The Parable of the Stairs

[Moishe3rd]

From James Lileks at The Bleat (http://www.lileks.com/bleats/index.html)

A minor political note, if you’re interested in such things. The other day a young girl came to the door to solicit my support for her presidential candidate. I asked her why I should vote for this man. She was very nice and earnest, but if you got her off the talking points she was utterly unprepared to argue anything, because she didn’t know what she was talking about. She had bullet points, and she believed that any reasonable person would see the importance of these issues and naturally fall in line. But she could not support any of her assertions. Her final selling point: Kerry would roll back the tax cuts.

Then came the Parable of the Stairs, of course. My tiresome, shopworn, oft-told tale, a piece of unsupportable meaningless anecdotal drivel about how I turned my tax cut into a nice staircase that replaced a crumbling eyesore, hired a few people and injected money far and wide - from the guys who demolished the old stairs, the guys who built the new one, the family firm that sold the stone, the other firm that rented the Bobcats, the entrepreneur who fabricated the railings in his garage, and the guy who did the landscaping. Also the company that sold him the plants. And the light fixtures. It’s called economic activity. What’s more, home improvements added to the value of this pile, which mean that my assessment would increase, bumping up my property taxes. To say nothing of the general beautification of the neighborhood. Next year, if my taxes didn’t shoot up, I had another project planned. Raise my taxes, and it won’t happen – I won’t hire anyone, and they won’t hire anyone, rent anything, buy anything. You see?

“Well, it’s a philosophical difference,” she sniffed. She had pegged me as a form of life last seen clilcking the leash off a dog at Abu Ghraib. “I think the money should have gone straight to those people instead of trickling down.” Those last two words were said with an edge.

“But then I wouldn’t have hired them,” I said. “I wouldn’t have new steps. And they wouldn’t have done anything to get the money.”

“Well, what did you do?” she snapped.

“What do you mean?”

“Why should the government have given you the money in the first place?”

“They didn’t give it to me. They just took less of my money.”

That was the last straw. Now she was angry. And the truth came out:

“Well, why is it your money? I think it should be their money.”

Then she left.

And walked down the stairs. I let her go without charging a toll. It’s the philanthropist in me.

[Emerald_Dragon]

that guy must come from old money. most of us work for it. and if you don't have a job, the tax cuts mean nothing.

it only matters if you have a job. i haven't looked at the breakouts of the progressive tax tables, but from whatall i've come to understand, rollbacks of the tax cuts would be beneficial. but very un-republican. the rich save, so did the middle class, but not as much.

the "haves" and the "have mores" benefitted. why should they pay more? they can afford to and have tax lawyers to shelter the rest. are you so rich that you feel it benefitted you?

[substand]

hilarious story i think....


it only matters if you have a job. i haven't looked at the breakouts of the progressive tax tables, but from whatall i've come to understand, rollbacks of the tax cuts would be beneficial. but very un-republican. the rich save, so did the middle class, but not as much.

are we reading this 2 different ways? where did the man say he didn't have a job? of course tax cuts only mean something if you have a job. if someone is paying no taxes, by definition they cannot be cut (although we've tried to get around this little snafu with tax credits - and lets be clear we're talking about income tax here, not all the other ways we are taxed). rollbacks of the tax cuts would be beneficial to whom? Suppose those tax cuts are part of the cause of the recovering economy. will rolling them back also roll back the recovery thus far? They certainly aren't the cause of the deficit, because #1 they don't amount to near what the deficit is, and #2, deficits are not caused by letting people keep more of thier money, deficits are caused by spending more money than you have. The solution is not to confiscate more of people's money to cover the deficits, no- the solution is to spend money wiser and stay within your budget (and not that monster of a thing they call a budget). Unfortunately, this is something the president nor congress seem to grasp.

and also, along the same lines of "you can't cut taxes on people who don't pay them" comes the same reasoning that the "rich" get more of thier money back for a tax cut. When the top 50% of wage earners pay 96% of the taxes, it's a little ridiculous to sugguest that those in the middle quintile be getting more back than the rich.

by the same line of reasoning that utilitarians use to justify the rich paying more (ie, diminishing utility of a dollar) we can justify them getting more back because "it doesn't mean as much to them, so they need more for it to make an impact."

[Emerald_Dragon]

>are we reading this 2 different ways?

that was a whole lot of smoke. your attempt at muddying the waters was successful.

I opined that the writer of the article must have come from old money or not work alot, to be for the tax cuts.
I'm sure you're well educated in Tax law and economics, so you can probably understand his POV. As I've said, I was very republican when I graduated. If you want to discuss the deficit relative to taxes, that is a small book of data that needs to be understood. I recommend some tax courses and economics courses to to whet your thoughts on, before venturing there.

[substand]

again i'm still confused... perhaps i didn't catch some sarcasm? but to say that "that guy must come from old money. most of us work for it. and if you don't have a job, the tax cuts mean nothing." and then say "writer of the article must have come from old money or not work alot, to be for the tax cuts" seems contradictory to me. If the tax cuts mean nothing without a job, why would the man be for them if he doesn't have one? If I've missed something important, let me know.. not trying to be an ass on this one =).

As for Tax Law, no of course I haven't studied it much at all. From what I understand, even those who do couldn't understand the whole mumbo jumbo... Economics- don't have a degree in it, but have studied it somewhere much less than an expert but more than your average bear.

As for deficit relative to the tax cut, this is just a vague observation that the tax cuts do not equal the deficit. Now if one subscribes to the view that pumping money into the economy will generate more positive economic activity that brings in funds greater than or equal to the money lost on the interest rate on the loans, I'm not seeing how the tax cuts make the deficit larger than the cuts themselves. However, if it works the other way around (as in the cuts produce more interest in debt than taxes in economic growth), then I might see it. Again, this is just a vague observation, but in my guestimate, the government would gain around 15-20 cents (in taxes)/yr for every dollar in economic growth. Since the cut was less than that percent-wise, and they would lost around 3% / yr on issuing bonds to cover the deficit, it makes sense to assume the tax cuts did not cause the whole deficit. Now, of course that is dependant upon the theory that the economic growth will be enough to offset the immediate deficit caused by the tax cuts (immediate meaning the equivalent dollar amount).

[stewey]

"Tax cuts do no good if you don't have a job" is just the stupidest quote ever. First of all, more taxes do no good if you don't have a job either.

If anything, tax cuts build jobs because companies save more money, thus more money to employ more people. More taxes = less money for companies = less hirings, more firings.

Here in Wisconsin the job market is fine, if I can get paid to screw off for 8 hours every night, anyone can get a job.

[Emerald_Dragon]

>If the tax cuts mean nothing without a job,
>why would the man be for them if he doesn't have one?

if he has a trust fund or living off dividends.

if you look at the tax cut, you'll find that you don't have to pay as much from stock dividends or cashing out of stock. capital gains taxes are reduced. if you have 'old' money, where does your income come from? interest from liquid holdings, dividends from stock holdings, trusts, etc.

I was saying that he probably had old money, living off of interest/dividends, and/or capital gains resources and didn't have a job. Or if he had a job, he's probably paid no less than $100k/year. Anyone who made higher, paid less. which makes you wonder if he's paid to promote the tax cut, if true.



>As for Tax Law, no of course I haven't studied it much at all.

fortunately or unfortunately, i have. with Economics to bring it into scope. Taxes can be viewed as legalized robbery. It can also be viewed as social dues to help our society exist to pay for community items such as education, infrastructure, defense, etc.


>I'm not seeing how the tax cuts make the deficit larger than the cuts themselves.

i'll try to explain. any economist out there can correct me if i'm not clear.

Our gov't prints money. In an effort to prevent inflation, they try not to print too much of it.

Every year, they give themselves a fiscal budget, based on the previous years tax collections. In general, they try not to spend more, than they anticipate they will collect in taxes. When they spend more than they have, they go into deficit spending where they have to borrow from themselves (sortof) to pay for things. The tax cuts that gave corporations and the 'rich' more money back, reduces the amount that they will collect, thereby, reducing their projected budget for the following year.

If they spend more the following year, than they are expected to collect in taxes, they go more into deficit spending. Our gov't can never really go bankrupt, because they can always print more money to pay for it. But by printing more money, they create inflation and de-value their currency due to the excess supply. It may already be happening.

What happens when more dollars are printed? Things that cost $1, cost alittle more. Right now, the inflation rate is in single digits, next year, it may reach 10% or more. Which means, whatever you bought for $1, now costs $1.10+. Things that are imported, cost more.

And the deficit. Its really high. I don't know if you've ever had credit card debt, but here's a simple an example as I can convey.

Imagine being in $20,000 in debt and paying like 8%, which is about $1600 of interest a year. Its fairly constant and you're about breakeven. You make $50k/year and have pretty much everything paid for with about $1000 leftover every month. Then you decide to buy a mansion for $87million, but at the same time lose your job and have to work at McDonalds for $30k/year as a manager. You can't move out of the mansion cuz you don't have anywhere else to live and can't sell it because no one wants to buy a rat infested house. At this point, you're working to pay the interest.

Which is a weak analogy of what's going on today. But our gov't can print the money it needs to pay for what it needs to pay for. You can guess what's going to happen.



>if one subscribes to the view that pumping money into the economy
>will generate more positive economic activity

which is what the Republicans are saying, and the writer of the Moishe's article believes. But from my response above, I hope you can see how i believe it affects the deficit.

And to address the more dollars for corporations and the rich, that could spur economic growth. They are only partly right. Most people gained about $20 bucks with the tax cuts [generally]. The top 10% of the rich and corporations gained about $30,000 [generally]. The gov't loses those dollars during a time it is spending more. What is it going to do to pay for it?

As for the gains to corporations, they will show a better bottom line on their net income, which generally positively affects their stock values, encouraging investors. For the top 10%, they get more money to spend on whatever they feel like, but unlikely on a new stairwell. Where is the economic growth stemming from tax cuts for corporations and the rich? There isn't one. How many people benefitted and what are their affects on the economy going to be?

The economy is stirred when companies borrow money to expand. (Which is why the Internet bubble occurred) It doesn't happen when corporations retain their earnings because of tax breaks. It means they can pay out more dividends to their shareholders, which now pay less tax on those dividends.

The economy is also affected when the average joe, goes out more often. whether it be to the mall to shop, the pub for a beer, the movies, whatever. that $20 means he can treat a date to the movies. But well, you have to work to have money to go out. If there are fewer people working now than 2 years ago, what was really gained by the 90% that received $20 more?

Those tax cuts were not meant to stir the economy, they were meant to make the administration look good because they can now say, everyone benefitted. Its just some gained more than most.



>the government would gain around 15-20 cents (in taxes)/yr
>for every dollar in economic growth.

that's what happened during Clinton's reign. sortof. because many more people were working, more people were paying taxes, causing a budget surplus because more taxes were coming in, than the gov't was spending. the fact that he shut down like half of the military bases worldwide added to the surplus. less money was spent on military.



>If anything, tax cuts build jobs because companies save more money,

you really don't understand the stock market, do you?

[Moishe3rd]

Interesting discussion
My two cent's worth (discounted for inflation):
The writer of the article, James Lileks, is a writer. His income therefore varies from zero to less than $100,000.00. (You'll have to take my word for it, or you can research his articles yourself - he has been writing a long time and is very candid about his life)
His wife is a lawyer. Her income ranges from zero to I don't know what - but she currently works for people on a contractual basis, so she is not a "percentage" lawsuit lawyer; tax attorney; or big corporate lawyer.
I would guess she makes in excess of $50,000.00 a year, when she is employed.
She was laid off last summer and James went into a mild panic about how he was going to pay the mortgage, etcetera.

All this is by way of information that says the man is not old money. He works, she works and they both appear to work hard.

I also am not old money. I also work hard. Unlike Mr. Lileks and many other people, I do not have enough money left over at the end of any month for anything other than trying to get through the next month.
My financial life sucks.
However, I am more than happy for our government to take less money from anybody, including the rich folks.
I personally depend on people having money to hire me.
So whatever money they gots, the more they is gonna give me.
This is good.
:yes:

[Emerald_Dragon]

>All this is by way of information that says the man is not old money.

thanks for clearing that up and shooting down one of my opinions. it rules out a possible conflict of interest for writing what he did. i still disagree with him about how the tax cut can benefit him. mainly because it benefitted the rich and richer.