Wednesday, October 01, 2008

What Does "Main Street" Really Want?

All the usual dichotomies in politics seem to have broken down lately. Republican vs. Democrat, elitist vs. populist, liberal vs. conservative.

One of the reasons cited for the failure of the bailout was anger from "Main Street" that Wall Street tycoons will walk out of this laughing their way to whatever banks are still in business, while the rest of us little guys suffer. But aren't these angry people on Main Street supposedly the same ones who think that higher marginal tax rates were invented by the Anti-Christ? Do you want super-wealthy people to share the burdens of society or not?

If we're worried about punishing the people who created this mess, why don't we temporarily return to a tax structure something like that of the very prosperous 1950s, when a married couple's income after the first $400,000 (the equivalent of about $3 million in today's dollars) was taxed at 91%. Let's make it retroactive for about 3 or 4 years. That would be a nice little slap on the wrist for the big Wall Street guys, and give the government a nice little wad of cash to use for a bailout! And any rich person who wasn't a total idiot would still probably be very rich-- just not quite as rich as before.


guinness416 said...

Heh. Excellent observation, and excellent idea.

Middle Class Hick said...

I do not understand your suggestion. Are you saying that for any couple making more than $3 million they have to pay the 91% or are you saying that anyone making more than $400k has to pay 91%?

First of, even if you are that rich (I will assume you mean the 3 million annual salary), you cannot go back and say some of your breatheren screwed up, now you have to pay taxes and likely go into bankruptcy on a whim. Some CEOs and other C level people are on the up and up - and while have good salaries, also are good at their job. They also make lifestyle choices based upon what info they have now. If Obama's plan goes through .. the 3% increase to the highest tax bracket will hurt a smidgeoun, however if you triple their tax burden without telling them years in advance to prepare, you really are setting yourselves up to see many small and medium businesses fail.

While I would love to make the bastards pay for what they did, there is plenty of blame to go around (all the way back to the Carter era). You have bond rating companies, mortgage brokers, bankers, wall street analysts, accounting firms, politics and policies, as well as gullible people. So just about 50% of the US citizens are to blame for this mess.

Gord said...

No way. They (guilty or not) will take their money and and their jobs and businesses and leave the country. And we'll gladly take them up here in Canada; our tax rates are quite low.

Adrienne said...

People, I'm thinking this was tongue in cheek. Even if not...GREAT IDEA!

But seriously, why is everyone throwing tantrums for tax increases for the rich (and yes, if you make more than 200K a year, you should be considered rich)? We are in a HUGE deficit and cutting spending alone ain't gonna do it. If I can live happily on a middle class income, they can live even happier on an "affluent" income taxed at a slightly higher rate. Next time they should re-think voting republican and we wouldn't have this mess to clean up.

Anonymous said...

A $200K annual salary doesn't make one rich in places where average homes still cost upwards of $500K.

Middle Class Hick said...

adrienne - I understand it might have been tongue and cheek, however I think that even going there is just financially irresponsible. Your assumption of 200k being a great salary is well and good, however, there are a couple things to think about. Are they married? Why does that matter? Well lets see if that person is married they are in a different tax bracket when you are talking 200k. Simple numbers. 200k salary - they rent and have 2 kids (so only a few deductions - nothing out of the ordinary). A single person pays $49,465.21 in taxes. Okay. Head of household (they should file this, but maybe they were a foster parent) pays $45,678.26. A married couple, two kids, pays $39,447.50.

The married couple pays 10K less in taxes than the single person with the same income and the same two kids. Who is harder hit? My point on all this is it is not really a about if someone can survive on that. They can. However are they truly rich? Maybe they are a doctor paying off their 150K in student loans. Who knows their situation.

As for the assumption that this is a republican policy problem, I think you need to check your facts on so many levels. Each party has lots to blame in every mess, scandal, etc. that we have to clean up. The only people that can fix the problem are not the people currently in Washington DC. That is my little rant on the voting part.

The whole crux of the question was what does "main street want". My response is simple. Get the government out of my life, pay down their bills, and make regulations and prosecute the hell out of companies that don't follow them. No sane politician will do that as it will put them lower than low as they won't have much to do after all the good laws are passed and regulations enforced. They will just be at the wheel, and no power tripping will be gained by being a senator or representative.

Mary said...

I seriously hope you are joking .. otherwise you are an idiot.

Anonymous said...

Wow Mary- thanks for your insightful comment. Such thought went into it that you should be very happy. Actually, I thought 'Middle Class Hick' was spot on. I also think the upcoming larger problem is dealing with (ie., paying for) all the pensions that we as a society will be paying for every level of government employee.

Anonymous said...

Every action has an equal and opposite reaction. . .unintended and unforseen reaction. The "bailout" might offer some immediate relief (to who? will it?)but it will have consequences. The feeling that the government should "do" something is rampant.

Anonymous said...

I would still like to see those punished who lied on their loan docs and those who signed up for refi after refi lose their houses. These are the people who created this mess. If people hadn't been willing to sell their soul for a house, the prices COULD not have reached the ridiculous levels (here in CA) that they did. They would have sat on the market until the price reached a reasonable level and then someone would have bought it. There is a massive case of greed and fraud and it is not entirely the bank's fault.

Anonymous said...

From a Yahoo article:
Asked if was ready to switch from no to yes, Rep. Steve LaTourette, R-Ohio, said: "Not yet, but it's getting there."

Sen. John Thune, R-S.D., said Republicans "can argue now that there have been some steps taken that they recommended."

The aftermath of Monday's vote, he said, has "changed the complexion, too, of what people's constituents are now saying. ... There's more of a recognition that we have to do something."

Like Middle Class Hick points out, the politicians would be out of a job if they actually passed good and fair laws. They want us to think that we need them to "do something" to "fix" things when markets go through corrections.

Anonymous said...

Here's an idea. The few, the rich and the elite who run the mega financial institutions employee well connected power broker lobbyist to represent their personal financial interest. Hello!! The few powerful elite CEO's who command $120 million annual salaries on top of multiple million annual bonuses and billion dollar stock options have paid off politicians through lobbyist to ensure minimal regulation so that they can run their business amuck with unreasonable insane business risk. If the business bet pans out, the elite stand to make multi billions. If it destroys the economy and 98% of the little people with it, it doesn't matter because they have a golden parachute and will stand to make millions anyways.

The reality is that the elite in our society who run the mega institutions is holding 98% of the American society and the general public hostage by influencing both Senators and Congressman through lobbyist.

The people vote the politicians into office. However the reality is that the elite few who run the mega financial institutions have more sway and influence over our elected officials then the people.

The irony of politicians running around pointing fingers and blaming greedy Wall Street people is hysterical and laughable. What a joke and the joke is on us.

It would appear that the general public that elected the officials into office have been subjugated into extortion and ransom by the elite few. The real issue is politicians who have neglected the people who elected them into office and is falsely influenced and intoxicated by the few elite 1% power brokers of our society.

I say vote all the damm incumbents out of office and elect new representatives who will represent the voting public. They are a public disgrace.

Jon said...

Interesting post. I didn't know that the marginal tax rate was ever so high in America. What a joke we are.

Does anybody know any good books to read about the impact of that tax rate?

Andrew Stevens said...

Jon, the impact was lots and lots of tax evasion and/or withholding of labor. The top marginal rate was 70% all the way up until Ronald Reagan. I have long argued that Reagan has been completely vindicated since we have interminable debates over whether we should use Clinton's 39% or Bush's 35%, but nobody seriously argues going back to the rates that prevailed before Reagan. Obviously, this consensus is starting to fracture, at least among New Yorkers afflicted with a serious case of class envy or some sort of overdeveloped sense of vengeance.