Parts of last night’s debate revolved around a conversation Barack Obama had with a guy in Ohio named Joe Wurzelbacher, who is about to buy a business that is apparently going to have its taxes increased under Obama’s tax plan. Speaking to Nightline’s Terry Moran, Joe — who says that Social Security is a joke that he “hates” — said: “To be honest with you, that infuriates me. It’s not right for someone to decide you made too much—that you’ve done too good and now we’re going to take some of it back.”
Joe obviously doesn’t mean what he says. Joe is happy enough to have the market decide that you made too much, to take away money from you — the market’s deciding your job is worthless doesn’t infuriate him one bit, because (apparently) it is inherently just and/or infallible. What infuriates him is if tax policy is designed to disproportionately help people (and businesses) who make less money than him (and his). If the people, through the instrument of their elected government, make this decision then and only then does Joe become infuriated. What Joe is really saying is: “I resent the fact that someone might prevent me from taking everything I can via the mechanism of the market.” Joe’s position only makes sense if you accept the infallibility — or at least the justice — of the market. It depends on the idea that externalities do not exist — that the costs of transactions ought not include information about anyone other than the buyer or seller. Does your company pollute our river? “Well, that doesn’t matter — that’s just between me and my customers.” Tax the pollution your business produces? “Well, it infuriates me if you think I’m making too much!”
By his own (apparent) definition of someone deciding “you made too much,” Joe must also be furious about some other evil forms of income transfer: public schools, public utilities, the federal highway system, parks, government spending on R&D, the Pentagon system, food stamps and other government assistance programs, not to mention Social Security. All of these projects use tax money to create public systems that — overwhelmingly — disproportionately help those less fortunate than Joe. Joe apparently believes that those who receive food stamps are, as the Wall Street Journal labels those who don’t pay income taxes, “lucky ducks,” and are perhaps simply insufficiently good at earning money for themselves on the market. Those grindingly poor food stamp-using lucky ducks! I’m sure Joe would trade places with them in an instant.
Also implicit in Joe’s comment is the idea that he earned all his money without the help of the abovementioned systems. I have no doubt that Joe worked very hard to get where he is — and he absolutely ought to be rewarded for his effort and sacrifice — but Joe did not just spontaneously and in a frontiersman-like way create wealth from scratch. His wealth was created partly with the help of other people — and their taxes — through many of the systems described above. Is it infuriating to Joe that the government took money away from people without children to pay for his public education, that the government invested in building the highways he uses to get around Ohio, that the government funds the R&D that helps create world-class technology and wealth, that the government supports farmers who are probably among the clients of the plumbing company he is about to buy?
Just asking.
This speaks to the successful branding of taxes as money thrown the drain. This perfidious thought started in the 60’s and reached its apogee under the Bush 43 administration.
Likewise is the recasting of Social Security as an investment instead of what it really is, insurance
Comment by John — October 16, 2008 @ 4:47 pm
The whole idea of “Joe the Plumber” is that Joe — by virtue of having an all-American name and an all American job — represents middle-class America. (To paraphrase columnist Gene Robinson, “Farhad the Systems Analyst” wouldn’t work.)
So let’s assume that Joe is correct in saying that if he ended up buying that business he’d like to buy, he would pay more in taxes under Obama’s tax plan. That must mean that the business would generate PROFITS of more than $250,000 per year.
It is not all-American to make $250,000 per year. SOME Americans make $250,000 per year, but the vast majority do not. Joe may have a job that seems to represent working class American, but if he goes ahead and buys this business, he’ll be making more than many corporate attorneys, more than many doctors.
If you think Joe the Plumber can take home $250,000 a year and still be considered working class or middle class, you’re probably making that kind of money yourself. I would advise you to get your head out of your …
Let’s assume that Joe is wrong — that even if he goes ahead and buys that new business, the business won’t be making more than $250,000 per year.
In that case, we have to feel sorry for Joe. He’s been duped once again by the Republicans into thinking that the Democratic candidate wants to raise his taxes — even though it isn’t true.
I’ve also heard, by the way, that Joe owes back taxes and doesn’t have a plumber’s license. Can you own and operate a plumbing business generating $250,000-plus in profits without a plumbing license?
John McCain should be ashamed of himself for dragging an ordinary person into the spotlight of politics like this. Joe the Plumber cannot be expected to defend himself against the deluge of scrutiny he is likely to face now that he has become a political football. That said, John McCain’s last chance in this campaign is to use Joe the Plumber to convince the American people that Obama will raise the taxes of ordinary Americans.
Joe, if you happen to be reading, I apologize sincerely for talking about you this way. I hate to drag you into the mud. It isn’t personal. John McCain has thrown you to the wolves in a last-ditch effort to save his flailing campaign, and that leaves liberals who love this country with no choice except to tell the painful truth — you are either wealthy (gasp!) or ignorant.
Comment by Ian — October 16, 2008 @ 8:07 pm
I may be mistaken, but isn’t the tax increase based on gross income? If that’s the case that isn’t really a lot of money for a business. If you gross $250,000 and have a staff to pay, along with insurance and any other overhead that doesn’t leave you a whole lot. But again, I am basing this on gross income. Do you guys know if this is accurate?
Comment by rbates — October 16, 2008 @ 9:05 pm
rbates: That’s a good question. I was told that the tax is on $250,000 net — that is, $250,000 profit. Right now, the tax rate is somewhere between 30% and 40%, and Obama is proposing an increase of about three percentage points.
If this were an increase on gross revenue, that would mean that businesses with revenues greater than $250,000 are currently paying more than 30% of these revenues to the govt — which would mean it wouldn’t make sense to go into business at all if your margin (revenues over expenses) wasn’t well above 30%. So I’m assuming, based on that, that the tax is on profits and not revenue.
But I spoke to a friend of mine (by text message) earlier today about this very question, and he led me to believe that he looked it up and the tax is applied to profits — not revenue. (Although a Politico article implied the tax was on revenue, which was unfortunate if indeed the tax is on profits.)
Comment by Ian — October 16, 2008 @ 10:22 pm
Thanks Ian. I looked very quickly on Obama’s website and it wasn’t immediatley clear if the tax is based on revenue or profit. I feel like McCain would have pointed that out if the tax was based off of revenue. But, maybe I’m assuming too much with him…
Comment by rbates — October 16, 2008 @ 10:47 pm
[...] WordPress.org ← Joe the Furious Plumber [...]
Pingback by Joe the (Unlawful) Plumber and Sammy Davis Jr. — October 16, 2008 @ 10:54 pm
Ian & rbates:
If you assume the hypothetical plumbing business is a sole proprietorship or type S corporation. Then the tax is on the revenue less expenses (as noted in 1040 Schedule C) so it’s effectively profit.
So if Joe, who doesn’t need to be a licensed plumber if he hires some, makes $250,000 but it costs him $200,000 in various expenses his taxes would not go up. If fact he would have to have an extraordinarly successful to have an AGI above $250,000.
Comment by John — October 17, 2008 @ 9:13 am