Paul Ryan's outrageous use of the word "envy"

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The only people who make substantial income in the restaurant industry are either the corporate execs of major chains, large franchise owners, or possibly owners of very upscale, trendy, and high profile joints. None of these positions can be acquired through a $500 dollar investment. The corporate execs usually don't even have any sort of food background. They often come from the financial industry.

I ate at the original Steve's ice cream, and the food was good. I ate at the original Boston Chicken, and the food was good. I ate at the original Bertucci's, and the food was good.

I also ate at a Steve's in a different city after they had expanded, and it was still good. Similarly, I ate at Boston Chicken and Bertucci's after they were chains, and the food was still good there as well. Heck, Bertucci's still has better pizza than the average nonchain pizza shop.

Are there chains with bad food? Sure. However, unless one's standards are set by expensive four star restaurants, good food can be found at some local and regional chains.


Exactly. Ryan wants to make it easier, to encourage growth and new job formation. Obama wants to make it harder, which will discourage growth and new job formation.

As for why I use the restaurant example, it's because restaurants are businesses that most people are familiar with. They're also more typical of the average small business than professional businesses like law, accounting, or software firms, which employ far fewer people.


I certainly agree it's a difficult business. But so are most small businesses that account for substantial employment. Yes, it takes a special kind of person to start a business and make it successful enough to employ a growing number of people, and yes, those people also run the risk of losing their shirts. That's why we should set up the tax system to make it easier for those people to do what they do, rather than making it even more difficult than it already is.


I haven't read Rand, but the general libertarian model is that wages should be set exactly the way they were set in your case: by agreement between the employer and the employed, based on the needs of the employer and the skills of the employee. It doesn't sound like you have a problem with that.

"Good Food" is a matter of opinion. I am sure that there are menu items served in chain-owned restaurants that are nutritionally satisfactory for most humans.

ruveyn

And small restaurants can end up becoming franchises. Chick-fil-A comes to mind.

Kentucky Fried Chicken started off as a single small chicken place.

ruveyn

Now KFC produces overpriced crap.

-Bill, otherwise known as Kraichgauer

1 in a million.

But an excellent example of dreams out of proportion to the real chance of success.

FYI, Obama was at Facebook last week for a Q&A and talked about his tax plan, raising the top rate only for the wealthiest Americans, people like him. Zuckerberg was right there, quoted as saying sincerely, "I'm cool with that."

Psychohist, this top rate Obama is talking about is NOT going to inhibit the potentail growth of a restaurant chain, should someone be the one in a million. There is room in that plan to reinvest and not face astronomical federal income taxes. The real burden on a restaurant, and I see this in my line of work, comes from LOCAL and state taxes and benefit regulations. The Obama healthcare plan IS problematic for this industry, I won't argue that it is not, and CPA's like me have been UNANIMOUS in lobblying against certain provisions like the increased 1099 compliance for that reason. But as I pointed out earlier, much of the nickle and diming that does a small business in is the direct RESULT of the hyper focus on keeping the federal INCOME tax low. That gets made up in the annoying rainbow of taxes and surcharges and fees a business like a restaurant is now stuck with. It wasn't this bad in the old days when state and federal governments just raised the tax rates when they needed money. They didn't have to get creative and slip it in via a more politically viable vehicle like they do now. The mess that a small business owner faces can be said to be a direct unintended consequence of the mantra in this thread, "don't raise my taxes!" If the money is needed it will be found, and you are not likely to enjoy the alternative anymore than you liked the obvious option.

And ... there is the very real factor of people simply misunderstanding their own tax situations. I was on the phone yesterday with someone who wanted to convert an S corportion to a C corporation because a shareholder was complaining about his tax bill. Well, I looked at the return and the K-1's and all the information and that tax bill could NOT have been generated by this corporation. And yet the shareholder sincerely believed it was. The level of disconnect between reality and perception can be astonishingly huge, yet that drives how people vote and how they view tax policy. And that ... leads to bad answers.

I really could care less what Obama says at this point, he's a lieing weasel.



I suppose his energy policy to force gas prices to skyrocket doesn't hurt people either...



Who would want to invest anything after what happed to the Chrysler Shareholders? Only an idiot, that's who.

I'll comment on the rest of your post later when I have time.

Only if you plan to comment with substance and not just political sniping. I'm having a difficult time seeing the relevance in anything you wrote, above, to my attempt to provide a factual and economic analysis of some substance, even if not fully up to PPR standards.

I have good friends who are conservative and can argue circles around me. This isn't sour grapes. It's me being frustrated by you choosing not to use your intelligence to get into the meat of the discussion. You aren't even talking on the same page!

Sorry about that, stress leading up to finals (taking a grad course). What I was trying to point out is part of the reason the wealthy are not investing in anything, is because they are afraid that Obama is going to ignore the law again and take away that which they invested in.

The Chrysler bond-holders should have gotten their money back first, as per bankruptcy law and legal precident they had first dibs. Obama chose to ignore the law to give the money to the Unions as a reward for contributing to his campaign. He also chose to demonize the people that tried to stand up for their own rights.

My point is why should anyone invest in any business when Obama is acting like he has the right to swoop in and take everything away without even due-process.

The oil companies are recording record profits because they aren't being allowed to drill so they don't have the usual expense that comes from drilling (paying employees maintaining the rigs, etc). In fact some places on land may be shut down because of a lizard. Obama has defied 2 Federal Court Orders. His Interior Department committed outright fraud on the report concerning the Gulf Oil Spill and recommendations.

Getting back to your other post, I'm not trying to snipe.


No, I think the problem is we have practically 50% of the country not paying Federal Income Tax. People are perfectly willing to spend other people's money on things, but there would be more of a push for fiscal discipline when their money is being used for things too. We shouldn't penalize people for being successful. The problem is we have an enormous spending problem at the Federal Level, raising taxes is just going to encourage Politicians to try to spend even more money.



It is called trying to come up with taxes that the public does not see directly, the income tax causes people to have to look at the tax forms and makes people conscious of what they are paying to the Government. All these hidden taxes just are used by Government for even more spending.



I agree that the tax code needs serious reform and simplification, the problem is then we have lobbyists petitioning for exemptions all over again and we end up with the same convoluted mess.

Hey, I knew you could do it.

I'll have to come back later, however, because I'm supposed to be working.

I will say that I disagree that the wealthy are afraid of what Obama will do, and disagree with your assertion that is holding them back from investing. Haven't heard that from a single client. I have heard that promising investment opportunities are still hard to find, however. I would suggest that is the real truth, if investment is being held back. Savy investors wait until they can feel what sector of the economy is going to take off, because that is where they want their money. Right now there simply isn't much in the up and coming to get exicited about. Which has nothing to do with taxes, and everything to do with industrial cycle.

And we sort of said the same thing about the stealth taxes, except that I think its driven by too strong a focus on the top federal income tax rate. Reagan loved his stealth taxes. He got to bask in the glow of cutting taxes (ie top federal income tax rate 70 to 50%) without having to take responsibility for too much pain, because he raised excise taxes and the like instead. Can you imagine being congratulated on setting a 50% top rate? Yep, he's glorified for it. Obama villified for wanting to go with 38%. Hasn't anyone considered that we might have taken the tax cutting just a wee bit too far? Reagan himself would probably say we have. Ok, sorry, I digressed ...

We totally can't win on simplifying the tax code, too many horses in the race for too many sides. But that isn't even why the guy I talked about was confused. He was just scapegoating, in my opinion. I see it all the time. People completely capable of understanding choose not to because it is more fun, to be blunt, to scapegoat and rail, than to understand the facts.

Last edited by DW_a_mom on 27 Apr 2011, 4:35 pm, edited 3 times in total.

I don't deny that local and state regulations and taxes also hurt. However, an $80,000 increase in taxes is a $80,000 increase in taxes. That's one or two jobs right there. And that's the amount by which Obama wants to increase the taxes from a $2,000,000 small business K-1 return.

And again, the economic figures bear me out. Unemployment started dropping suddenly after the Bush tax rates were renewed:




And prior to that, unemployment had risen gradually starting around when Obamacare was passed, so your points about Obamacare being problematic for small businesses are well taken.

Now, am I saying that state taxes should be reduced? No, I'm not. Neither is anyone else on this thread that I've seen. I think Massachusetts state income taxes are fine right where they are, which is probably why they've stayed at the same level for 20 years. Other people can speak for their own states.

I'd also point out that Representative Ryan isn't arguing for tax reductions, either. He wants to reduce the percentage rate, but he also wants to get rid of deductions and other loopholes so that tax revenues remain the same. His plan is more about tax simplification than about tax reductions. However, his plan does seem to free up more money for small businesses to grow; it's more likely to hurt affluent people that use a lot of tax dodges.


Sure, there are people who base their opinion on bad reasoning. That's why I'm providing good reasoning for my side of the question. However, I also agree with Ryan that Obama's "tax the rich because they're evil" approach is an example of bad reasoning.

I think that is a political distortion of his reasons. He puts himself firmly the box of who he intends to raise taxes on. He wants to tax the rich because they can afford it, and there is historical / economic evidence that taxes can be raised there without much pain on the taxpayer or the economy, given the current rates in place (formula changes when the rates go up, of course). The money has to come from somewhere, and he believes (and I believe) that is the place to get it while causing the least amount of negative result. I don't feel the rich are evil and he doesn't. To say that is the reasoning is purely political spin.

And your tax example ... if that $2m business wants to hire 2 employees, it won't be taxed on $2m because it will deduct the wages. The tax is on the profit after paying the employees, and you cannot convince me that anyone sits there and says, "I must figure out how to take home 1.5 million after taxes, and will cut employees if I have to to get there." It only SOUNDS like 2 employees, but it is 2 employees that owner would have hired if he had needed them, but didn't hire because he didn't need them. Taxes isn't even in the equation.

If the business needs 1.5m to invest in expansion there are tax preferred ways to do that, as well. Tax is on NET, not gross.

And ... I must get back to work, saving real taxpayers from burdens larger than the law requires!

So he claims. The fact is, though, that he made his millions on a book. He doesn't have a business that employs other people, needs continual reinvestment, and involves substantial risk. And book royalties tend to have a short lifetime; his millions have already been taxed at the lower Bush rates, so he's mostly safe from the higher rates he wants to have in the future.

As far as taxing the people who can afford it, what about the billionaires that supported his campaign? He's happy to let them be taxed at an effective rate of less than 10% after such gimmicks as donations of appreciated stock. The fact is, he's not going after the really rich individuals who can truly afford it; he's going after the upper middle class and small businesses. But he's keeping quiet about that part, because he wants to rile people up with his class warfare "tax the rich" thing.

As for "pain to the economy", look at my graph again. That 1% drop in the unemployment rate represents about 2,000,000 people who have jobs now and wouldn't if Obama had managed to raise taxes the way he wanted to, and still wants to. 2,000,000 jobs. That's a lot of pain.


You know better than that. If you're going to increase the size of your payroll, you need more working capital. Yes, technically the extra $80,000 goes into working capital instead of directly into employee pay, but really that only strengthens my point. Usually the ratio of annual payroll to working capital is greater than 1:1, so the $80,000 difference in taxes actually represents more than $80,000 worth of salary. We may be talking about half a dozen or a dozen jobs rather than just a couple.

Must resort to cop out answer: don't buy it, don't agree, but absolutely must break myself of the need to respond because I must catch up ten extra hours of work in two days already as it is, and I'm thinking I have a serious posting addiction problem. Guys, time to hide the bottles from the alcoholic .. Maybe if no one answers me I'll be less tempted...