By Hardy Hayes,
President, Democratic Club of Camarillo
Maybe you saw the interview on MSNBC, maybe you read about it on HuffPo, or maybe this will be your first exposure to it, but I found the interview of Republican Congressman John Fleming (R-La.) by Chris Jansing to be fascinating and somewhat telling.
Fleming appeared on MSNBC after President Obama laid out his jobs bill proposal in which Obama proposed, among other things, tax increases to the wealthy. As one would expect, Fleming is opposed to any tax increases to “job creators.”
For some background, Fleming, in addition to being a Congressman, owns a series of Subway sandwich shops and some UPS stores. Jansing asserted that Fleming earned $6.3 million last year from these enterprises; in an effort to be impeccably fair here, Fleming’s stores had REVENUES of $6.3 million, a far different number from what he actually earned. Fleming correctly pointed out $6.3 million is before you subtract all your expenses for salaries, rent, equipment, and food, his actual net earnings were “a mere fraction of that amount.” He didn’t tell us what his earnings actually were but he did say “by the time I feed my family, I have maybe $400,000 left over.”
Jansing tried to get Fleming to tell her if he would lay off any workers if his taxes went up but he evaded the question. The follow up question (in my opinion) would be whether additional taxes would keep him from adding additional stores (assuming that he would add them if there were no tax increases). And THAT is really the crux of the matter, isn’t it? The Republican premise is that ANY tax increase will kill job growth and therefore, they will vote against any tax increase.
To Republicans, taxing the wealthiest Americans is “class warfare.” That talking point comes up over and over in their canned spiels. I swear they must have a Monday morning caucus strategy meeting where they announce their talking points for the week and then like a herd of sheep, they all repeat them word for word.
Fleming’s version of it was that his success is a virtue (no argument there) and that “class warfare has never created a job.” “This is all about creating jobs,” Fleming said. “This is not about attacking people who make certain incomes.”
Now there’s something I can agree with, in my view of things, the Republicans started a war against the middle class and the poor forty years ago and they have yet to create a job with it! In my opinion, the class warfare started with Reagan’s busting of the Air Traffic Controllers Union, continued with his deficit creating tax cuts to the wealthy and “trickle down” theory and it has continued through the Bush tax cuts and the recalcitrance of today’s extreme right wing Republicans.
Republicans steadfastly refuse to accept any blame for the situation we find ourselves in and their only solution to our problems is to give the wealthy even greater tax cuts and to cut spending for those who have become most impoverished under their shrewish administrations.
Let’s move on though and talk for a minute about how Obama’s proposed tax on the wealthy is going to affect somebody like Rep. Fleming and how it’s going to kill jobs. The implication of what Rep. Fleming is averring is that if we tax him at a higher rate the taxes will be so onerous that it will either mean that he will have to lay off employees or it would not make economic sense for him to open any new stores; he’s basically saying that the additional taxes would make it just not worth his while to do so.
Now, I have to admit that I’m not exactly sure what Obama is specifically proposing, but I do know that most of the conversation for the past couple of years centers on going back to the tax rates that were in effect during President Clinton’s administration. That would raise the top marginal rate to 39% from the current 35%. Okay, what does that mean to somebody in Rep. Fleming’s situation?
Every year the Federal government publishes an Employer’s Tax Guide (Publication 15, Circular E) that gives employers the information they need to calculate the income tax withheld for each employee. Though it breaks down payroll based on payroll interval, the bottom line is that it details how much of each employee’s gross pay should be withheld in order for the employee to meet his tax obligations for the year. It is based only on gross payroll and not on the deductions and exemptions that may be available to each of us. For purposes of illustration and because it makes the clearest case, I’m citing the numbers from Table 7 – Annual Payroll Period (on page 37).
The top bracket in Table 7 is the 35% bracket. That bracket begins at an income level of $381,250, which means that only income over $381,250 is taxed at 35%. So for Rep. Fleming’s $400,000 net income, only $18,750 is taxed at the 35% level. Thirty five percent of $18,750 is $6,562.50 (don’t misunderstand me here, the Congressman is paying over $110,000 on his income up to that $381,250 threshold but I’m just talking about what additional taxes he will owe if Obama’s plan were to pass). If the President’s plan was to be enacted and Fleming had to pay the new 39% rate, how much extra tax do you think he’d have to pay on that $18,750? Well, it turns out he’d have to $7312.50 or an extra $750.00 PER YEAR. Do you think for a minute that paying an extra $750 on an income of $400,000 is going to cause any rational person to refrain from expanding his business and hiring more workers? Do you think for a minute that $750 is going to cause him to lay off any workers? Do you think for an extra $750 per year he’s going to fold up his tent and go home? I don’t and neither should you.
“By the time I feed my family, I have maybe $399,250 left over.” Poor baby…
by RL Miller, Calitics, Jan 23, 2012
