The whining of the rich

Through Glenn Reynolds, whither I wandered because of Mark’s post about something else entirely, I came upon this truly amazing pasticcio of mendacity, ignorance, and small-minded cupidity. [UPDATE 20-21/IX: the original post was taken down; instead there’s this and a cache of the original  post is here.]  It’s worth a close look because the author is a law professor, not some high-school dropout Limbaugh lemming, and because the tone of entitlement and whining is typical of a fair number of the comments I got on my post about intergenerational equity (and by extension, equity).

UPDATE 20/IX: I had in mind to remove Prof. H’s name from this post in view of his recent post, because I have and had no wish to make him personally victimized or threatened, much less his family and especially  his wife, who apparently gave him counsel he should have listened to (mine has certainly saved me from making a fool of myself many times).  But I can’t edit the whole web or even, practically, the hundreds of comments.

What I can say is, leave him alone.  If his post weren’t typical of a common way of thinking, so common as to rate discussion in Paul Krugman’s column today, I wouldn’t have flagged it or flogged him about it.  This isn’t personal and shouldn’t be.

Because Obama proposes to let the Bush tax cuts expire only on “incomes above $250K”, I was surprised that Prof. Henderson expected to be importantly worse off under the president’s plan, so I went here and plugged in what seemed to be reasonable numbers.  He says his family’s “combined income  exceeds the $250,000 threshhold for the super rich (but not by that much)” .  I tried $140,000 each for him and his wife, $5000 in charitable deductions, and a 5% mortgage on a million-dollar house, which is what would cost about $15K in property tax per year in Chicago, with 80% 20% down [thanks JHA]: $40,000 per year in mortgage interest.

Under Obama’s  plan, his federal tax would be $48,333, and his Illinois tax about $8400 (3% of AGI).  Under current law (Bush tax cuts),  $55,600 + $8400.   Oops; what happened? Obama will greatly ease his AMT hit, and his taxable income is less than the $250,000 cutoff.  If all the Bush tax cuts expire, his income taxes will be the same as now, $55,600, again because of AMT changes.

But wait a minute: he says he’s paying “nearly $100,000” in state and federal taxes, not including sales  tax; let’s say $95,000.  Leaving out his property tax, that’s $80,000 in income tax.  How much income would lead to this kind of tax hit? I had to experiment with the calculator a little, but it’s a little less than $170,000 apiece.  So his pretax family income exceeds $250,000 by at least $90,000.  But this doesn’t include tax-free  contributions to their 401Ks: anything they are socking away for retirement adds to his actual income; unless they’re at the $33,000 limit they must just like to pay taxes, or are too stupid to be walking around professing and treating sick kids.  So we’re pretty close to $400K gross income,  and on top of that their employers are surely putting money into their retirement funds.  I guess $150,000 is “not that much” in some circles.

He is also whining about his and his wife’s education loans, $500,000, which are costing them about $50K per year in interest. Let’s just sketch out the family budget here:

Taxes          $100,000

Housing*    $65,000 mortgage + 15,000 insurance & maintenance = $80,000

Two really nice cars  $.70/mile x 15,000** miles = $10,500

Student loan payments (20 year amortization at 10%) = $60,000

*Why a couple with a half-million dollars of debts decides it needs a million-dollar house in Chicago, where the Hyde Park average price ” near their work”  is a third of that, is not entirely clear. Also note that $25,000 of this is going into their own pockets, building equity in their house.

**They live near their work, so this is probably generous.

This leaves about $90,000, a lousy $245 a day,  for food, clothes, vacations, cable TV, and like that.  You can walk into Nordstrom’s on Upper Michigan and spend that in a minute, and for stuff you really need.    Really, I don’t know how these people get by; their adaptive skills, economical habits, and modest living style is an inspiration to all of us.  Perhaps they are careful to tip no more than 15% at the Sizzler when they splurge.

So how does our third-of-a-million-a-year law prof/doctor couple and their three kids, barely scraping by already and falling before our eyes to the very bottom of the top 1% of US families by income, make out under Obama’s rapacious soak-the-rich commie attack on all that is holy and American and fine? Wait for it; take a guess before the jump:

His taxes will go down $3700; he can buy one of those ties every two weeks! And this guy is threatening to fire the gardener and the house cleaner, take the kid out of art class, turn off his cell phones, and try to raise competent adults with only basic cable.  Prof. Henderson, I’m ashamed to share my profession with you.

Henderson’s lying isn’t limited to misrepresenting his income and what the Obama tax plan really means for rich people like him (though I wonder if he actually knows what any of the numbers in his family finances really are).  He also blithely says  ” The biggest expense for us is financing government.”  No it isn’t: their biggest expense, and it’s three times larger, is financing their private consumption.  Any budget can be sliced up so the piece you want to look big is the biggest; Henderson is obviously dividing his private expenses up like the budget I constructed above, but choosing not to divide his public expenses into, say: education, policing, national defense, fire protection, keeping his street paved, subsidies to corn farmers and oil companies, etc. etc.  If he did that to “financing government”, his largest expense would certainly be his housing.  This is a familiar trick, but no less disreputable for that.

The next time you come upon a Chicago law professor in his scuffed Gucci loafers and tattered Armani on the sidewalk, holding up his libertarian down-with-government sign and shaking his tin cup to get his doctor wife and hollow-eyed waifs through another tough week in their million-dollar hovel, please don’t just walk by. Remember, it could be you. Be a mensch: throw a nice shiny 3/8″ washer and couple of nickel slugs in there, with my blessings.

UPDATE 18/IX: my original calculations of the Obama tax plan effect ignored the deductibility of state income tax.

UPDATE 18/IX: Brad Delong kicks this up to launch speed.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

163 thoughts on “The whining of the rich”

  1. Well, what do you expect from such a lazy fellow? After all, by the same reckoning that reveals his biggest expense to be the government, he spends far more time sleeping than he does engaging in any other particular activity. No wonder he doesn't have any time left over to honestly portray his budget or to accurately calculate his tax liabilities.

  2. Why, yes! 3.9% above the margin is tyranny!

    This is a wonderful illustration of how money is not only fungible, but also outright postmodern. $.25- .5M is really a trifle that hardly keeps the lights on for members of a professional guild like me, but $.06-.2M for union parasites and government functionaries is an outrage.

    I'd go Galt, but it seems like the Gulch doesn't have internet access yet. Turns out the cable guys were all undocumented parasites.

  3. Not being a tax lawyer or an economist, I've always wondered if I am missing something when I read that the overall burden doesn't come close to approaching 50 percent, let alone something more. Each person's taxes are different, because of how they earn their income and how they are taxed based on what they do and where the live, but I highly doubt that most, if any, people go over an amount higher than 40 percent. That might still be too high, just as 35 percent might be too high, but anyone who is allegedly paying 60 percent of their income in taxes probably just has a really, really shitty accountant.

  4. You've left out educational costs for the kids. I'm guessing that they send their kids to the Lab School, where tuition runs a little over $20,000 a year, per student. I'm guessing that they get a break worth about half that, because of their positions with the university. So that would put their tuition bill at a little over $20,000 a year. It sounds like they also have a nanny to take care of their newborn, which I'm guessing sets them back, including taxes, about $30,000 a year. If they spend like the Obamas did when they were in Hyde Park, the various enrichment activities for the older kids would be around $10,000 a year.

    So, assuming you have the calculations for their disposable income right, they're down to about $30,000, which isn't a lot.

    The reason that this professor feels broke is the same reason he spent so much money on his house: he has three kids, and having kids and trying to raise them in Hyde Park can get pretty expensive pretty quickly. (Guessing real estate values without any familiarity with a neighborhood is a dangerous thing to do; my guess is that a decent house for a professional-class family in Hyde Park would run at least $700,000.)

    Finally, one comment on the modeling done: if you want to use the TPC tax calculator at this point in time, I think the comparison set should be current law and the 2001-2003 tax cuts expired. My understanding of the proposal Pelosi is considering is that it wouldn't cut AMT taxes for families like the Hendersons. They really would face a cut of about half of their uncommitted cash. Which would lead to some cutbacks, exactly as originally described. You may think that's a good idea, but can we ask the housecleaner first?

  5. "This amount is so high because we can’t afford fancy accountants and lawyers to help us evade taxes"

    That's strange. They're both salaried so their taxes would be pretty simple. Need to tot up the deductions, but little else. I've had an LLC, with estimated quarterly payments, up and down income oscillations, etc. for 20 years, and have been exceptionally satisfied with my accountant, and I've never paid more than $400/year, usually considerably less.

    He comes off as exceptionally stupid. How do people like that get law degrees and become professors? Well, it's true, those lawyers over at the "Right Coast" come off as exceptionally stupid as well. OTOH, Bainbridge doesn't.

  6. Thomas, are you seriously suggesting we maintain lower taxes for the rich so that we can save the jobs of housecleaners?

    Let me apply some reality to that simple concept. Housecleaners typically make little money, lack benefits, and can only afford to live in poor neighborhoods with other low-skill workers. This means they and their children are the prime beneficiaries of extra government spending on things like health insurance and childcare for the poor. As a class, they likely also lack the ability to properly prepare their children for school. So extra government spending on things like schools lunches, tutoring, small class sizes, counselors and other intervention support become really important.

    They likely can't afford the $50 a month for high speed internet, so having a full-service computer lab at the library will also help when teachers assign homework. Public transportation is also very important, as cars can be expensive to purchase, maintain and buy gas for. Without much extra cash after bills are paid, public parks have always been indispensable to poor families looking for a cheap way to spend an afternoon together. When their children graduate from high school (which isn't guaranteed, because the graduation rate for housecleaners and gardeners is terribly low), unless they can find a scholarship, state schools are the wisest option. This means student loans are very important, as well as state universities and community colleges – the latter especially as a means of obtaining education in numerous trades.

    Unfortunately, there's a considerable chance that their children will not have made it. Whether due to poor support at home, negative peer influence (remember the neighborhood they live in), drugs, crime, gangs and sex are all pressures that will produce grandchildren to unfit mothers and fathers. These children will be lucky if the 16 year old father sticks around at all (unlikely), or if the 16 year old mother knows how to address their cognitive and emotional needs through language and engagement (unlikely). Assuming grandma is still cleaning house, the mother will have no option but to go on welfare while raising her child. Because childcare for single mothers was just cut in her state, someone needs to take care of baby.

    But of course, few 16 year olds are cut out to be parents, and many will be resentful, realizing that when their friends are out partying, they're stuck changing diapers. Broke, the father gone, and a bleak future ahead, who wouldn't be depressed and angry. So fast forward 5 years, and this little kid enters kindergarten likely having only ever been read to a few times, with underdeveloped cognitive skills and zero knowledge of the alphabet or numeracy. Hopefully he will have gone to a government funded head-start program, which will have reduced his knowledge gap from maybe 3 to 2 years.

    Along with his class of 30, most of whom are similarly disadvantaged, many worse off – already victims of neglect or an abusive household – they are thrown into an intense environment of academic catch-up. Some will do OK, taking to the challenge. Others, especially those with fewer supports at home, will begin to hate the world, especially as represented by the institution of public schooling, which they rapidly begin to associate with cold authoritarianism designed to punish them for their lack of understanding. Some truly wonderful teachers, the enlightened type with limitless compassion and patience for slow developmental progress will be able to provide some of them with some of the remediation they need. But many teachers will be ordinary people, and respond to a class of 30 cognitively, experientially and behaviorally disadvantaged children the best they know how, and considerably more will fall through the cracks. With the government spigot closing fast, not only have class sizes ballooned, but "extras" like music and art will have been excises from these students lives.

    That's the life of a housecleaner. Or a gardener. Or many a cashier. Or clerk. Or dishwasher. Or generally anyone making poverty wages. The more you lower taxes on the people most able to afford them, the less money you have to spend on any of the above interventions I've mentioned that play a crucial role in facilitating happiness and mobility in the lives of the working poor. The growth you get by cutting taxes will not raise government revenues enough to pay for the original cuts you made. In the end, we simply choose whether or not we feel these programs are worth paying for. It isn't a matter of can we, but should we.

  7. Oh the pain! This poor fellow isn't rich at all. He can barely afford to pay for the private school, the nanny, the gardener and the housecleaner. Do these fat cats even have a tiny clue about how their whining sounds to normal people?

  8. There are some big budget items for this guy which I don't have – my wife and I are happily sending our kids to our local public schools, and our child care expenses are down to the schools' aftercare program. So we feel fortunate and prosperous, and don't stint on disposable income expenditures. College tuition looms on the horizon, it's true. But we can pay more taxes, and I won't be a bit surprised if we are required to.

    I would rather the country got the additional tax revenues I expect will be raised some other way than by income tax increases on the high middle, though. A gasoline tax of $5/gallon, and dropping the mortgage interest tax deduction, and maybe taxes on legal cocaine and marijuana seem to me better ways to get the revenue. Here's an anecdote – true? I don't actually know. Swedish oncologists work forty hours a week, I was told – and they do their own gardening and paint their own houses. Taxes on their income, and on the income of the people they might hire to work for them, are so high that this makes sense for them. Yikes! What a dreadful outcome for Sweden – you put all that effort and treasure and training into a medical specialist, and then s/he leaves the hospital and goes home and paints the kitchen?! I fear reaching the point where it will make sense for high-middle income people to do their own (dreadful, sloppy, unskilled) drywall rather than hiring it done.

  9. Cardinal Fang — you made me chuckle. I thought of this passage from the great Austen:

    "Altogether, they will have five hundred a-year amongst them, and what on earth can four women want for more than that? They will live so cheap! Their housekeeping will be nothing at all. They will have no carriage, no horses, and hardly any servants; they will keep no company, and can have no expenses of any kind! Only conceive how comfortable they will be!"

  10. A little more drywall patching and painting has benefits hard to measure in money , and might give our oncologists a better idea of what life is like for blue-collar folks. Paying taxes that would support decent public transportation so they can get home in time to do stuff like that and help the kids with the homework, and do some reading on the way instead of looking out a windshield, is not all bad.

    Carbon charges on gasoline (and everything else), and phasing out the mortgage deduction, no quarrel with that. As to taxing recreational drugs, I adopt Mark's position by reference automatically, whatever it is.

  11. Betsy is talking about the brilliant section from the beginning of Sense and Sensibility, where the greedy Fanny gradually persuades her malleable husband to go back on the promise he made on his father's deathbed to support his stepmother and half-sisters. Austen in this and other novels accepts the class structure of her world. In her view, Elinor, Marianne and their mother are horribly deprived having to live in a household with only two servants, just as Harriet Smith should not marry a high-born man because, it turns out, she is low-born.

    But a modern reader, or at least this modern reader, sees the passage differently. We deplore Fanny's grasping selfishness in not wanting to share the riches of her vast estate, but we also wonder why we are to think the Dashwoods so deprived. They don't work. If they are deprived, what about their two servants?

  12. I didn't mean to go about challenging class structure, or questioning Regency standards for genteel womenfolk; only to laugh at Professor Henderson, who seems so terribly, terribly overburdened by his veddy high standard of living.

    My dear brother and his wife, on I believe not more than $55,000 a year, raise two children, devote themselves to the public schools, drive one small car, and contribute to their communities outside of paid work in ways measurable and immeasurable. Henderson and his spouse are no doubt extrRRRRRRRRRrrrrawdnrily intelligent people, but so are my brother and sister-in-law.

    I cannot imagine someone of Henderson's spoiled, self-entitled ilk ever having the dedication, mental health, or personal resources to do what my brother and sister-in-law do on their *financial* resources.

  13. 80% down on a million dollar house? Do you mean they paid 800,000 so they only have a $200K mortgage? I assume I'm missing something, or this is a major typo.

  14. He is also whining about his and his wife’s education loans, $500,000, which are costing them about $50K per year in interest.

    I didn't see the $50K in the article. Is 10% the going rate on student loans? And I can't help but wonder if those loans are guaranteed by the government he hates so much.

  15. Your rant is interesting. I was shocked to see that that the guy will pay less under Obama's proposal. I confess that I am one of those who has come to doubt what I hear from our dear leader. So I followed your links and ran my income through the tax calculator hoping to see that our dear leader will save money for me too. I was disappointed with the result, but not surprised. My tax under current law law came out as $80,600 and my tax under Obama's proposal came out as $90,674. So i'll have $840 less per month to use.

    My inputs were two 50 year-olds, $10,000 salary, $400,000 business income, $10,000 dividends, $10,000 taxable interest, $60,000 charitable, $60,000 mortgage interest and $5,000 state taxes.

    Nice try though.

  16. The unmitigated gall of these people, thinking that they ought to keep more of what they've earned, and spend it on whatever they please. Sure, they may have native intelligence, talent and drive, well-sprinkled with luck – but what about those who don't have those things? Don't they deserve some of the professor's earnings? And what could these horrible kulaks possibly know about their tax situation, when we have online calculators to do the math for us?

    The state is smarter than they are, and ever so much more powerful. The state should take from them according to their ability, and distribute to them according to their needs.

    It's the only sensible solution, and a guarantor of future prosperity for all.

  17. A couple with no kids earning almost half a million a year is only going to have to pony up $10K at a time of national crisis and soaring deficits- and this seems like a lot to you? You think you should pay less taxes than W set you up with? Unless I misunderstand your point, I hope you live in Chicago and can seek sympathy from poor Prof. Henderson, because you sure aren't getting it from me.

  18. So, Jeff Meyer will move from $27,867 a month to $27,027 a month, a decrease of 3%. And living in a state where that level of income has a puny $5000 state tax. My heart absolutely bleeds for him. The sacrifices he makes.

  19. The libertarian Star Wars intellectuals and Conservative weepers will loose their jaws telling you how rugged and studly the Hendersons are. Oh, lord, if only the government would stop attaching the shiftless to the Secretariats of this world, how they could run. The truth about these people is that that they are utter wimps — they've always been that way, and they'll always be that way. Anybody with an upper middle-class upbringing (or better) and a quality high school transcript can get into a college that will reward you with a Henderson life without forcing you to sacrifice anything. It's a sweet deal the sweaty, back-broken poor are never offered.

    And, so what? That's certainly their attitude. So what if taxes paid for everything that made this never-a-moment-of-heavy-lifting life possible? The schools, the teachers, the roads, the regulation of transportation and electricity and banking and lending, housing codes and food safety and medical research, yeah, yeah. Gee, isn't it all supposed to be that way? Of course it is — you owe them at least that much. After all, they're Americans, and this is America. How could it ever be otherwise?

    Apropos of nothing, really — you wanna hear a tragic story? The first four months of the year, eating takeout from Wolfgang Puck's, commuting in Lexuses, living in a seven figure house, playing golf on the weekends, skiing in Aspen, they don't make a penny. It all goes to the useless government.

  20. As an aside, I'd like to point out that to earn my $400,000 of business income I paid over $2 million in wages and benefits to 32 full time employees as well as about $4 million in property taxes, sales taxes and development fees to local government agencies. There was a chance that, after paying the $6 millionish to employees and the government (for the benefit of society), I wouldn't even make a dime. I could easily have lost money.

    So when I read things like your rant and curmudgeon's comment: "America’s rich are greedy parasites. There’s no other phrase for it." I just shake my head at the ignorance around me.

    Most of the time, rants like this that support our dear leader are written by guys like you who are probably salaried academics with tenure. You can probably look ahead several years and have certainty about how much you'll be able to take home from your labors. And you assume that all others are 'salaried' and therefore have some certainty. Notice that all of the preset examples provided by the Tax Calculator in your link are for wages earners.

    I would like to point out that businesses like mine provide a huge amount of employment for the rest of you. I never have certainty about how much I'll earn or even if i'll earn. You declared from your high horse the guy's personal expenses were his largest expense. Sir, mine are not. My personal expenses are far less than my various categories of taxes and fees and far less than the wages and benefits I pay others. When I say to myself, "dang, I already pay alot of taxes, now they want another $840 per month!" I am not being "a greedy parasite"

  21. Toma – – You said. I was a divorce lawyer for some of these people once upon a time.* If you put any of them in a REAL "earn your way" situation, they wouldn't last 30 days.

  22. * I worked dividing up their bobo estates (usually the marriage had fallen apart because the annual income suddenly dropped from the minimum of $150,000 they needed to survive — clearly, most of these unions were purely economic partnerships). Generally, they had yard-care bills of $400/month or more, yet less than $40- or 50K in retirement savings.

  23. Meyer accuses us of ignorance, looking all the while down his nose at those who actually work for wages and seeking some extra award for his great contributions to society. He runs a business not to supply jobs, but to secure that $400,000. He is able to earn that money and run that business because he lives in these United States, but he feels no special obligation to support these United States beyond some meager level and he feels no obligation to provide more support because he has succeeded to the degree that he earns $400,000 a year from his business. Should his business suffer and that value go to zero, he'd pay little if any taxes on his remaining $20,000 and we'd all veiew him as a failure, as he views thos ewho just get by. I run a small business, perhaps a bit smaller than his, but subject to the same pressures. I earn a bit less than he does. This country needs money to be all that it can be for all its citizens and if the marginal rates rise and I pay a bit more, so be it. It is a small price to pay in my opinion. But, I have enjoyed his comments, which marvelously live up to the "Whining of the Rich" title for the post. Selfrighteousness always seems to cause the abilty to recognize irony to wither.

  24. Thanks for the pointer, the analysis and now the comments. The comments at the original Henderson post are enlightening [and troubling]. It is unfortunate that the many who sympathsize with the Hendersons have not 'done the numbers' or looked at the facts. Thanks Michael!

    And for 'government spending out of control', many right wing pundits are aghast and hitting hard at the 'Obama 2009 deficit' but fail to see that the CBO projections just a day before the inauguration predicted a nearly $1.2 Trillion deficit based on the last Bush data

  25. What mudge said. Jeff Meyer has got a real entitlement complex, as do most of these self proclaimed mortal sacrificers. Almost anywhere civilized in the world, he'd be paying more taxes. At almost any point in the 20 century in the US he'd be paying more taxes. Yet a half-mil a year and all that provides, and he's broken to bits over a 3% hit to his taxes. And odd, for all the benefits he "provides", I didn't see a mention about health insurance for his employees.

    What I find most amazing is that every one of these people thinks they're a staggering individual genius, for, I guess, having the heroic idea that all taxes are theft. So everybody bow down, otherwise Jeff Meyer is Goin' Galt.

  26. Mudge:

    "Meyer accuses us of ignorance," Yes

    "looking all the while down his nose at those who actually work for wages" No

    "and seeking some extra award for his great contributions to society." No, unless you call not paying a higher percentage than you a extra award.

    "He runs a business not to supply jobs, but to secure that $400,000." Yes. So? Do you not work for pay too?

    "He is able to earn that money and run that business because he lives in these United States," I guess, but I could do it in a number of countries.

    "but he feels no special obligation to support these United States beyond some meager level" If you call $4,090,674 meager in relation to approximately $310,000 takehome after tax.

    "and he feels no obligation to provide more support because he has succeeded to the degree that he earns $400,000 a year from his business." see my last comment.

    "Should his business suffer and that value go to zero, he’d pay little if any taxes on his remaining $20,000" Yes. I suppose I might even be forced to draw on some of those public benefits.

    "and we’d all view him as a failure," If you say so.

    "as he views those who just get by." I have made no such assertion. You are pulling this out of your own mind. It is evidently in your own mind as you have confessed so in your prior phrase.

    "I run a small business, perhaps a bit smaller than his, but subject to the same pressures. I earn a bit less than he does. This country needs money to be all that it can be for all its citizens and if the marginal rates rise and I pay a bit more, so be it. It is a small price to pay in my opinion." Fine. You are free to contribute all that you would like. Be my guest. I just wonder why you would like to reach into my pocket and take more than the $4,090,674" I am already paying.

    "But, I have enjoyed his comments, which marvelously live up to the “Whining of the Rich” title for the post. Self-righteousness always seems to cause the abilty to recognize irony to wither." Sigh.

  27. Russell:

    "he’s broken to bits over a 3% hit to his taxes." Hyperbole. I don't see how you can construe 'broken to bits' from what I wrote.

    "And odd, for all the benefits he 'provides'," I wrote 'pay' because they've earned it. I did not write 'provide'.

    "I didn’t see a mention about health insurance for his employees." Interesting. I see how you want to suggest I am sub-par as an employer. I guess that would make you feel better. The word 'benefits' is a concise way of writing 'sick-pay, vacations, health-insurance, etc.' I do provide health insurance but I didn't write it long hand because I thought the word 'benefits' would convey the concept more concisely.

  28. lol, Meyer. Your sense of entitlement is immense, as noted by Russell. I am impressed. And your sense of irony abandoned you again when you failed to recognize it in my statement about being a failure if you only earned $20,000.

    You are extraordinarily greedy and marvelously vain. I encourage you to go to one of those other countries, where you will be able to maintain your customer base, earn your $400,000 and, of course, pay less in taxes. Obviously having 3% less disposable income is an insult to your self-esteem and your honored place amongst America's elite. I was especially impressed by your citing your "obligation" to the nearest dollar. Nice touch.

  29. Mudge. My sense of entitlement is immense? What is it that I am projecting entitlement to? I presume we are talking about the difference between $90,674 and $80,600.

  30. Mudge:

    You say I am extraordinarily greedy, I presume, because I earn $400,000 and am willing to write about my desire to not pay an additional $10,000 in taxes. Apparently a person who has $400 and wants $10 more is extraordinarily greedy.

    But I have a question for you. What level of income would you concede that i could earn and not be considered 'greedy' in your eyes. In business, a margin of safety is necessary. If I shoot for $400k I might make $0 or negative $400k. It depends on the conditions I encounter along the way – after I have already committed to the venture. If my business might fluctuate between positive $400 and negative $400 then the average is $0. If I have an expectation of averaging zero does that make me 'greedy'?

    If shooting for $400k makes me greedy then should I shoot for $200k so as to be acceptably non-greedy? $100k? Because if I shoot for only $200k then i'll have only 16 employees instead of 32 and pay only $2,000,000 in taxes and fees to local government agencies instead of $4,000,000. I'm not talking about 'going Galt' here. I'm talking about taking reasonable business risks.

    You might suggest that I shoot for $400k, but not greedily quibble over the $10k because my country needs me. I ask you, if I am so greedy that I clutch after the last $10k then why am I deducting $60k in charitable contributions?

  31. Bugboy.

    The point is: Why do you care whether I am commanded to pay the extra $10k or not? It is not likely that you will make even a penny more if I am commanded to pay it. I could suggest that you get a life since you are going out of your way to suggest loss for me when it benefits you not a whit. I didn't come here suggesting loss for you!

  32. It would be nice if the level of invective were toned down a bit.

    But, yes, Mr. Meyer is certainly letting his entitlement show, as when he repeatedly demands our society's thanks for the $4 million in payroll his enterprise contributes to our friends and neighbors, as if that were charity and not the means to his $400 in profits – a $4 million he explicitly characterizes as his contribution to society and thus in a sense an alternative to taxes. And he somehow doesn't seem to realize that he's paying about the lowest taxes in the first world. Look, I'm sure Mr. Meyer is a fine fellow and all that (he claims to give 15% of his income to charity – though given the way his income is structured, it's more likely about 1% of the gross income of his private company). And calling him names helps nobody. But if he thinks he's overtaxed, he'll have a hard time proving his case by comparison to other existing tax schemes. If he wants to make the case on first principles, then his options are to argue that the less fortunate should take more of the tax burden off his shoulders, or to propose major spending cuts – actual specific ones, not empty mouthings about big government. Or he can just moan about how being in the top 1% of earners isn't as much fun as it really ought to be, and that those lucky duckies near the median income, say someone making $30,000 a year after taxes, just don't understand his plight as his after-tax income might drop from being 10.6 to only being 10.3 times theirs.

  33. How is it that a law professor who makes that much doesn't even understand how tax brackets work? He says his income exceeds $250K but not by much. Well, the tax increase in ONLY on the "not much" part and not on the whole $250K. That is how tax brackets work.

    He writes, "If our taxes rise significantly, as they seem likely to, we can cut back on some things." If the "not much" over $250K is $10,000 then his taxes might go up by as much as a whopping $390. He calls that "significantly" going up. He will have to sell his house, he says.

    Then this brainiac asks, "what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions?" THAT needs an answer: it's called the social contract. Some law professors have heard of the concept. The theory is that we have a society that offers many benefits and advantages, including competitive advantages that enable him to have a nice income. But those things cost money. The LAWS, schools, roads, courts, police, firefighters, military, environmental cleanup, monetary system, trade enforcement (currently lack thereof) etc., cost money and law professors in particular get a lot of benefit from that, including his salary.

  34. I have nothing else to say to this narcissist, simply saying he lacks self-awareness is too kind. I apologize for my "level of invective". lol

  35. Jeff Meyer – Bush left us with a $1.4 per year trillion deficit and a collapsing economy. (Obama's 1st budget year ends in a few weeks, and we'll see how he's doing.) Oh, and with total military spending if you include all related programs at about $1.3 trillion a year.

    And you're complaining that with an income of $400K you'll only have to pay $10K extra to help cover that?

  36. Professor O'Hare,

    Love the back-of-envelope analysis. Tax assumptions and math aside, however, a larger point needs to be made. This whiner is doing what the Right always does and we always let them get away with: Focus solely on the costs of taxes to those who pay them, not on the benefits derived by others (and the payers themselves) from their use. Of course raising $800b in revenue from the $250k+ crowd has costs! So does my grocery bill. But it lets me eat, too. Love your stuff, Professor, but never fail to add that government does things with our money that we like.

    I'm a KSG alumni who run a weekly political discussion club in San Diego. I have yet to meet a single layperson — even among those interested enough in politics to actually come to my group — who knows that 80+% of USG spending is on SS, MC/MC/S-CHIP, Defense/security, and interest.

    Keep up the good work. (Also, loved your letter to Berkeley students last week.)

  37. Jeff,

    That site doesn't work on my phone. But I read Ezra Klein on the Republican plan (well, on the one plan from a Republican that anyone was taking as being a remotely serious effort; his name escapes me), and it was magical thinking. It involved cutting taxes, while stating that tax revenue would mysteriously be 19% of GDP (it's 18% now, if I recall), and the cuts were all vague promises about future efforts. Given how campaign literature works, I really doubt that an official party roadmap is going to propose brutal cuts in programs people like – and it's the programs people like that cost money (well, those and debt service). If this Republican document you link actually says "we're going to cut taxes and pay for it by slashing Medicare, or slashing Defense, that would be interesting, and a bit honest about the realities (not that I, or I suspect most voters, would support it). But I'd bet it doesn't, and if it does I'd wonder if you'd care to summarize for me their brilliant scheme to spend less while laying no electoral price.

  38. So what? I don't care how much money he or anyone else makes. In fact, I find your entire rationale for justifying using the coercive power of the state to seize more of this family's assets sickening. Even if your assessment is that "he can afford it", the reality is that it is disgusting that creeps like you use so much energy to justify taking what isn't yours. Furthermore, further funding the expansion of government power is a problem in and of itself. Expanding funding of an ever expanding state apparatus is folly. The beast shouldn't be fed, it should be bled.

  39. WOW, Betsy.

    Now I understand Republican tax panic: when a few extra bucks go to the government, their marriages collapse, their bobo hotels go on the chopping block and they're back to apartment living with a penniless future. Clearly, they should Galt their way to Ethiopa before things go sour.

  40. RD Walker, you say that taxes are a "rationale for justifying using the coercive power of the state to seize more of this family’s assets…" and "taking what isn't yours."

    So how would YOU pay off the huge debt that Reagan and the Bushes ran up? Remember, Clinton was paying off that debt at a rate of about $200+ billion a year.

  41. DavidG


    I am building 80 units of housing for very-low income households as part of a larger 400 unit project. I expect to spend an average of $200k per unit on construction that breaks down roughly this way: land $40k, govt fees $40k, interest expense $40k, materials $50k, labor $50k. The finished products should be worth approximately @50k for the market rate units and $100k for the very-low income units. With luck, i'll make a profit 5 years from now.

    I approached the local redevelopment agency for help covering the $100k loss on construction of the very low income units. Funding such things is the purpose of the redevelopment agency. I asked for half of the shortfall, $50k per unit. They turned me down, saying pointedly that such funds were NOT for for-profit developers but only for non-profits. Their claim was not lawful, but I digress.

    Soon after that, the agency granted funds to a local non-profit developer for the development of 65 units of housing for very-low income households. Those units are smaller than mine, in a worse neighborhood, not integrated with market-rate units, lacking amenities that mine have (garages) and…wait for it…cost $385k per unit. The non-profit developer has aggregated grants from the feds, state, local agency, various non-profit contributers and the sale of tax credits in order to spend $185,000 per unit MORE than than what is reasonable to construct the units. After I heard of it I pointed out to them that the median price of all homes that had sold in town over the last six months was only $322k. They could have bought houses on the open market, converted them to use as very-low income units, and saved $63,000 per unit x 65 units!

    So. What was that you were saying about focusing on the benefits we (and others) receive from taxes?

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