless America. See you in the soup line.


KJS

Since when is 'the rich getting richer' Unamerican? Isn't that what America is all about?

There use to be a social contract though. I get richer, you get richer, we'll all get richer. The more profits we make, the higher wages we'll give you, the better benefits, etc.. You help the company by doing hard work and you will be rewarded financially and have a modicum of job security. No more.


KJS

I don't want to get into whether or not you believe that lowering taxes is good for the economy, but the phrase you used has been bandied about quite a bit, "the rich benefitting from the biggest tax cut in history".


I didn't hear too many people claiming that "the rich are getting screwed by the biggest tax hikes in history" when Clinton raised taxes. In both cases, the hikes and the cuts, the working class got screwed/helped along with the rich.


I think this boils down to class envy and people being unable to understand that a percentage cut in taxes has a bigger benefit for the lower classes, AND affects their disposable income far more.


Personally, I welcome the tax cuts, even though I make a middle class income. I'm going to use that $600 for sure, and who cares if some billionaire will pay a few million less in taxes this year? He earned his money. The feds should be taking less of his money, and less of my money. He's just going to invest it and create more jobs anyway.


Many americans have somehow become convinced that if a millionaire saves $.5 mil on a $10 million tax bill, it is somehow unfair to them because they only saved $1000 on a $5000 tax bill. (numbers created out of thin air for purposes of an example).


How this notion got into their heads is beyond me. The only explanation I can think of is class envy. Because it is fundamentally fair to give everyone a break on their taxes, not just the poor and middle classes. Also, the end result is plain and simple, a break on your taxes! Why get so upset over the fact that someone in another bracket may be getting a break too?


I live in the bay area which is as close to communist as you can get in this country, and they all hate W with a passion. Almost everyone around here is furious about the big 'tax breaks for the rich' but I haven't spoken to a single person who sent their refund back. I want to ask them, "Would it really be worth $600 out of your pocket to keep some rich guy from getting a break on his taxes too?" That seems pretty spiteful to me. I'll take the $600 thank you.


Unless you somehow believe the government is not collecting and spending enough money, I don't see how anyone can be opposed to cutting taxes.


natedogg

Nate,


That $600 you got is not a tax cut. It is a loan from Uncle Sam to you against your 2002 taxes.


The tax cut of 2001 was weighted such that those who make a ton of $ (and henceforth do not *need* a tax cut) got a larger (% wise) break on their taxes. That is unfair, IMO. The theory that this money trickles down to the middle and lower classes is BS, IMO. (Didn't George, SR. call trickle down, "vodoo economics"?)If the administration really cared about the financial improvement of these people they would have given them a bigger cut and made the million and billionaires scrape by on what they have been paying.


I am for progressive taxation--those who can afford to pay more, pay more.


But my post was more about patriotism and layoffs. Seems like keeping people employed in good jobs was something we use to pride ourselves on as Americans. Now we have extreme patriotism and rapid job reductions.


KJS

The tax cut of 2001 was weighted such that those who make a ton of $ (and henceforth do not *need* a tax cut) got a larger (% wise) break on their taxes.


This is not my understanding. But maybe I'm wrong. For instance, I read that the 15% tax bracket will drop to 10%. That is a 33% tax cut! MUCH bigger than anyone at the top.


My information could easily be incorrect, but from what I've read, the biggest cuts go to lowest brackets.


natedogg


PS: Agree with you about the job layoffs, especially the slimy airline industry that lobbies for a bail-out bill and both GETS the money AND lays off 100,000 workers. What a load of crap.

There was an interesting article in Barrons regarding the unemployment rate in the early part of the 20th century. Essentially is was much lower because of flexibility in paying wages. When companies fell on hard times they simply paid less wages and kept employees.


We've had this discussion before regarding CEO's and their worthiness of the money that they receive for their work. Really what you're advocating in my mind as a radical change to our economic system. Perhaps it would be relevant to point out an alternative economic system to ours that is working today.

Perhaps it would be relevant to point out an alternative economic system to ours that is working today.


Perhaps we should discuss whether "our" economic system is in fact working.

George Bush did not call trickle down economics voodoo economics. George Bush believes in trickle down economics.


What he called voodoo economics was the idea, put forward by his competitor for the presidency, Ronald Reagan, that you could massively increase defense spending, lower taxes, and balance the budget. His description was accurate. Reagan's plan was based on the Laffer curve, the idea that you could lower tax rates and generate more tax dollars because higher tax rates discouraged those at the upper income levels from making more money.


Republicans like Bush and W are not in favor of progressive taxation. Many are now in favor of the so-called "flat" tax, whereby the billionaires and millionaires would pay at the same rate as the thousandaires. It is a subterfuge for reducing the highest bracket income tax rates. What they don't tell you is that, when you consider all taxes that people pay, not just income tax, we already have a basically flat tax rate. For example, if you make $80 million a year, you will pay the same absolute dollar amount in social security tax as a person who makes $80 thousand a year. As a percentage of his income, the person making $80 thousand pays one thousand times the rate.


I don't remember the exact quote, but W said that a coroporate lawyer making $250,000 a year and a waitress serving her making $25,000 a year were both equally entitled to a tax cut. This sums up his economic philosophy perfectly.

taxes suck.

Progressive taxation has its problems. One example is my Dad. He is in one of those high income tax brackets, but he is at the bottom cutoff level. This is totally unfair, because now some guy that makes a couple bucks an hour less then him is paying significantly less in taxes. Ugh, no wonder people get fed up with politics.

It's amazing to me that after a 10 year record economic expansion, with low inflation, a strong dollar, very low unemployment, and while running a budget surplus that with a 1.5 year slowdown that hasn't, but probably will, teeter into a very mild recession that people entertain the thought that our economic system isn't working.

Goat,


I don't understand your assertion. Tax debates aside, progressive tax rates mean that you pay the higher rate on incremental or marginal income. In other words, (I haven't looked up where the cutoff points are so the numbers come out of my rear end), someone making $100K and someone making $50K (after deductions) pay the same taxes on the first $50K of income. But if the guy making $100K makes $1000 more, he will pay at a higher rate on THAT money than when the guy making $50K makes $1000 more.


A person might work an occasional week of overtime and complain that much of their extra income is swallowed up in taxes. But the tax withholding tables assumes the earner makes that money every week. Typically, the worker will get back most of that money when they file their return since this income won't be taxed at a higher rate when it is spread over the year (unless they are right at the breakpoint).


That being said, I'm against excessively high marginal rates (as in the Carter years) and for full disclosure on just how much is taken out for social security, a truly regressive tax.


Regards,


Rick

Rick is correct on how the progressive tax works so you're example is not a very good one. Let's use some examples. One person makes $50,000 and one makes $51,000 (this second guy is in your dad's position). Assume a flat rate of 20% on the first $50,000 and 25% on amounts over $50,001. The first guy will pay $10,000 and the second guy will pay $10,250 (20% on the first $50,000 and 25% on amounts from $50,001 to 80,000) so the second guy (your dad) doesn't pay much more than the first guy.

I agree that clearly the American economic system is working. Not only have the last 5 years been great but in relative terms the last 70 years have been great. However, in Western Europe, Canada, Australia, etc. they have also had relatively great economic times for the past number of years and in these countries CEO's do not make anywhere near what they make in the U.S. For instance in Canada the CEO of our biggest companies, usually our banks, will make in the 5 million range where in the US his counterpart would make in the 100 million range. CEO's of companies like Coke or Disney can make 300 million and have another few hundred million in shares. I'm not saying they shouldn't get paid well but this seems a little out of whack to me.

Tom,


I love to talk and think about alternative economic systems. The problem I find though is that one has to work on a totally different set of assumptions, especially about production, materialism, and lifestyle. You are probably right that there is not a very tenable alternative system that you could just drop on 2001 USA and still provide the kind of livelihood that some of our people are used to (I am making assumptions here based on your use of the phrase "working today" here). Therefore, much of what I believe is possible in terms of radical change is not ever going to happen because not enough people feel discontented with our current system and/or those who do are not well organized enough to foster the changes they desire.


That said, the point of my rant was just to point out that I think our social fabric is bound to be hurt by the number of layoffs we are currently experiencing. What I see is a shift from a time when patriotism was associated with a strong economy that lifted up everyone to today, where labor is viewed mostly in terms of capital costs and the human side of the equation is easily overlooked, thus making it possible to have a period of extreme patriotism and lots of people being laid off. The social costs of these layoffs is hardly even discussed in the media. (NPR did have a piece yesterday about the increase in meals at soup kitchens since 9-11). The fact that people are losing their livelihood--the ability to clothe and feed themselves and their families--left and right when companies earnings drop the slightest bit or their stock needs a boost (or their business is affected by terrorism) is detrimental to our social stability, in my opinion. Think about what someone who graduated from college in 1975 could expect in terms of salary, benefits and job stability compared to someone graduating from college in 2000. I've had jobs where I was courted, hired at a decent salary ("We pride ourselves on paying people more" I was told) given benefits and laid off SIXTEEN WEEKS later. A month after that they hired my friend to do the exact same job.


To keep it short, I think that there needs to be some discussion about how the new paradigm of work and job instability affects people and therefore society. I for one think we would benefit from a shift back towards the ideal that a good economy is one that provides good living wages to workers as well as some profits and good (but not unecessarily excessive) salaries for executives. What I see now is an extreme profit motive where labor is viewed as a cost to be micromanaged to appease stockholders and the social costs of people losing jobs is not addressed.


KJS


PS. Its telling that what people picked up about my rant was not the social ideas I addressed but the taxation stuff. Seems we always think about our own bottom line first.

I think that in some respects people are freer and get paid more in the absence of traditional work situations. I know this does not help someone who is laid off or someone in an industrial job, but a lot of people are finding the newer, flexible work situations appealing. The best way to look after yourself is as a free agent who is willing to move around some. And I think some job security is mythical anyway. I am saying this as someone in what appears to be a stable job with benefits. My security really only comes from my skills and willingness to move. If things get bad, I can be licensed in at least 4 states by just doing some paperwork and get a better situation. I can go out on my own using the skills I have developed in my stable job.


A relative of mine makes a lot more money than I do and has what appears to be a stable job with a major company. He probably will never be laid off based on seniority. He expressed to me once that he was envious of my wife and I because of the freedom we had due to our education and experience. So the only security you ever really have is what you can create for yourself. And the bi-weekly check and a health insurance card isn't what's about.


But if you are not a skilled laborer or employee, things will be tougher in the "new" economy. And that means a lot of people will have a hard time, at least periodically.

I don't remember the exact quote, but W said that a coroporate lawyer making $250,000 a year and a waitress serving her making $25,000 a year were both equally entitled to a tax cut. This sums up his economic philosophy perfectly.


Why exactly is that so wrong?


I don't have a problem with a progressive tax scheme in principle, as long as it's not too extreme. But where do you draw the line? To say that someone simply cannot be overtaxed if they make a certain amount strikes me as too extreme.


If you believe it's possible to overtax someone who makes 250k, then you must also believe that it's possible they deserve a tax cut as much as anyone else, IF tax cuts are being given.


If you don't believe it's possible to overtax someone who makes a lot of money, then we simply have fundamental differences of opinion that cannot be resolved. That's why I keep voting, and I assume you do the same. /images/smile.gif


natedogg

Actually I was just thinking that you might have had a model economic system in mind when you made the post. I'd be interested in reading about alternative systems based on different assumptions. Capitalism can be and often is brutal.

"Why exactly is that so wrong?"


People who make $250,000 live a hell of a lot better life than people who make $25,000. I prefer politicians who care to improve the life of those making $25,000. The person making $25,000 is paying the same percentage of her income on sales taxes, excise taxes, social security taxes, etc. They both may be entitled to a tax cut, but to say they are equally entitled to one is to betray a lack of interest in helping those most in need of help.


"To say that someone simply cannot be overtaxed if they make a certain amount strikes me as too extreme." I agree. But how badly would it hurt some people if, for example, we raised the highest bracket from 33% to, say, 40%? Not much. And how badly would it hurt some people if we raised the lowest bracket by the same percentage. A lot. Therein lies the point, at least to me. There is no way I needed the $600 check I got this year. Did I keep it? Of course. (I am donating an extra $600 to my child's school this year.) But it would have been better to have sent $600+ to those to whom the money would have made a difference in their lives.


Also, remember too that the top brackets are only on the income above the lower brackets. I don't know what the lowest bracket is, but everyone pays that same % on that portion of their income. The next highest bracket applies only to that income above the maximum income for the lower bracket.


So: Yes, I do believe it is possible to overtax someone who makes a lot of money. But I don't believe we have that situation today and I don't really worry about those people much anyway. Even if they do become "overtaxed" they'll do just fine.

Just read Rick's post about the brackets, and he gave a much better and clearer explanation than I did.

however when you get into the very top bracket you lose many of the deductions as they get phased out that are afforded to the lower levels of income. such as loses from some real estate. things like if you take a new mortage on your home only 100,000 is interest exempt. big surprises in the top bracket.

many years back. the top bracket was 90% thats right. i remember ronald reagan when he was an actor saying he quit making many movies as it didnt pay to work when you reached that level. i lived thru the 70% era and that was silly too as people just quit making the extra dollar as it only paid if you were a workaholic or didnt have to expend the energy for the incremental buck.

the most important thing is to get the gov. to spend what they get wisely so they dont have to raise anything.

Franklin Roosevelt toyed with the idea of a 100% income tax above a certain figure. His "logic" was that above a certain income, people really didn't need any more money. I think we all agree that 90% is ridiculous, and that 70% is also (or at least we all should agree on this).


Nothing Ronald Reagan said, by the way, should be believed. He never quit making movies because it didn't pay to work. He consistently made up the facts to fit his politics throughout his life. And when the real facts were inconvenient, he pretended he couldn't remember. Read his testimony in front of the grand jury investigating the blanket waiver he gave to MCA while he was president of the Screen Actors Guild. Exactly the same as his convenient memory lapse in Iran/contra years later.


But I agree with your points: taxes can indeed be too high, no matter what your income; and we should be doing all we can to see that our governments spend the money wisely, although that phrase "goverments spend the money wisely" may be a non-sequiter.

Maybe I'm a heretic, but I see some advantages in a regressive tax. Not because of their regressive nature per se, but because they must be less painful than progressive taxes, thus less money is taxed. (I am generally for a lower level of government spending, and I don't think spending can be curtailed unless people are really hurting from the tax.) As a hypothetical example, let's say all taxation had to be per capita, i.e. to make it perfectly fair, each person had to pay the exact same amout of tax. Like belonging to a really exclusive country club where you don't pay the bar bill as you go. The tab is just chopped up by the members in equal shares at the end of the year. If this was the case, it would be hard to tax people more than $1000 or $1500. So we'd have a pretty small government. And before the constitutional amendment allowing an income tax, taxes had to be divided by the states I think. Pretty tough to raise money that way. Now it's easy. We didn't even have the withholding system until well into the New Deal. That was because people had to pay their tax bill all at once by the filing deadline. That hurt. But people should resent the taxes some, so I don't oppose them being painful. If we still had to pay our taxes all at once, taxes would be lower. So I think regressive taxes just can't be very high or people will fight against them. When class envy comes in, though, things get tricky. People will vote for taxes for some other guy. This is morally wrong when based on any shred of envy, but it happens all the time.

Besides regressive taxes make sense. Since poor people soak up more than their share of services, shouldn't they pay more for them? Kidding, just kidding, I promise. /images/smile.gif

old time history they had poll taxes(a head tax) it was a good idea as everyone used the services of govt. but nowadays govt. has expanded so much that cant fund all the crap they spend on, so the money must come from somewhere. politically it would never pass.

we have a really great reggressive tax that works fairly. its called the lottery. most lower income buy the tickets and half the money taken in goes to schools which the lower income people have more children. perfect. it also gives those that have no light at the end of the tunnel a chance to maybe strike it rich so it gives some hope. and when in despair hope is gold. the bad side some buy too many tickets and lower their standard of living.

While this may be true Clinteroo, in Australia we have had many cases in recent years if companies going bust for no good reason and the directors still get massive bonuses for "perfomance".


Just recently we had an example where an insurance company had to be bailed out to the tune of 5 billion dollars, virtually brought the building industry to a standstill, laid of thousands of workers and the CEO and directors all got phenomenal bonuses. They spouted the usual crap when asked to explian the reason

ray zee, you continue to amaze mee.


im a poet and didn't know it. i always knew in the back of mind that the lottery was a good thing. the money does go to the seniors, schools, ect. plus if you buy ONE ticket, you may win. but if you buy 50 tickets, you just blew 50$ bucks. lol


that is all,


dannyboy :o)

Happens in Canada too but the same company in the U.S the President or CEO, etc. would have probably gotten a much bigger bonus.