Buyer’s Remorse

NewZealand

Larry Kudlow put out an article in Fortune looking at the war that President Obama has essentially declared on the productive members of our society by substantially raising the taxes on the very people who do the majority if not all of the employing in the USA.  How is this a long term winning strategy for the country?  It’s not.  

Kudlow even went so far as to say many of the liberal well-to-do’s may also have “buyer’s remorse” on account of their vote for Obama now that the reality of what that vote actually means.  “Hope and Change” sounded nice in the campaign but the reality is Obama is delivering no hope for making employers actually want to grow (and thereby employ) and he is definitely changing things.   The reality might be Obama is simply being empowered by a willing Democratic Congress but in any case I feel like I am watching a homicide on prosperity.

Then Fortune featured another article on how High Earners, but not rich people are going to get socked under Obama’s plan.  The article calls this group HENRY’s – High Earners Not Rich Yet.  As the article points out “They’re among America’s most productive, hard-working citizens: our doctors, attorneys, architects, and entrepreneurs, then owns and builders of cleaning companies, delis and security franchises.”  

This can only be seen as a “grab as much as you can get in taxes and power while the gettin’s good” by the administration because clearly any one can understand that if you make life too taxing for the productive and employers out there they will simply not produce or employ to the level in which they are capable.

When I was in first grade I remember my teacher asking me where I would live when I got older and I distinctively remember saying “New Zealand” because I recalled just how far away it was on the map.  How prescient would it be if I end up there someday?

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3 thoughts on “Buyer’s Remorse

  1. Tony:
    As your (as you claim!) only blog fan, I always have to respond to your posts. I think you are right in that perhaps some entrepreneurs may be pulled into the Reign of Terror that this admin is supposedly raining down on the heads of the wealthy. But don’t you think that it’s kind of obscene that the heads of sputtering Fortune 500 companies were/are still taking massive bonuses, buying jets, throwing Sheryl Crow parties with taxpayers’ dollars AFTER the fact that they made some very bad choices? Should they be rewarded for failure? Do you personally increase your take when your company is losing money? I would be surprised if you did – I’m no MBA, but I could pretty much guess that this isn’t a standard good-business practice. We had an employee at my company who was bleeding us money and we fired her. Goodbye!
    And as for “grabbing” taxes and power, it is not clear to me what you mean – who exactly is “grabbing” the taxes? As far as I know, it’s going back to the people who earned it.
    BTW – I have a good friend in NZ – the economy is not doing so great there, either, but it IS beautiful, I hear!
    Peace. And I really hope you weather this OK.
    Marc

  2. Hi Marc,
    I agree with you – I do not think that companies that are taking bailout money should be spending it frivolously. They should not be rewarded for failure. Likewise, productive people should not be punished for their success. Raising taxes on the productive incentivizes them to not be as productive, this leads to ultimately lower tax revenues for the government and less employment. A small business with 20 employees can make due with 17 and the owner will use the expense of the missing three to maintain his income. The net result is these sorts of policies just make like harder for everyone – the employers that have to figure out how not to have an exorbitant amount stolen from them in the form of taxes and the employees that will have to look for other work in a marketplace that won;’t be too friendly because the next place they go has an owner in the same predicament. Also consider this – if $249,000 per year has you paying 35% in income tax but $250,000 has you jump to 39% people in this situation with simply restrain their income to keep it below the threshold. You’ve live in Europe – this happens all the time over there both on the individual and company level. Individuals negotiate for other perks – various allowances that are not “income” or more time off, or certain other expenses covered all to keep their income lower – especially in places like Denmark or Sweden. On a company level, look at Italy. If an employer has more than I think it’s something like 17 employees they fall into a category where the company has to pay a huge amount in additional benefits or taxes. So instead, companies when they get to 17 simply open a new company of 10 employees to do business with the first company employing the 17. When the 2nd company gets to 17 they open a 3rd company and so on… I forget what the exact number is (17 is in my head from some reason from my experiences in Italy years ago) but the idea is the same. My point is – you are right failure should not be rewarded, and those taking huge piles of bailout cash should not be abusing it. (I don’t see the big deal if companies are using jets to move decision makers around – this is normal and contributes to the company getting stuff done efficiently). However, it is clear that the new administration is making no bones about taxing the heck out of our society’s most productive people and that also to me simply is not fair and ultimately will result in lower tax revenues for the government as we have seen over and over across the past several decades. By the way – Sheryl Crow could always reject accepting payment from those companies that are paying her with bailout money or just not do the gig right? Take care – hope you and your family are well.

  3. Touche on Sheryl Crow. I gotta say, that really disappointed me. And I thought she was such a shining example of Pop liberalism.
    ;-)

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