Joe vs. “The Socialists”

Posted in OPINION to The Loyal Opposition by Dan Schreiber on Thursday, October 30, 2008 at 8:00 am

I have to admit that I don’t understand people like Joe the Plumber.

As most everyone probably knows by now, the unfortunate Joe Wurzelbacher (aka “the Plumber”) found himself smack dab in the middle in the presidential race when John McCain inserted him into the last debate. McCain and Obama then competed for Joe’s vote during the rest of the debate in a Joe-the-Plumber-name-race, each apparently trying to mention his name more times than the other (which resulted in McCain’s only debate victory: 15-11).

It turns out Joe’s big fifteen minutes of fame consisted of one minute of prominence, two minutes of Joe bashing Democrats, and twelve minutes of undesired media scrutiny. After only one day, we found out he is an unlicensed plumber and owes back taxes. We are likely to soon find out that he doesn’t like his mother-in-law and once cheated at Scrabble as a child. I actually feel bad for the guy, since he didn’t ask for any of this. On the other hand, he’s had more press conferences than Sarah Palin, so I suppose he isn’t completely innocent either.

But mostly, I don’t get it. Joe’s beef is that he someday wants to buy his boss’s plumbing business but believes taxes will prevent him from doing so. And yet, Joe isn’t talking about his own situation, because he makes less than $250K per year, so he will actually make slightly more under Obama’s tax plan. Joe’s concerns end up being a lot of generic Republican talking points, like “redistribution of wealth” and “socialism.”

So it makes me wonder: why is Joe so outraged on behalf of people in the top 5% of the tax bracket? Obama’s plan to reduce Joe’s taxes and provide more affordable health care should help him. And yet Joe seems angry that wealth might be distributed towards him instead of away from him.

The thing is, we distribute wealth all the time. We just distributed $700 billion to banks, who until last month were selling money as if it were tap water. The last eight years have seen a steady redistribution of wealth from the middle class to the upper class. The upper class doesn’t work harder or make better decisions or add more value to society than they did 8 years ago. They just have more money now because tax policy has changed to distribute more of it back to them, in the hopes that they will trickle it back down to the rest of us. Unfortunately, as in the 1980s, that theory hasn’t work out so well for everybody else.

And let’s not forget the socialism charge either. When Republicans talk about socialism these days, they are not talking about government taking control of the means of production or nationalizing private property, which is how textbooks normally describe it. The difference between the robust capitalism we now enjoy and Obama’s scary brand of evil socialism is apparently this: a proposed tax increase that will be 3% higher for people making more than $250K/year. Keep in mind that the first $250K is taxed at exactly the same rate as everyone else (which is how our tax code works), so that extra 3% only applies to the part of someone’s income that would be used to buy recreational vehicles or vacation condos or trips to the Caribbean. It is most assuredly not the part of one’s income that is used to pay employees, which is an expense to a business owner, and not part of their income (or profit).

Which is yet another talking point to discuss: Republicans are all but promising that the top 5% of the tax bracket will resort to extortion to keep their current tax rate: “If you raise taxes, we’ll just start firing people!” they seem to be saying. This is a strange case to make, because the purpose of an employee is to bring additional profit to a business. If an employee is not creating more value to a company than they are being paid, it doesn’t make business sense to continue to employ that person. So, firing an employee in a well-run business should decrease profit over the long run, not increase it. And it’s just plain silly to say that three extra percent will cause an employer to no longer be able to afford to employ someone, since the employer is already doing well enough to make $250K in profit.

Of course, some companies do hire people for reasons other than profit, and I think that’s fine. But whether someone is employed because of nepotism or social consciousness or for the good of the community, I seriously doubt that those are the employers that are going to start firing people because their taxes go up. If business owners just can’t stomach the idea of paying more taxes, my recommendation would be to pay their workers more until they make less than $250K. Then they will avoid Obama’s new taxes altogether. They’d need to be careful though – if they hire new workers instead of raising the salaries of their old workers, they run the risk of making even more profit, if their new workers are efficient enough.

So, no, I don’t get Joe. He wants to preserve his ability to be 3% greedier in the future, when he will be making more money than he really needs. And in order to preserve that future greediness, he is willing to be on a slower track to getting there, since he’ll make less money and have to pay more for health care. It doesn’t make a lot of economic sense to me. It only makes sense from an ideological standpoint, where words like “socialism” are taught to be feared, despite not really knowing what they mean.

So, I have bad news for Joe and his dream of running his own business. Serving the interests of the top 5% is not a good strategy for becoming a member of the top 5%. If he wants more options in life, he might want to worry more about the bottom 95%.