Tuesday, January 24, 2012
THAT'S NOT THE POINT, DAMMIT!
Misteromney is making a big point about the fact that he hasn't violated tax laws, that he's paid the absolute minimum possible under the law.
Nice bit of smoke and mirrors, nice distraction.
NOBODY is accusing him of violating the tax laws. That's not the point.
The point of the complaints is that the LAWS are set up to make super-low taxes LEGAL for super-rich people like Romney. He can manipulate his sources of income in dozens of ways that ordinary people can't.
Most importantly, super-rich people are able to CUSTOMIZE the tax code itself to suit their own purposes. Ordinary people can't do that either.
I paid more tax than Romney this year, but the only way I can alter my percentage is by earning less. The only way I could voluntarily earn less** is by breaking my contract entirely and never earning again. I can't chop and channel my income, can't set up tax shelters, can't buy a Congressman to create a special personal exemption.
= = = = =
** Sidenote: This is a fallacy of the usual economic theories. Neoclassical economics starts with an assumption that earners and consumers can adjust their earnings or buying habits in a linear way when wages or prices change. You can supposedly decide to "work less" or "work more"; you can substitute another protein source for eggs. NO. DEAD WRONG. ABSOLUTELY INCORRECT.
Ordinary people rarely have the ability to adjust income or outgo.
You can quit your job entirely; you may be able to moonlight in various ways. But the choice of short hours or overtime is the employer's choice, not yours. In my "author-style" occupation, I don't have hours, but my choices are equally binary. I could try to pick up another courseware contract, but that's a very high-risk gamble. I can't choose to earn more on the current one. Royalties don't work that way. If I cancel this contract, it would be gone forever, and would destroy my chances of getting another one.
On the consuming side, if you're already living carefully and cheaply, you can't save much by substituting one brand or product for another. You can choose to stop eating in restaurants, or switch from owning a car to walking, or eliminate cable TV. Those are binary omissions, not substitutions. Eating in cheaper restaurants? Only helps if you're eating super-fancy to begin with. Trading down to a cheaper car? Only helps if you're starting with a Porsche. Save money on mortgage? Yes, if you can pay the points and closing costs. Save money on energy? If you can afford a new furnace or solar panels.
In short, any "adjustment" that really saves money requires either a lifestyle change, a large transaction cost, or a large capital expenditure. You can do some of those things if you're rich, and you have to do some of those things if you're totally broke. In between those extremes, you can't afford to make meaningful "adjustments". So economic theory, like all modern theories, fails to describe reality. ¶ 7:02 AM
Nice bit of smoke and mirrors, nice distraction.
NOBODY is accusing him of violating the tax laws. That's not the point.
The point of the complaints is that the LAWS are set up to make super-low taxes LEGAL for super-rich people like Romney. He can manipulate his sources of income in dozens of ways that ordinary people can't.
Most importantly, super-rich people are able to CUSTOMIZE the tax code itself to suit their own purposes. Ordinary people can't do that either.
I paid more tax than Romney this year, but the only way I can alter my percentage is by earning less. The only way I could voluntarily earn less** is by breaking my contract entirely and never earning again. I can't chop and channel my income, can't set up tax shelters, can't buy a Congressman to create a special personal exemption.
= = = = =
** Sidenote: This is a fallacy of the usual economic theories. Neoclassical economics starts with an assumption that earners and consumers can adjust their earnings or buying habits in a linear way when wages or prices change. You can supposedly decide to "work less" or "work more"; you can substitute another protein source for eggs. NO. DEAD WRONG. ABSOLUTELY INCORRECT.
Ordinary people rarely have the ability to adjust income or outgo.
You can quit your job entirely; you may be able to moonlight in various ways. But the choice of short hours or overtime is the employer's choice, not yours. In my "author-style" occupation, I don't have hours, but my choices are equally binary. I could try to pick up another courseware contract, but that's a very high-risk gamble. I can't choose to earn more on the current one. Royalties don't work that way. If I cancel this contract, it would be gone forever, and would destroy my chances of getting another one.
On the consuming side, if you're already living carefully and cheaply, you can't save much by substituting one brand or product for another. You can choose to stop eating in restaurants, or switch from owning a car to walking, or eliminate cable TV. Those are binary omissions, not substitutions. Eating in cheaper restaurants? Only helps if you're eating super-fancy to begin with. Trading down to a cheaper car? Only helps if you're starting with a Porsche. Save money on mortgage? Yes, if you can pay the points and closing costs. Save money on energy? If you can afford a new furnace or solar panels.
In short, any "adjustment" that really saves money requires either a lifestyle change, a large transaction cost, or a large capital expenditure. You can do some of those things if you're rich, and you have to do some of those things if you're totally broke. In between those extremes, you can't afford to make meaningful "adjustments". So economic theory, like all modern theories, fails to describe reality. ¶ 7:02 AM
