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Jared Bernstein

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Brother-In-Law Retorts: Labor Day Edition

Posted: 09/02/11 10:00 AM ET

Labor Day is upon us, that last family cookout or picnic of the summer. So we'd better fire up both the grill and our handy responses to annoying arguments from that conservative brother-in-law with a PhD in Fox TV. (Again, that's not you Sean, Jim, Andy, Tom, Clint... well, maybe Clint... and Tom... kidding!... I love you guys!).

Refer back here for the original installment of this series, but here are some more canards that are as sure to show up as your aunt's potato salad.

(Recall that I keep these link free so you don't have to click through and slow down your delivery... but I've included the relevant links at the end for later reference.)

Why are you libs always picking on the rich?! You should love them: they're the ones who pay the taxes -- half the country doesn't pay any taxes at all!

First, dramatically get everyone's attention... "Whoa, wait a second... that doesn't sound right at all. I mean, what about all the people drawing paychecks out there... they all pay payroll taxes, right?"

In fact, if you combine income tax and payroll taxes, then 86% of households pay taxes. Then, if you throw in state, local, and sales taxes, pretty much everyone pays something. Even if you're in a state without a sales tax, point out that if you put gas in your car, you're paying the Federal gas tax.

In fact, if you put all those taxes together, the lowest income families -- the ones in the bottom fifth of the income scale (but don't say that -- sounds too wonky/snooty) -- pay about 16% of their income in taxes.

Now, get a little understanding in your voice, "But you must be just talking about the federal income tax -- and sure, lots of people in the bottom half of the income scale don't pay that tax... BECAUSE they don't make enough money!!"

Warren Buffett pointed out the other day that because of all the tax breaks for rich people, he pays 17% of his income in taxes... (dramatic pause... you might get some gasps out of that one, because chances are, most people at your picnic pay a larger share of their income in taxes than that). Sure -- when it comes to federal income taxes, the wealthy pay a larger share, but they've been the only ones making the big bucks for a while now, and in fact, just like Buffett -- their incomes been growing faster than their income tax liability, so their average rate's gone down!

"So," you say, "I guess it doesn't really bother me that 14% of households, most of whom are low-income elderlies or students don't pay income or payroll taxes. You wish them the best... (quiet pause as you wind down... ) God knows they're struggling..."

(Oh, Snap!)

If they'd just cut out all those damn regulations, I guarantee you America would be creating jobs!

I'd start out folksy: "You know, that just doesn't sound right to me. I mean, let's say you're a business man or woman, kinda like Uncle Sean or Uncle Tom over there, and enough people want to buy your stuff that you'd be leavin' money on the table if you didn't hire some more help. Are you tellin' me that because that nasty old EPA down there in DC has some rules you don't like, you'd leave that money on the table?!"

(Maybe wait to see if you get a nice guffaw here... look around incredulously...)

"You know, even business folks themselves don't say regulations and red tape is their biggest problem. I was looking at this survey of small businesses the other day, and they themselves say their biggest problem is poor sales, not enough customers walking in their doors, and according to this survey, they've been saying so for months now."

And then there's this: seems to me we might want to worry about what life would look like if we didn't have rules about pollution, food safety, or even that car seat Aunt Nell's new baby rode over here in.

Sounds more to me like this is just something those folks up at Fox TV have been complaining about forever. Now they're trying to tie it to jobs, but we've had periods of extremely robust job growth with regulatory regimes much like today's.

Finish with some current events: "I hear the President's going to give a jobs speech this week. Here's what I bet... you get some of his ideas at work in this economy, get some money into some working people's pockets, some jobs fixing schools, maybe a tax break to employers who hire people. I'll bet you'd see a bunch of jobs come on the scene, even with the EPA regulating smog."

Obama's new jobs plan won't work just like none of his other stuff has worked...why do you think we're still in this mess!?

In fact, his stuff has worked pretty well, it's just that the hole is so deep. Remember how bad things were when he took office? The economy was cratering, with GDP falling 9% in the last quarter of 2008, right before he moved to DC. Then, after the Recovery Act, by the third quarter of 2009, the economy was growing again. It was a huge turnaround, and the Recovery Act was a big part of the reason.

I know it's hard to accept that it helped, given that things are still so tough, but facts are facts, and literally within months of the stimulus act, GDP began to do a little better and the rate of job losses began to taper off. But March of last year we were adding private sector jobs and we've added about two-and-a-half million jobs since then.

Not enough, for sure. One thing you can say is that his stuff ended too soon to repair enough of the damaged economy he inherited. But the "stuff" he's put in place has kept the worst recession since the Depression from becoming its own depression.

And you know what else? I just heard the GM and Chrysler posted some great sales numbers last month, up about 20 and 30 percent, respectively, over last year. How about that?

So, seems like his stuff maybe wasn't so bad... he just needs to do a lot more of it.


That should keep your bro-in-law quiet at least up to Thanksgiving. By then, we'll be ready for the next round.

Sources:

Misconceptions and Realities About Who Pays Taxes

NFTB Small Business Economic Trends

"Will More Smog Create Jobs? Republicans Think So"

"The Impact of the Recovery Act, In a Few Easy Charts"

This post originally appeared at Jared Bernstein's On The Economy blog.