This is an excellent point about leverage:
Freshman Rep. Jared Polis (D-Colo.), who has long been critical of the surtax on the wealthy, which he worries could hit small businesses, spoke up in favor of the tax on insurance. His comments about union opposition to the tax struck some on the call as surprising. Big Labor may be opposed to it, he told his colleagues, but the unions support the Senate plan, which must mean that they’ll go along with a bill that includes such a tax.
This is the inherent problem with endorsing any piece of flawed legislation. The second a group endorses (or tangentially endorses by not opposing) a bill, they lose basically all leverage they have to improve it. Congressional leadership does not make substantial changes to a bill to make members who have already agreed to the compromise happier. They already have their vote, and have no reason to give them anything extra.
The same thing happens with outside interest groups. While the pro-choice groups say they are against the bill, they will not score a vote on the health care bill as a vote against a women’s right to choose. In the world of Washington, this is, in fact, an indirect endorsement. If the pro-choice groups were willing to score the bill, it would instantly make the bill un-passable until the abortion language were improved.
The simple truth is that, in Washington, you can’t endorse, or even stop fighting, a bad bill and then expect Congress to improve it to your liking. When people say, “This bill is full of problems, but you should pass it and try to fix it later,” all that the leadership in Washington hears is, “The bill is good enough so you have zero reason to change it.” If a group says it is unwilling to oppose a bill no matter how terrible it gets, they are signaling to members of Congress they have no reason that they should not be ignored.




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YAB ASS (Yet Another Blue America Success Story)
So Membership in the ‘Veal Pen’ means powerlessness.
~Ruff
Are you implying that the unions were unaware of this?
And why are the pro-choice groups unwilling to score it?
Veal pen threats to their “sponsors”?
“Sweet talking” by Rahm? [now that's an oxymoron!!!!]
Regarding the quote about opposition to a surtax on the wealthy, if a “small business” or small entrepreneur is so successful that he or she must pay a tax that hits only the wealthy, they oughta pay the tax. The argument that such a tax would be unfair because it would fall on the owner of a successful two-person business as well as the head of Goldman Sachs or GM is special pleading.
People in that income bracket bring home those bucks because of the education, stability, productivity and social commitments of thousands, sometimes tens or hundreds of thousands of employees and members of the communities in which they do business. Taxes are a small price to pay for that privilege. Pay up or go Galt and enjoy your fire/police/rescue services and roadway department-free box canyon in Mexico. Colorado can no longer afford you. Then imagine how easy it will be to make more money or manage what you have from there, too.
Not sure of the tax issues, but suspect that a small entrepreneur who “creates” jobs, with an income of $500,000 is in a different position from a corp drudge at the same income.
Yes the owner’s better off, becuse the small business owner can expense much to his business.
$500,000 net implies a gross of $3,000,000 or more.
$500,000 for an entrepreneur includes a reward for risk, $500,000 for a corp drone is straight income. If you think that the risk taking of the former is pro-growth, you might want to tax that person at a lower rate than the one who collects the same income with no risk.
See my 8, and let me know what you think. The $500,000, assuming expenses are legit (no more stupid an assumption than for large corp), including risk, makes the entrepreneur worse off.
Job creation? How thinly stretched that claim is. It’s the excuse for a raft of local, state and federal tax rebates, giveaways, subsidies and legal immunities. Funny how those jobs – like the promised minimum number of (non-income generating) parking spaces in that new, tax-rebated shopping mall – somehow never seem to materialize or never last as long as promised.
Businesses discount the risks and benefits of a complex action to today’s dollars. People and communities should too, but they are often persuaded to believe that future promises – like future performance – are a sure thing.
I believe that if you make the income, you owe the tax. If you make that much income bringing an idea to life, good for you; you won’t stop doing it because of a relatively small tax cost that would, in fact, support the people and communities your business depends on to be successful. I also believe that capital gains should be taxed at ordinary income rates. Passive investment income doesn’t produce jobs. It derives from someone else doing their job.
OT here: Bill Moyers tonight on how the banks rob us….Enjoy.
Please, do not use the word leverage in your headline. Look at how Wall Street has bankrupt mainstreet using leverage and still are to this day. Leverage this! So we endorse the bill, we loose a little leverage, either way were screwed by Wall Street with that mandatory 8% pick pocket or prison sentence.
No matter how many times we tell them this, Jon, they never seem to get it. One wonders if they even want to know.
You raise a larger point that I had meant to.
Lots of issues surrounding job creation, but the conventional wisdom is that small business is a job generator. (I did a desultory search to see if that assertion were accurate while I was working, but couldn’t easily find anything dispository. In the absence of evidence, I’ll accept conventional wisdom.) So the only competing hypotheses I was comparing was $500,000, including risk & potential job creation, vs. $500,000 basically a rent collection. As a national economic policy you would want to encourage the former more than the latter.
The notion of an excise tax on so-called Cadillac health care plans is a real stinker. Because it uses fixed dollar amounts ($8500 for an individual or $20,000 for a family) the now routine double digit increases in health insurance costs guarantee that most of us with employer-provided health insurance will soon be in the Cadillac category even if our health plan is a Yugo. Congress has been amazingly dilatory about readjusting the trigger amounts for the Alternative Minimum Tax so there’s no reason to believe that they will be any more prompt in adjusting the definition of a taxable health care plan. This tax will become another nail in the coffin of the American middle class.
For those keeping score, this is the same Congress that has allowed the Federal Estate Tax to expire as of December 31, 2009. That’s right: the federal tax on estates, no matter how large, is now zero.
This is not the outcome I was looking for when I busted my ass knocking on doors and working the phones in 2008. I won’t be doing that again.
That’s true, but if the small business owner hires new employees and pays them a salary plus fringes, those are business expenses, and that business owner won’t pay any taxes on those expenses. So, how are higher taxes the more income that business owner makes a disincentive to make jobs? If the business owner has calculated correctly, adding jobs will lead to increased profits, even if those profits are taxed at a higher level than today, the business owner still gets richer, and therefore still has a positive incentive to make his or her investment.
In my view the claim that higher taxes than today will discourage small business investment because there is a disincentive, a negative incentive involved, goes much too far. The monetary incentive to add revenue to one’s business than it was earlier, but the monetary incentive to grow is still there and is still positive. In addition, there are other non-monetary incentives involved in growing a business. The larger it grows, the more status and infuence one has in one’s local community. That’s a very powerful incentive for some people. In addition, while one may pay higher taxes as profits increase, one also may get the chance to go public and become extremely wealthy without paying any taxes at all, if one holds on to the stock. In any case, I think the Republican argument that taxes higher than today will reduce the incentive for small business to expand and create new jobs is a rationalization designed to reinforce their continuing effort to increase inequality in America. It has little or no basis in reality.
I agree with that, so let’s raise the top marginal tax rates to 70% for those collecting “rent,” and to 50% for those creating jobs.
How many people start businesses with the intention of making a lot of money, and how many do it because they see a need (or a niche) for something they can provide?
I don’t know many small business people who are making $500,000 a year income. (I’m not sure a lot of them make $500,000 a year net ….)
I know several who think it’s a good week when they make the equivalent of minimum wage after expenses.
As a comment on what a lot of posters are talking about in regards to ‘small businesses’, the reason small businesses are the darling talking point of both parties is that THEY are the ones that largely pay taxes. Most multinational corporations end up with a very minute effective tax rates, if any at all. Not so with most small businesses. The more small businesses you have, the more tax revenue you receive, since the government is unwilling to pursue unraveling the thousands of pages on a multinationals’ tax return.
Also, as a comment on the original article, you’re absolutely right. Supporting a bill despite the problems you have with it doesn’t give anybody any reason to fix them. You’ve already said you’d support it.
There’s a huge difference between compromise and capitulation, but most people these days see them as largely interchangeable.
We don’t have a “national economic policy”. We have a series of overlapping ad hoc measures that benefit those with the best lobbyists. They are invariably the already well to do, which makes them weller to doer. It increases the gap with average Americans, as a matter of government policy and largesse, not innate talent or guts. And it prejudices the middle and working classes by not or underfunding programs that could make them healthier and more productive.
This small a tax is not the sort of burden that will make or break a talented entrepreneur – regardless of how loudly big and little businesses scream and cry “Mommy, make them stop!” It’s the sort of thing, however, that can break the spirit of a party and the possibility of a vibrant American middle class.
There’s this slogan running about on Orange about the Republicans as the “Party of No,” as if the progressive power of “no” were some sort of great sin…
Jon, you use as an object lesson of this post the quote from Rep. Polis that “the unions support the Senate’s plan”. The problem with that is IT’S NOT TRUE. The responses I have seen from major Union leaderships had been that the Senate bill needs to be improved, and that the House plan speaks more directly to the needs of the middle-class. The inference that the Unions are on board with the Senate’s plan is infuriating. Besides lacking good policy and political judgement, Polis also lies here, and Firedoglake is usually much better in sniffing out lies on this subject.
Example: What part of “Trumka: Senate Health Care Bill Must Change To Be Real Reform” does Polis (and Firedoglake) have trouble understanding?
I haven’t seen any major union official endorse the Senate Bill. The premise of the diarist is correct, and one would think a top union official would not be so obtuse as to know it. Source please!
The part where he says that the AFL-CIO will not support any Democrat who votes for the Senate Plan. Oh, wait . . . That’s not in his statement is it?