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  1. Here’s the real problem as I see it: a fundamental lack of understanding of basic economics by most Democrats.

    They do not understand how “taxing the rich” is actually a regressive tax once you get above a certain level. For example:

    Take a successful auto body repair shop that does $1 million a year in business. It is a Chapter “S” corporation and pays taxes at the individual rate and has 15 employees. Taxes are increased for individuals making more than $250K so the taxes on that business go up. The business was just barely making it as it was. It was in the black, but just barely. The increase in taxes puts it in the red.

    The owner decides to lay off the courtesy driver who takes customers to and from the shop. So now the shop is back to where it was. It has recouped that tax expense but has pushed that tax burden down to that driver who now effectively is being taxed at 100% because their job just disappeared. The burden of this tax increase on “the rich” has now been shouldered by someone who certainly is not “rich”.

    What is even worse are the impacts that can not be measured. Maybe this operation was planning to open a second location but has now decided that it can’t afford to. Maybe they had been planning to hire another employee but have put that decision off. But in any case the net impact of this tax increase is a decline in overall revenue because the loss of tax receipts plus the cost of unemployment compensation to that employee is greater than the increase in revenue from the business.

    The problem that the Democrats don’t seem to be able to understand is that you can not tax a business and that the businesses that create the vast majority of jobs in this country are taxed at the individual rate, not the corporate rate. Raising the individual tax rate on “the rich” simply raises the tax rate on small business and in most cases this tax increase will simply be recouped by lowering expenses elsewhere or raising prices. The middle class ends up paying most of the taxes in this country even if it is not on their tax return. Most of these taxes are buried in the prices they pay for things.

    But to get back to the story, the courtesy driver has now lost his entire income because of taxes on “the rich”. You can’t run a business at a deficit like you can the federal government because the electric company demands the bill be paid every month. You can’t reduce everyone’s salary across the board because then your best employees will flee. You have no choice but to cut expenses and when you cut expenses, it means that money is coming out of someone else’s pocket.

    I think the primary reason for all of this is that the percentage of Democrats who have actually ever had their own business or even taken a course in economics is much smaller than the portion of Republicans who have.

    Comment by crosspatch — November 12, 2012 @ 3:22 pm - November 12, 2012

  2. (Perhaps Mitt Romney would have won last week had he been better at articulating the bigger picture.)

    Frank Luntz says Romney should have talked more about the fiscal crisis and the need for spending cuts: http://www.theblaze.com/stories/viewers-ought-to-be-outraged-pollster-frank-luntz-explains-where-republicans-failed-in-2012/

    Noting that many Americans don’t want a tax increase, but would consider it if Washington actually implemented drastic spending cuts, Luntz concluded: “To fight over the taxes is to miss the bigger issue for the vast majority of the American people that Washington spends too much, it wastes too much, and [you've] got to stop it.”

    Comment by ILoveCapitalism — November 12, 2012 @ 3:38 pm - November 12, 2012

  3. As to the economic reality: crosspatch is right, that tax hikes fall upon business people job creators, which means they kill jobs. The person who no longer has a job was just taxed at 100%.

    But Milton Friedman said, the “real” (in an economic sense) level of taxation is the spending level. Because if the government has low taxes, but high spending, then it is borrowing (and likely printing) a ton of money. And that creates inflation, a regressive tax wherein poor and middle class people must pay more and more for food, gas and rent. And again see their jobs killed, because of that.

    If we want a healthy economy, the solution is a small government… period. Less taxes, less regulation, and less spending. Whenever it’s been tried, it has created greater prosperity.

    Comment by ILoveCapitalism — November 12, 2012 @ 3:45 pm - November 12, 2012

  4. Obama wants to spend America into oblivion for remaking us into the USSA; realities will ironically crash his dream & our nightmare.

    Comment by Sebastian Shaw — November 12, 2012 @ 3:47 pm - November 12, 2012

  5. Back on Luntz – another thing he points out, is that voters think the GOP is the party of big business.

    That’s nuts. The Democrats are. Everything Obama did in His first term, was to protect Big Banking, GM, Big Insurance, and the like. The GOP isn’t perfect, but is somewhat more the party of small business (and jobs / the middle class). Yet Democrats are able to perpetuate these myths.

    Comment by ILoveCapitalism — November 12, 2012 @ 3:49 pm - November 12, 2012

  6. Well said, Crosspatch. I actually thought Mitt Romney did a reasonably good job making about the same point given the limited amount of time provided him in the debate. It’s very tempting for Republicans to give in on taxes for the rich; they should, however, take what you’re saying and make this case to the people. When the impact of the top marginal individual tax rate’s effect on small business can be made succinctly and cogently, it may very well blow up the whole push for raising these tax rates. I’d be much more inclined to look at closing loopholes. Inasmuch as some high earners get away with paying very little in income taxes, it’s not because their tax rates aren’t high enough but rather that they find ways to deduct their way out of paying much in taxes. Anyway, Crosspatch (and others), what are your thoughts on reforming tax deductions or other actions intended to raise revenue without raising tax rates?

    Comment by chad — November 12, 2012 @ 3:53 pm - November 12, 2012

  7. “That’s nuts. The Democrats are.”

    And that is another thing Democrats seem to fail to understand. Big business LOVES the Democrats and all of their regulations because those regulations act as a barrier of competition in the market. They also force smaller players to either go out of business or merge with the larger companies.

    The Democrats have a very interesting con game going here where on one hand they claim to be about being against “big” business and the disparity between richest and poorest while at the very same time doing everything they can to make big business bigger, force the little guy under, prevent new startups and competition, and INCREASE the disparity of wealth.

    Maybe one of these days people will catch on but it’s too late right now for it to have any impact for a couple of year. The GOP is the party of the small family business, the Democrats are the party of “huge megacorp” while at the same time pretending to be the party against “huge magacorp”. Very strange.

    Comment by crosspatch — November 12, 2012 @ 3:55 pm - November 12, 2012

  8. ILC, right on about big business. It always seems that free-market capitalism gets the blame for crony capitalism’s sins.

    Comment by chad — November 12, 2012 @ 3:55 pm - November 12, 2012

  9. what are your thoughts on reforming tax deductions or other actions intended to raise revenue without raising tax rates?

    I favor reducing loopholes, they create perverse incentives that distort the economy. But as I said: Job A is to get real spending cuts, including entitlement reform.

    Comment by ILoveCapitalism — November 12, 2012 @ 3:58 pm - November 12, 2012

  10. chad – So-called “crony capitalism” isn’t. It’s an oxymoron, perpetrated by the Left to make people hate real capitalism, i.e. the free enterprise system. I’m guilty of using the term, too. I’m trying to use more honest terms, like maybe “venture socialism”, or “fascism”. What people call cr.cap. is: socialistic government direction of an economy that remains *nominally* private… and that is characteristic of fascist states.

    Comment by ILoveCapitalism — November 12, 2012 @ 4:05 pm - November 12, 2012

  11. I agree with that. For me, I take it as a given that crony capitalism isn’t really capitalism, just as I take it as a given that a “People’s Democratic Republic” isn’t actually a democratic republic. But I see your point that it might be a good move semantically to remove the word capitalism from crony capitalism.

    Comment by chad — November 12, 2012 @ 4:20 pm - November 12, 2012

  12. How could any breathing, thinking human being have been “undecided” in this election? So much emphasis is placed on wooing the “independents.” Read: morons.

    I call them morons, because if they are truly vacillating between Obama and Romney, what are their “litmus tests” for candidate selection based on?

    And “moderates” also have some ‘splainin’ to do. If I were a “moderate” I would still be hot under the collar about the lies told about funding Obamacare and the whole process of jamming Obamacare, unread, unwritten, unavailable down our collective throats. Was it a case of “moderate” rape in which we got “moderately” infected with a “moderately permanent” unfunded entitlement?

    Just how does one “cooperate” with a union in state with no right to work law? How does one “cooperate” with a flood of government regulations? How does the little guy “cooperate” with higher taxes on his employer that costs him his job?

    Easy, everyone needs to “moderate” his life style until being unemployed is no more than trading in a paycheck for the public dole.

    When you are on the public dole, you can be far more sensible about fervently protecting your source of income.

    So, now we have the “fiscal cliff” looming. Great. Thelma and Louise. Over we go. Pump up the inheritance taxes, pump up the capital gains, pump up the income tax rates, slap a federal sales tax on everything, tax fuel, electricity, and especially every instance of use of the internet. That is the 800 pound gorilla in the room; stop letting people text, phone message or use the internet for free. Run that IPO address through a government meter for a rolling transaction tax on every little contact, search, etc. Make clicking links a taxable event. Put a juicy tax on every item sold on the internet. Enact a credit card use and PayPal use tax. And on and on and on.

    Let’s get this thing about undecided and moderate resolved.

    Since the Democrats will not and can not run a “moderate” we will just have to all become Democrats and force the issue. That is, of course, unless the liberals have such a tight control of the government dependency vote that there is no way to outnumber them. Thank you, Cloward and Piven.

    Comment by heliotrope — November 12, 2012 @ 4:20 pm - November 12, 2012

  13. Consider the recent Democrat record on reform:

    Campaign Finance Reform: More Government Regulation.
    Health Care Reform: Higher taxes and more Government Regulation.
    Financial Industry Reform: Higher taxes and more Goverment Regulation.

    To a Democrat, “Reform” means only one thing: Increased taxes and regulations.

    Comment by V the K — November 12, 2012 @ 4:58 pm - November 12, 2012

  14. Looks like the President has other priorities.

    Comment by V the K — November 12, 2012 @ 5:28 pm - November 12, 2012

  15. heliotrope – I’ve had some conversations with Obama voters who are NOT hard leftists; people who have voted Republican in the past. The common theme is: They know better. They cringe about their vote for Obama… but they wonder if anyone can solve the problems, and still want to “give him a chance.”

    One woman said: on election night he cried and said that he knows half of us don’t really want him; that shows he might still change His heart and pull us together, wouldn’t it be great if He brought Romney into His cabinet? Another said he knows Obama is printing too much money and wants to tax and control too much, but he couldn’t see voting for the Republicans because of the war on women.

    These are paraphrases, not exact words. But as you and I know, the Republicans had no war on women; it was a fiction, even given the out-of-context remarks of two nobodies. I can only guess that these people still feel that voting for Obama proves how wonderful they are, then they look for any little excuse to do it.

    Comment by ILoveCapitalism — November 12, 2012 @ 6:02 pm - November 12, 2012

  16. I think that was part of the problem, ILC, and reason for our current despair. We heard things like “War on Women,” and “Romney wants to outlaw tampons,” and “Republicans want to legalize rape” and thought “No one could possibly be stupid enough to fall for that.”

    But a sizable number of voters did.

    You would have thought we would have known better. Think of the crap that Levi believes.

    Comment by V the K — November 12, 2012 @ 6:45 pm - November 12, 2012

  17. The problem is, V, you can’t fix stupid.

    You can present the facts, you can point out the logic, but at the end of the day, if people want to believe stupid, they’ll believe stupid.

    The only thing that will ultimately break these people is realizing that Obama lied to them — which is why the media has so desperately tried to cover anything up that would make that obvious.

    Comment by North Dallas Thirty — November 12, 2012 @ 6:51 pm - November 12, 2012

  18. My argument is that they “fell for it” willfully, for some other reason. Actually, you can fix stupid; you can’t fix -willfully- stupid.

    Comment by ILoveCapitalism — November 12, 2012 @ 7:02 pm - November 12, 2012

  19. You can present the facts, you can point out the logic, but at the end of the day, if people want to believe stupid, they’ll believe stupid.

    You didn’t really think the liberals destroyed the public education system by accident, did you?

    Comment by V the K — November 12, 2012 @ 9:23 pm - November 12, 2012

  20. I have way-to-close family members who voted for Obama with their eyes shut and not listening to anything negative about him and just really mad at the Republican for causing the deficit and fighting two evil wars and for trying to suppress women’s rights and, and, and ……

    I hate to call them morons, but when God gave you the power to think and to determine truth from fiction and you willfully and purposely avoid thinking and buy the talking points and the party line, then you are the ideal Democrat useful idiot. Moron is a stage higher than idiot.

    Comment by heliotrope — November 12, 2012 @ 10:30 pm - November 12, 2012

  21. [...] The president’s resistance to real — & necessary — reform [...]

    Pingback by GayPatriot » The man without a plan won — November 12, 2012 @ 10:36 pm - November 12, 2012

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