Thursday, February 9, 2012

Your Hometown

So I was one of the four thousand or so people who was lucky enough to see President Barack Obama speak at the University of Michigan January 27th. My apologies for getting this post up late, but there are two things I want to comment on that I haven’t seen elsewhere.

The first is the anecdote that popped up in the State of the Union address as well. Warren Buffett, America’s favorite benevolent billionaire, somehow manages to pay less in taxes than his secretary. That doesn’t sound right and President Obama wants to rectify the situation by raising taxes on the “very rich” (the president defines them as those that make over a quarter million dollars annually). That sounds fantastic, but how does good ole Warren manage to pay so little in the first place? Well my guess would be that a large part of the reason stems from the overcomplicated income tax code.

How many of you out there do your own taxes?* My guess would be not many. I know I have a tough time slogging through mine and I am someone who occasionally enjoys this sort of thing in a sick and twisted way. I get the job done (eventually), but I know I am probably missing a few discounts. Of course, if I could hire a professional to handle it for me I may save some money. And if more money could get me a better CPA… well all of the sudden it’s not so hard to see how a billionaire could nickel and dime his way down a couple tax brackets with the right team of accountants. And of course those with less income have less money to hire that team of CPA's to help them find all those tax breaks. 

*Don’t forget to fill out our poll on the sidebar!

So, while raising taxes on the rich might sound fine, simplifying the tax code so that there are fewer loopholes for them to squeeze through would be even better. Bush even took a stab at it during his second term, with some in his administration going so far as to suggest a flat tax. How much did you make? Divide it by X. Write us a check. All you would need is a calculator*. It would be great to see Obama try the same, however, I doubt the Texas Instruments-Casio bloc would be enough to overcome the PWC-Deloitte-KPMG lobby. Sigh.

*Disclaimer: I get that it wouldn’t be fair to tax someone making $20k/year at the same rate as someone making $200k. Nevertheless, it isn’t fair for Warren Buffet to pay less than his secretary either.

Second, it appears the president, like any card carrying Democrat, is a fan of Springsteen*. As we waited for the president to emerge, we were treated to what I can only assume was the Obama's personal mixtape. I remember hearing Stevie Wonder and Earth Wind and Fire, but the only singer I heard twice was Bruce.

*I have no idea if Eric Church is a democrat. Actually, you tell me.

Of course, like any good Democrat, President Obama is also a fan of unions, blue collars, and manufacturing, too. Like any hard working American he had his sleeves rolled up as he addressed the crowd. So I shouldn’t have been surprised when he opened his speech talking about manufacturing (“Auto jobs are back!”). And I shouldn’t have been surprised when that line drew raucous applause. This may be Ann Arbor, but it’s still Michigan.

But I was surprised that manufacturing shared the stage with education that day. Obama opened by talking about the auto industry and reminded us that the fortunes of our economy go as our manufacturing. To close the speech he called for strengthening industry again.

All in all, the president did a great job. Most of the crowd probably walked out humming “Born to Run” or some other adreline-pumping anthem. Heck, Denard Robinson was probably whistling “Hail to the Chief” and walking on Cloud Nine. Meanwhile, I had a slightly different Springsteen lyric stuck in my head. On the walk home, I thought about the economy, and manufacturing, and the rise of cheap labor overseas, and the automation of many factory tasks. Ultimately, I agreed with the Boss: “These jobs are going boys, and they ain’t coming back.

1 comment:

  1. It's not just that a flat tax rate isn't fair, it's that you can't really fund a modern government. The money generated from taxes on the wealthy dwarfs the money generated from taxes on the poor. A progressive tax system is the only real way to go if you want to keep anything close to the types of governments around the world today.

    And I think Warren Buffett makes so much money because he pays capital gains taxes, which are much lower than income tax. I don't think capital gains tax should be equal to income tax as it's beneficial for the nation if investors take on the risk of investing, but perhaps rates are too low, and there may be a bunch of loop holes to close there as well.


Keep it civil.