One-percenter: why I support Occupy

Gaius, a self-described member of the 1% ("Herman Cain's 9-9-9 plan would save me roughly $400,000 a year in taxes, and President Obama's tax proposals would cost me more than $100,000") writes on DailyKos in support of the Occupy movement and describes the absurdity of the pitched battles over raising taxes on the rich by a mere 3.5%:

Thus you can imagine my amazement this summer when I watched the Republicans in Congress push the United States to the brink of default - and the world to the brink of ruin - over whether to repeal a portion of the Bush tax cuts and raise my taxes by 3.5%. I know a lot of people with high incomes and even the conservatives among them were confused by that sequence of events. Here is a secret about rich people: we wouldn't have noticed a 3.5% tax increase. That is not only because there isn't a material difference between having $1 million and $965,000, which is obvious, but also because most of us don't actually know how much money we are going to make in a given year. Most income at that level is the result of profits rather than salary, whether it comes in the form of bonuses, stock options, partnership distributions, dividends or capital gains. Profits are unpredictable and they tend to vary wildly. At my own firm, the general rule of thumb is that if we are within 5% of our budget for the year, everyone is happy and no one complains. A variation of 3.5% is merely a random blip.

I was not amazed but disgusted when John Boehner and his crew tried to justify the extremity of their position by rebranding the wealthy as "job creators." While true in a very basic sense, it obscures the fact that jobs are a cost that is voluntarily incurred only as a result of demand. Hiring has no correlation at all to profits or to income - none. Let me keep more of my money without increasing customer demand and I will do just that - keep it. Perhaps I will spend a little more of it, though probably not, but even if I do it won't help the economy very much. Here is another secret of the well-to-do: we don't really buy much more stuff than everyone else. It may be more expensive stuff, sure, but I don't buy cars, or appliances, or furniture, or anything else more frequently than the average consumer. The things I do spend more money on are services such as travel, entertainment, restaurants and landscaping, none of which generate well-paying middle class jobs. There, in a nutshell, is the sad explanation of what has happened to the American economy over the last 25 years of "trickle down" economics.

A Voice From the 1% (via Beth Pratt)

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  1. Really well written – informative and useful.  Unfortunately, too long for a bumper sticker.

  2. Someone needs to interview this man and have this plastered on every news channel and paper in the US. 

    Well at least this part of the article…a lot of the rest seems to trail off in his contempt for the Tea Party ect.. I like facts and he has some good ones, just leave the bias on the side and it’s win win.

  3. There are actually a lot of reasonable people in the top 1%, they aren’t any more evil as a group than any other segment of society. Their interests (particularly their financial interests) are just waaayyy over-represented, and plenty of them know it.

    1. I suspect that the over-represented financial interests are those of the very federal representatives that have presided over all the mess in the first place. You know, the 50% of the Peoples’ Representatives who aren’t really Of the People because they themselves are millionaire$, who aspire to be billionaire$.

  4. Maybe it’s a hopeful sign that even conservative-minded rich people are finding the extreme right-wing GOP party to be absolutely insane these days.  I bet a lot of these types end up supporting Obama’s second run quite heavily.  It’s not in rich people’s interests, generally, to tank the US economy.  Sometimes I wonder what morons the GOP really does appeal to?

    1. Maybe it’s a hopeful sign that even conservative-minded rich people are finding the extreme right-wing GOP party to be absolutely insane these days.

      Neo-cons are usually nouveau riche. Old money is old money because they’ve learned how to avoid being guillotined.

  5. Great rant! This line struck me: “Paying a lot of taxes just means you make a lot of money, and it is hard, frankly, to complain about that.” I was lucky enough to be able to sell a house into the bubble, earning a lot of capital gains, which I had to pay 20% tax on. I didn’t mind at all, considering that I got to keep way more than that. 

  6. It struck me the other day that Herman Cain, previously CEO of Godfathers Pizza…got the idea of his 9-9-9 plan from his pizza coupon mentality. We can simply extrapolate the 9-9-9 to $9.99 and thus you see where all his “great ideas” will come from…I further expect other plans to emerge which provide things like health benefits with a side of wings for $4.99. Voucher must be presented at the time of co-pay. 

    We can augment the foodstamp program with a coupon program, maybe even get sponsors for it for extra revenue. This month get an extra box of pasta for $.99 when you present your food stamp debit card and tell the cashier your favorite TV channel is Fox News.

  7. The author was in a poor family during his youth, but climbed to affluence through luck and hard work. As such, he knows both sides of the conflict and that gives him empathy with the poor.

    I suspect that the main problem lies with people who were born into riches. Because they lived separately from the poor their entire life, they lack the real life experiences that would have made them empathise with them. Somebody who was born a millionaire and became a billionaire just doesn’t know what it’s like to live in poverty (or even in the middle class).

    1. Interesting, I’ve always thought of it as the other way around (“I pulled myself up without a handout from anyone, so they can just do the same”)

      1. I believe the difference is this author, unlike many who try to tell similar stories (i.e. Craig T Nelson ignorantly spouting “When I was on food stamps, no one helped me make it out, I did it on my own”), acknowledges that the rich who pulled themselves up from poverty would generally not have have been able to do that without assistance that they do not (or refuse to) recognize in the form of government programs.

        Beyond that, anyone who has success in this country, wherever they started, does so on the backbone of a society that was founded and grew on a strong government centralizing the execution and funding of common needs/pursuits (i.e. roads, schools, postal system, police, fire, etc).
        Regardless of how you view those services today or their viability in the future, the fact is that starting a business in this country has had a significant advantage (of logistics alone, if nothing else) which are in place due to our government since FDR. I say this being a small business owner, BTW.

        1. (i.e. Craig T Nelson ignorantly spouting “When I was on food stamps, no one helped me make it out, I did it on my own”)

          Hilarious!  “I never got no hand outs back when I was on the dole!”

      2. That’s only people who have found the American gem called “Entitlement”.

        There’s some metaphor about ‘the dark crystal’ here…

      3. “I pulled myself up without a handout from anyone”

        Except that it’s never true, no matter how much they might believe it.

    2. IIRC – the 1-percent and those in similar strata – view the lower-echelon-rich and the middle class the in the same way most members of the lower-echelon-rich and the middle class view the homeless or perhaps trailer-folk – as an abstraction .

      Alternatively, other 1-percenters and those in similar strata  (the ones who are more hands-on) might view the middle classes et al-in the same way a farmer views his or her fields of wheat or livestock or raccoons or rats. Our worth depends on our utility.

  8. I sure hope the Internet or (preferably the author) can do something to eliminate the anonymity surrounding the person that wrote this piece. They should be commended for their intellectual honesty and general integrity for speaking the truth about the core of the “99%” issues. I forwarded it in my email anyways but I would hate to find out that this person is not who they say they are even though the truth of the message would be the same.

    1. I disagree.  Anonymity is crucial sometimes to be able to speak the truth publicly.  Also, you know the person’s life would become hell: the extremists would go through his garbage to find something to hang him with, etc.

      I hope Gaius follows the example of Publius and continues to write a series of these pieces to provide a civics education for all.  We really don’t need to know where he lives, or exactly how much he makes.

  9. …jobs are a cost that is voluntarily incurred only as a result of demand.
    Hiring has no correlation at all to profits or to income – none.

    THANK YOU.

  10. The statements in the article have been known to economists for years. And, frankly, are obvious to those who have thought about such topics. Multi-million dollar ad campaigns are very powerful things.
    The issue is a matter of selfishness, or put another way, responsibility. Many people don’t think they were helped by anyone else and see no reason why they should be responsible for helping anyone else.They feel they have worked hard for what they have and see no reason why they should be forced to share it with anyone else. And they have the influence to make sure they generally get their way. Of course, for example, business people actually rely on public schools to provide educated workers, the road system for transportation, etc.
    I think those that support “the 1%” would be happy if they were able to pay al-la-carte for those services that they actually value enough to pay for (witness school vouchers), and nothing else. Of course, other people think a society is judged by how it treats the worst/weakest/poorest members. Call it decency.

  11. This is the key bit, to me:

    “it obscures the fact that jobs are a cost that is voluntarily incurred only as a result of demand. Hiring has no correlation at all to profits or to income – none.”

    If the dem’s had any sort of spine, they would be pushing this meme. Can we lay the “job creator” BS to bed once and for all?

  12. “The things I do spend more money on are services such as travel, entertainment, restaurants and landscaping, none of which generate well-paying middle class jobs.”

    Huh? I appreciate the sentiment but I disagree with this statement.

  13. I think he meant that landscapers, waiters, ticket-takers, and hotel staff aren’t getting middle class money.  Of course, the owners of those businesses are making tons, not to mention the industries surrounding them.

  14. I’m not really surprised.  Gaius may be a Caprican now, but it’s hard to imagine anyone from Aerilon ever comfortably inhabiting the 1% identity.

  15. This post tends to fortify my belief that often, it’s the crazy people we hear simply because they’re the loudest and most people, rich people included, tend to be reasonable folks.

  16. This whole 1% debate is a sideshow that plays into the hands of politicians on both sides seeking a class warfare angle.  Social justice questions aside, extracting more revenue from the 1% won’t solve the fundamental problems facing the USA, which are unsustainable long-term entitlement and military spending in a stagnant economy.

  17. This quote more than any other defines my frustration with the debate on taxes: “I was not amazed but disgusted when John Boehner and his crew tried to justify the extremity of their position by rebranding the wealthy as “job creators.” While true in a very basic sense, it obscures the fact that jobs are a cost that is voluntarily incurred only as a result of demand. Hiring has no correlation at all to profits or to income – none. ”

    If Republicans had *any* business experience (started a business, filed taxes), or if they weren’t being dishonest/disingenuous about it, then they would know this simple fact: You don’t pay Federal taxes on Revenue, you pay them on Profit.  Businesses do not spend Profit on hiring. If they did, it wouldn’t be called Profit anymore, and it wouldn’t be taxable.

    1. Won’t most economists claim that businesses will always pass the taxes onto the consumers?

      During inventory, they pay tax on hand with what they have. That’s not being taxed on profit, but current stock.

      When governments raise taxes on corporations, they’ll just pass the savings onto YOU, so to speak. We’ll get the brunt of the tax increase.

      1. They’ll pass it on to a point. But aside from direct-controls on those actions (probably impossible), there’s the fact that their sales will drop, proportional to the jacking up of the price. If they pass on too much, people will be unwilling to pay their prices.

        This means they either: a) drop the prices until things sell, and accept a slightly smaller profit margin, or b) collude with other companies to keep prices high across the board. The latter only works well on staples and necessities; if a cabal of producers priced all new laptops at $2,000, people would just make do with what they have, or what they could get used.

      2. Also, I’m an actual small business owner. I pay taxes on profit (which would exclude most labor costs, if I were to start employing anyone).

        My inventory is written off the quarter I get it, along with all other deductible expenses. My taxation is ((Gross Sales – All Deductible Expenses) * Effective Tax Rate). I make sure I have enough in the bank to pay it. That’s about as complicated as it is.

        1. And now that I think about it, I’m the perfect example for this situation.

          Specifically for my online sales: if my tax rate goes up, I can only increase my prices to compensate until I’m in line with the other sellers. If there’s twenty people selling the same thing and my taxes go up 10%, I can’t increase the price 10%. It flat-out would not sell.

          So, I bite the bullet and accept having 10% less cash at the end. If I were selling one-of-a-kind items or services, or had loads of brand loyalty, it might be different. But even then, not for very long.

  18. I had a thought this morning: maybe we could put the idea into the Tea Partiers’ heads that “states’ rights” means each state should only get back from the federal government the amount they paid in taxes.  Since blue states pay more in and red states take more out, they would have to learn through experience that they’re not as self-sufficient as they think they are.

  19. I thought the Republican argument wasn’t so much about that upper 1%, but those right around the line of what was “considered” rich by Obama @ 250k. Some blathering about how it hurts all the small business folks…And I remember people saying 250k/year was basically middle class living in cities like New York and San Francisco.

    1. Actions speak loudest. Anyone who feels guilty about the amount of money they have, and thinks that Congress can spend it more effectively can seek absolution here…

      Bravo, you the umpteen-millionth person to imply that a rich person can’t argue for economic justice without giving all their money to the government first.

      But here’s the thing: this one-percenter isn’t saying he wants the government to have more of his money. He’s saying he wants the government to tax the populace more fairly, despite the fact that he personally would pay more in taxes. Just giving more of his money to the government without changing the system would do nothing to further that cause.

      1. No, you may not keep your money to spend on hookers and blow and use it to lend weight to your argument too. If you want to spend it on yourself, that’s fine. If you want to use it to promote a cause, that’s fine too. But trying to do both just makes you a cynical hypocrite.

        1. He’s arguing that a marginal tax increase one the rich would be a small price to pay for economic justice. That is most certainly NOT the same as saying “I’d gladly pay more in taxes even if it did nothing to further the cause of economic justice.”

          1. So him having less money, and giving it to the government to spend instead won’t further the cause of economic justice then? Well, I guess we’re in agreement.

          2. So him having less money, and giving it to the government to spend instead won’t further the cause of economic justice then?

            Not if it doesn’t change the overall tax burdens paid by people of different income levels, no. Which is exactly why that is the result he’s actually trying to achieve.

    1. Easy!

      Lots of their wealth is in ‘investments’ (stock). The time period that guy references is 2007-2009, conveniently when the market was dropping like a brick. Witness the compelling bullshit of creative data selection!

      So it’s true, in a very narrow fashion: their wealth/returns decreased in that time period, but there is a huge but… to go with that. As the markets go back up, their wealth ends up back where it was before, if not higher (higher assuming that some competing companies folded in the meantime, which they will and have).

      But you see, this is one of the problems with how we treat and tax the rich. When their wealth drops a little, it’ll go back up unless they freak out and sell it. When our wealth falls, we lose our houses and go bankrupt. We don’t get it back, on average. They have their safety cushions and parachutes, and the rest of us fall headfirst into poverty.

  20. This was a very well written article. I was clearly written and obviously was well thought out.  That being said, it completely misses the point.   I don’t think anyone actually believes raising taxes 3.5% on the rich is going to cause the wealthy all that much trouble.  I don’t subscribe to the notion that raising taxes on the wealthy by that amount will cause businesses to substantially change any plans they may have one way or the other.  However, the real issue here is DEBT!  Our government keeps spending our money!  And worse its money they haven’t even gotten from us YET!  They are continuing to mortgage our future and our children’s future.  Raising taxes on the rich is always going to play well with people who are not rich and most of the well off wont complain much either because after all its not that much in the grand scheme of things.  But that misses the point again. The point is that we CAN’T maintain our currently levels of DEBT.  Raising taxes, doesn’t and never has stopped government from deficit spending.  There MUST come a point when government has to say, OK we can’t do everything so we have to stop spending.  We have to CUT spending.  Take a look at the projections from the GAO of what our debt levels will be in just 2 years.  Here is a hint, we will have to raise the debt limit twice more so we can borrow more money.  And that is just to pay the INTEREST on the nation debt.  When will people WAKE UP!  It may already be too late to avoid economic collapse, maybe that is why no one in Washington is really doing anything substantial to actually change things.  They know its too late.  The people at OWS are under the assumption that Wall Street caused all the economic problems, but they didn’t.  They surely did benefit from the actions of our government but they were not the cause.  This country has been in trouble since the dot com bubble burst.  The government has been trying to build up one asset bubble after another to absorb the financial shock of the wall street bust that happened in 98.  The run up in real estate, commodities and stocks can be directly attributed to the massive amount of intervention the government has been involved in.   We have borrowed and spent over and over again.   If government spending created jobs or wealth or economic recovery, our economy would be booming. And in case you haven’t noticed it, the US government is  spending more money than ever, so where is the Boom?  
    Maybe, tax increases, deficit spending, Federal Reserve manipulation of interest rates and the deliberate creation of inflation actually only works for so long in stimulating an economy.  Maybe when it gets to the point when you have 9% unemployment and massive public and private debt, you start getting diminished results until you become an Argentina or Zimbabwe and have to take millions of dollars with you shopping so you can buy a gallon of milk.  

    1. Try looking at private debt before public debt. The former directly impacts demand and therefore the economy.

  21. edit} oops: in reply to michael ellis
    Debt yet? Cant debt. Must, ok? Cut GAO interest! Wake up OWS!
    Wall.
    Of.
    Text.
    Also, your assertion that “The people at OWS are under the assumption that Wall Street caused all the economic problems…” is trite.

    1. You should learn to write in complete sentences. Further I believe that you are incorrect in your observation that my comment is trite.  What exactly is trite about that comment. Be more specific please.  I just love it when someone who obviously has nothing constructive to add must resort to spell correction, edits and unsupported criticisms.  It just makes my point for me.  Oh and by the way, since when is 4 paragraphs a Wall of Text?  Back when people used to read books, 4 paragraphs usually was called a page.   Thank you.

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