I am the rich

The guy that blogs here wrote a post that is excerpted here. He’s already taken it down because he got his ass handed to him for complaining. Apparently when you make a lot of money, you’re not supposed to complain about having it taken from you.

I’ve been assured that he’s flogging himself as we speak and preparing to wear a hairshirt for at least a month once he’s done.

We’ve also been assured by Paul Krugman that the rich hate Obama. The Good Professor cites no polls, because the polls actually show that the rich love the President only slightly less than black people. The wealthy people in my neighborhood and in my office never seem to tire of reminding me that we’re very lucky to have "such a wonderful President" (direct quote from yesterday).

Interestingly, the President is set to screw both of these groups, which are the last to continue supporting him. Blacks – low-income ones at least – will get screwed by the DREAM act and the rich will get screwed by the tax increases. I guess they probably deserve it for voting Democratic so uncritically.

Since the blogger took down his post, I thought I’d put up some quick thoughts on my financial situation. My wife and I make more than $250,00, but not by much. This means that we’re evil.

In truth, in DC it doesn’t mean that we don’t have to worry about money – though obviously our worries are less pressing than those that have been laid off.

If the tax increases go into effect, we’ll continue putting off a couple home improvement projects we’ve been hoping to do. At this point we’re waiting to see what happens. Obviously, this isn’t a big deal, but it would keep some people employed. If the tax cuts aren’t extended, I guess we’ll just be paying the marginal construction workers’ unemployment benefits instead.

Since we’re having a baby next month, we’ll also seriously consider having my wife stop working if taxes go up. Taxes on income in DC are very high (~9%, I think). We’re looking at day care costs of $1,500/month for an infant. We definitely make more money with her working, but she works at a law firm and the long hours may not be worth it if well over half her pay goes to taxes and day care. We’d drop out of the ranks of the "rich" – by a lot – if she stopped working, but our expenses would fall dramatically as well.

If we have another kid, she’d almost certainly stop working under higher tax rates. The elementary schools in our neighborhood have gotten usable under DC’s out-going Mayor. Who knows if this will reverse under the new one? If so, we’d probably have to move or give home-schooling a shot – even on our current two salaries, having a couple kids in private schools will be a stretch and DC public schools beyond elementary school (at this point) are not a serious option.

The original point of the now-deleted blog post is that people respond to tax rates by changing their behavior. Under lower tax rates, I will pay people to do home improvements and to watch my children while my wife and I work. Under higher tax rates, I won’t do home improvements and my wife will quit her job to raise our kids. This is reality. You might not like it, but no amount of shouting at bloggers will change it. You may be able to make people quiet, but the incentives remain . . .

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7 Responses to I am the rich

  1. As a DC lawyer, I’m guessing your wife mainly engages in value transference. Therefore, having taxes incentivize her quit her job to take care of the kids would not be a bad thing from a social policy stand point.

    In fact, I think the vast majority of the people who make > $250K in income are engaging in value transference. A top income tax rate of 70 or 80% may not be a terrible thing (although in the short term it would make the recession worse).

    • Foseti says:

      Devin,

      I agree. In some ways I’d prefer the lifestyle associated with my wife being at home to raise the kids, as well.

      However, the economic consequences if this happens on a vast scale would be terrible for employment and terrible for the government.

      The government is nearly completely dependent on “the rich” for income tax revenues. If the rich go away, the government is totally screwed.

      A lot of people would also be out of work.

      The pros and cons are interesting. It might be a good idea to set tax rates based on these ideas – but that’s not how they’re being set now.

  2. theobsidianfiles says:

    Foseti,
    Interesting post, I don’t have much to say in disagreement.
    Other than the fact that the DREAM Act will do little to poorer Black folk, who were never much helped, nor was it intended to do so, by Affirmative Action.

    But, other than that, good post.

    O.

  3. Jehu says:

    Put in my vote for letting your wife homeschool your kids. Particularly being as if your wife homeschools, your marginal costs for additional children will be reduced and you are therefore likely to have more children. When you homeschool, they’re YOUR kids, as opposed to the STATE’s (check out the hours typically spent under the eye of the state versus the time you get to spend with them sometime for the typical school-aged kid). And, in my experience, homeschool moms are usually happier than public school moms.

  4. JohnK says:

    I am always happy to introduce the possibly interested to analyst John D. Mueller, who has some interesting things to say about incentivizing/de-incentivizing fertility.

  5. theobsidianfiles says:

    John,
    Ending legalized abortion is a nonstarter, Women on both sides of the political divide, to say nothing of quite a few Men, will never go for it. That’s not to say that the problems associated with entitlements like Social Security aren’t real-they are. The problem there is, you’re dealing with a highly organized, highly motivated segment of the population that reliably votes each and every election, and, have made it so the mere mention of tweaking SS in any way, is now called the third rail of politics.

    Nice try, though.

    O.

  6. […] Losers: New Deal Revolution Edition“, “Democracy and Servility“, “I Am the Rich“, “More Libertarian […]

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