Etched In Stone

The possible return from the Bush tax cuts to the Clinton rates for affluent Americans is the most talked about domestic item of the day. I’ve already had something to say on the subject, but there’s more. Let’s start by understanding a rule of the game which most people who’ll read this know, but some otherwise informed people to whom I‘ve spoken don’t. If the higher marginal rate starts at $250,000 only the income over that is taxed at a rate 4.9% higher. OK let’s call it five. If our “small businessman” makes $260,000 profit he pays $490 more in tax, only on the extra ten Gs

I’d like to make a point demonstrated by my father during his tenure as President of Paramount Pictures from 1936 t0 1964.* In the early 1950s he was so angered by what he considered a confiscatory rate on top personal income, something over 90%, that one year he returned a major portion of his salary to Paramount. During this whole period he maintained a life style that most people would consider luxurious. He evidently got by as usual on the income taxed at a lower rate plus what hadn’t been returned to the company.

I seriously doubt that he would have protested a top rate of 39.6%. But this is incidental to the fact that the tax at issue was then, as it is today, based on personal income, not on corporate profits. He didn’t decide that Paramount would make fewer pictures and in the process hire fewer people. He lacked the personal financial incentive, and most important the ethical prerogative. Yet here are the movers of big business claiming that if their personal taxes go up a trifle their corporate enterprises will be forced to reduce production and presumably profits.

This is not only disproportionate and dishonest, but a violation of their obligation to shareholders. Because higher ups are peeved at the government taking a little more of their personal wealth, it would mean  that working stiffs with a few shares of the corporation’s stock, many of them forty seven percenters with 401 Ks, would also have to get by with less. A corporate executive is an amployee To even threaten such action is at best questionable.

Only a minority of Republican voters participate in this charade. Still it’s this minority who benefit at the bank from all the votes, regardless of motive. This is today’s quintessential Republican Party at work. Us card carrying Democrats have been saying this for years. But no one could have stated our case more convincingly than Mitt Romney. I believe that a significant number of once unaligned voters will remember that the man who specified the 47% was a Republican long after they’ve forgotten that he was a stiff bumbling candidate. This is one sketch that’s etched in stone.

* To keep his job in perspective, this was a time when what are now called CEOs received a salary about forty times their average employee. Today the number is four hundred.