Dear readers! We interrupt our previously scheduled postings for a series of very special announcements:
Radio waves are the last political resort.
Apparently all other political channels are either broken or backed up by "more important" problems. This passed Saturday, frustrated by the House/Senate stalemate, GOP asked Obama to keep Bush tax cuts intact via their radio address. Is that what's going to work? What is this the 1920s and everyone is glued to their Radiolas?
Clearly, the issue that affects not just the monetary policies of this country, but also "minor" sociopolitical concerns such as, for example, the economic principles of true capitalism and definitions of social classes, cannot be successfully discussed in the policy-making branches of our government – the partisanism overpowers the reason. So, the republicans decide to address the President directly… on the radio. Moreover, on Saturday. Don't they know that radio is primarily a weekday medium? Most listeners tune in either on their way to and from work, or online in their offices.
On the other hand, who the fuck cares? It's just an empty, check-mark step. In reality, everyone is resigned to wait until November elections for the resolution anyway, because it's not the fiscal reasoning or survival logic that will dictate the decision. The only thing that matters for the outcome of the tax-cut issue is which party prevails. Meanwhile, GOP is trying to impress on their constituents that they are "doing something about it." Just don't call it "pressing Obama" – that's way too blatant even for politicians.
Proof-positive: politicians are not real people.
Nearly 18 months ago, when President Barack Obama first threw the number $250,000 into the tax-cuts discussions, at least some financial publications, including MSN Money, questioned the suitability of that number as a middle-class ceiling. Now, overwhelmed by the barrage of bad news, nobody talks about the number itself anymore.
But I was always interested in understanding how the fuck they came up with that number? What made "them" (whoever they are) think that $250,000 salary qualifies someone as "wealthy?" What kind of perverse minds decided that a small-business CEO, a senior financial executive, an adman, an average doctor, a sales person who spends 300 days a year on the road, don't belong in the middle class? Are they an upper-crust? Is it correct to bunch them up together with the private-equity billionaires or public companies' CEOs and make them pay taxes at the same rates?
Yes, the majority of the general population will never make over $250,000. But the same majority do not possess talents, perseverance, and drive of people who apply themselves to the best of their abilities and work 16 hours a day in order to make 6, 10, or even 15 times more than an average schmuck, who doesn't really try too hard and spends his workday surfing the Internet for TMZ news and shopping bargains.
In fact, people who make $100,000 – $750,000 a year are usually the hardest-working sector of the middle class. Most of them have built their careers or businesses from scratch. And guess what? They are not really that reach. I know CFOs, doctors, lawyers, who make $300-$350K a year and worry that they will not be able to afford $245,000 a head in tuition, room, and board to send their children through a good college.
And here lies the truth: the reason a random number is picked to determine who belongs to the middle class and who doesn't is because politicians are not real people. Just like the super-rich, they are far removed from the reality of the every-day life. Many of them are actually wealthy people. And even those who are theoretically "middle-class" enjoy a lot of paid perks. How can you possibly formulate the idea of social classes if most of your meals are paid by lobbyists and their clients?
Administration doesn't care about the economic recovery of this country.
In principle, I would be very reluctant to agree with any official political statement. But, whoever is actually behind the text of the GOP radio address got one thing right: small-business owners will be the first to suffer from increased taxes imposed on the earnings above $250,000. Maybe the plastic people in Washington don't know this, but the majority of privately-held businesses are S-Corporations and transfer their incomes to owners' individual tax returns.
So, let's imagine such small business ran by two single partners, who work very hard to keep their business going, retain their 15 employees, and maybe even create new jobs. If they are very good at what they do and also lucky, they may overcome all the difficulties of today's economic conditions and make $1,000,000 in net income. Good for them!
Now comes the tax season. Even though they left the entire million in the business, they have to split it and report $500K each on their individual tax returns. If the proposed tax rates are applied, together they will have to pay $335K to the federal government. Add to that, state and local taxes – about $150K more, and the hard-earned $1,000,000 is immediately reduced to $515,000. The $485K is taken away from the struggling business.
So, where is the incentive for the entrepreneurs to go on or go into the business? What about the "middle-class" employees of these small businesses, those who make under $250K? What will happened to them, when their employers go out of business squashed by these additional fiscal burdens on top of all other difficulties? Do you think that the government cares about them, or the "economic recovery" altogether? Or do they care about having enough money to bail out the next banking giant or a failing automaker?
The Frustrated CFO 