Monday, August 20, 2012

A Response


Patrice over at Rural Revolution has put together a great World Net Daily column about why young people should seriously consider getting a vocational education rather than going into debt for a college degree. Her points are very valid and I happen to fully agree with her. College isn’t for everyone and there are plenty of jobs out there that don’t require a college education and they pay well enough to support a family.

But there are some folks who don’t agree. In fact, there was a comment from “twosidedtruth” that caught my eye. I was going to respond to his/her comment but it got rather lengthy and decided to make it a blog post (The first in over a month).

2-Sided, three points that I'd like you to consider. First, if you look back at the history of the Great Depression you should note that when FDR put in place those high tax brackets on the rich an economy that was showing signs of recovery hit the skids once again. In 1937 the top rate was raised to 79% and the economy plunged as investments dried up in 1938. It took a war to bring about a recovery (although that was artificial as proven by the severe dip after the war).



Secondly, why do you think the USA has been the world’s leading economy for the past century? It certainly isn’t because we govern and tax like our European friends. Our economy has been so strong and led the world because we didn’t punish achiever with huge tax burdens. As a nation we succeeded because we let and encouraged investors to invest. Sure, people made tons of money. But I think we all know that it takes money to make money. The economies of Europe are stagnant because often there is little money left to invest after the governments take their (huge) cuts. If a government takes the money from those who invest, it just begins a vicious cycle. Taking the money discourages investment, and with little to no investment, there is no money to tax.

Third, I don't know why people keep harping on the level of taxes that Mitt Romney has paid. Sure he paid about 14.5% on his income over the past couple of years while many paid at a higher rate. But you do realize that nearly all of Romney's income is investment income which is taxed at a different rate than earned income. And keep this in mind: Romney has already paid earned income taxes on the money that went into those investment accounts. In essence, he is paying taxes twice on the same pool of money. The investment tax rate is lower than earned-income for one reason: to encourage people to invest money. When people invest money, an economy grows. What do you think would happen if folks had to pay a tax rate in the high end? Investment would dry up. Just like Europe.

And I would like to ask you one question. Why is it that folks who talk about paying the fair share don't mention that nearly half of all Americans earning an income DON'T pay any taxes? Even at 14.5% Romney paid more taxes than 50 million (give or take a few million) people in the USA. As someone who pays little to no taxes each year, even I think this is crazy.

Why shouldn't I pay more in taxes? Heck, I use (will use) government services more than Mitt Romney does (will). In some areas we are equal. I drive on the same roads, use the same sewer systems, go to the same National Parks, and many other local, state, and federal programs and projects. But Mitt Romney is not going to need Social Security (although I am sure he will be eligible someday). He certainly won't need to use Medicare or Obama care. But I will use those things as I get older and so will most of us. So why should Romney pay for things he isn't going to need or use? And why should you expect him to pay for things you are going to need and use? Do you ask him to pay for your groceries, or pay for your gas, or pick up your bar tab?

One last thing: I just don't think that the taxpayer picking up the tab for a college education is really going to solve anything (other than the individual debt). If everyone went to school the lack of jobs for graduates is not going to change a thing. I'd be willing to say that it would only make the job prospects for graduates even worse as there would be even more graduates competing for the limited number of jobs. Just because we create more college graduates doesn’t mean there will be a corresponding increase in jobs requiring those degrees. While on the surface, all those countries paying for all college education might seem like a utopian dream, but the reality isn’t as nice as one might think. Young college educated unemployment/underemployment in many European countries is staggering, even worse than the US. In some cases, such as Greece, it is as high as 49% and 46% in Spain. (Source)

Please don’t misunderstand me; a college education is a great thing for many. The unemployment rate for those college educated is around 4.5%. But this too is misleading. I know first-hand of several people who have received college degrees (and not women’s studies, French Lit or other worthless degrees) and cannot find employment that matches their degreed area. Many are working retail. But there are many vocational fields that are always understaffed. While driving a truck might not seem light the best lifestyle a person could have, if you have your Commercial Driver’s License, you are not going to be without a job. And these jobs pay well especially for those with experience. Some companies will pay experienced drivers upwards of $23.00 an hour plus overtime, which is nearly always available. I happen to know some drivers who make over $60,000 a year. Not bad and no college debt.




17 comments:

  1. I agree with what you say about a college education - if everybody is educated, then menial jobs will advanced college degrees. For instance, when the Czech Republic was part of the Soviet Union, advanced college degrees were free and encouraged - so much so, that now to sell eyeglasses to people, you have to have a science doctorate, usually in physics.
    As Patrice is famous for bringing up, Americans need to be willing to do the jobs that exist, not wait and complain until they find the one they want.

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  2. Thank you for your blog post comment to 'twosidedtruth' ... I hope he/she reads it

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  3. Rob, everything you say makes a lot of sense to me and my wife. We're in total agreement, because you're RIGHT. However, as for "2-Sided," I really doubt that he won't misunderstand you. Many of us have managed to see the truth throughout our lives, even with all the liberal conditioning we receive from every direction, many others have not. No doubt 2-Sided's mind is made up. He will only accept the "truth" of total agreement with his ideas and beliefs. Anything that disagrees with him is a lie in his mind. We true conservatives can see the difference between right and wrong. Liberals can see only their own left-slanted outlook on everything. Nevertheless, we keep on trying to get them to understand and realize that they are being LIED to, big time! If we can sway even one person, maybe it's worth all the anguish. But we're up against a huge army of well-trained manipulators and deceivers! All our best. --Fred & Deb in AZ

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  4. Great points. Thanks for taking the time to write! And the other person should always be aware of both "sides" because you can't make any informed decision without knowing BOTH ides. Good thing you are willing to tackle an issue after studying it and giving some very true facts that are glossed over too often.

    Lana

    P.S. Your comment setting with the "robot" detection made it very hard to get this to post. Just so you know! You will probably get more comments without it --- hope I can get this to go through!

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  5. Maybe I read 2sided's comment wrong, but I thought the one point he made about paying an unequal share (30% vs 13%) was kind of valid. If one pays 13% why shouldn't the other allowed to be in the same tax bracket? It seems the people in the middle are stuck with the highest taxes percentage wise because they cannot afford tax lawyers/accountants to find the tax shelters and they make too much money to get the breaks that the lower income folks get. That may be a point of frustration.

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    1. People forget about the difference between taxes on EARNED income and CAPITAL GAINS income. The top rate on capital gains is 15%, but that is AFTER TAX money that is invested. Taxes were already paid on the money invested, possibly at the TOP RATE! Educate yourselves. This "fair share" canard is tearing this country apart!

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    2. So, because someone has already paid taxes on the money they use for an initial investment, they should not have to pay as much tax on additional income made from that investment? By that logic, all of my personal income made after paying my college loans should be taxed at 13%, because the investment I made by paying my college loans has paid off in my current salaried position. My salary is the return on my investment in an education and you claim that investment returns should have a lower tax liability.

      And what if someone takes their capital gains income and reinvests that money? Should the return on that investment be taxed even less than the initial return because it is one more level removed from doing any actual productive work?

      Income is income. It should not matter how it was made. If taxing income is fair then taxing all forms of income equally is the only logical approach.

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  6. Followed the path from Patrice's blog to your post and I agree with both of you.

    Another thing that might be worth mentioning is that Mitt donated 14% of his income (numbers my hubby told me that he read in a report on MR) and that doesn't include his tidings to the church. Puts many of those that are blasting him about taxes to shame.

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  7. Very well written response; thank you for taking the time to post it. I have always found it interesting that people consider college degrees and trade school degrees mutually exclusive. In fact, getting a good job via trade school training and living modestly can be an excellent way to put yourself through college without accumulating debt, and leaves you a solid backup plan should your other aspirations not work out or hit a rocky patch. Just a thought.

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  8. A few years ago our friends had an foreign exchange student from Germany. When he graduated from our local high school he was to return to Germany and complete one more year of high school. He, then would be required (by the government) to enter the military for two years of service. Once finished he would continue is higher education. When I asked what he wanted to study, his reply was "medicine" but that would not be the case. He had been tested as a young boy and his testing indicated that he didn't have the aptitude for studying medicine and would likely be come a teacher like his parents. Even though his heart and desire was in medicine,and would have studied diligently he would not likely be given a chance to follow his dream. What a shame that the government decided early on that he didn't qualify to follow his dream.
    Another student, from China was a talented artist, however his government was paying for him to study engineering and the English language, which he hated, but since the Chinese government was paying for his education he would comply with it. These young men both had dreams in other areas of study, but do to their governments paying for their education they would not be allowed the freedom to choose their own life's path.

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  9. One of the commenters mentioned the difference between 13% and 30% tax rate. If you only look at the surface (or read the DNC talking points), this might seem like a valid arguement. However, keep in mind that Romney, and others living on investment income, have already paid the 30% on the salary he made from which the money that was used for investing came from. In other words, lets say he made $1,000,000 in salary. He paid his 30% in taxes, $300,000. from the reminder he invested in his company and others. From the $700,000 left over, he invested half, $350,000. So now he has made another $1,000,000 and at 14% he paid $140,000. This seems fair to me. If big investors paid earned income tax rates on investment income, investing would dry up. The reason people invest is to make money, plain and simple. Nothing wrong with that. That is how capitalism works. But a side impact of big investors investing is that it creates (or saves to use a DNC term) jobs. Investors invest in a company that wants expand operations. To expand, the company either hires new employees or they purchase new equipment, which the equipment manufactuer has the hire or retain employees to make.

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  10. Another commenter made the point that many governments who pay for education direct people into the areas the government wants them to go in to. The individual doesn't have the choice what they want to study. If the USA starts to pay for college education, could this be far behind? I have no doubt that if the USA paid for education, at some point very quickly after that happened, there would be some newly formed government agency that would tell each person you are going to study medicine, you are going to be a teacher, you are going to be a an engineer, etc. This is a free nation with a promise that we could pursue what makes us happy. If you are told what your career is going to be, how is that allowing you to pursue happiness?

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    1. I'm with the folks who think Romney should be taxed on investment income the same as earned income.

      The tax codes were written by the wealthy to protect their own wealth. The codes need to be completely re-written as far as I'm concerned.

      I have always worked. Often, I have worked outside the home 60 or 70 hours a week. I was taxed on my whole income, not a portion of it. When I was a school teacher and spent thousands of dollars out of pocket for things the school did not provide, I paid sales tax on those items, even though I had already paid my income tax (and property tax). I don't think Romney's income should be any more "protected" from taxation than mine.

      I don't understand the argument that Romney should pay lower taxes because he's not going to need Social Security or Medicare. We pay taxes and we enjoy some, not all, of the benefits they provide. If families were taxed on how much they "used" that our taxes provide, then people with many children would (instead of receiving deductions), pay much higher taxes than people with no children or one child.

      I'm betting that somehow his taxes will be made public and that people will be shocked when they realize just how little in taxes he pays in comparison with us, the once great middle class.

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    2. I'm sure that "somehow" his taxes will be made public. Because he's running against thugs, and thugs will break the law to maintain their power.

      The "once great middle class" is still great. It's the minds of some that have declined.

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  11. I enjoy reading patrice's blog and her weekly columns. I wanted to thank you both for standing up and saying what what is right and countering the constant confusion being pushed onto the American public. I also wanted to add that comparing percentages of earnings paid in taxes is a liberal tactic of hiding the truth about what was paid. When someone like Romney pays a small percentage in taxes, you are talking about hundreds of thousands of dollars that he paid for your benefit. That is a large amount of money so that you could enjoy some form of social service. When someone pays that amount of money so you can have a somewhat better life, they should be thanked, not treated like a criminal.

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    1. Paul, I disagree. This is a country of opportunity. People may choose to go into professions like teaching or firefighting or law enforcement and make a decent living. Some people start businesses, which is riskier but has the potential, with hard work and luck, of making a better living. Some people play the financial game and earn millions. We should all pay a portion of what we make to build out infrastructure and help our communities. To say that the very wealthy should pay a smaller portion of their income than middle class families, many of whom have parents working more than one job to make ends meet, is ludicrous. If you said they should pay the SAME percentage as families who work so hard for their money, I'd disagree, but at least we'd be able to debate.

      You say that Romney paid hundreds of thousands of dollars [in taxes] for my benefit. Bull. He and his companies have probably gotten much more in the way of corporate welfare, subsidies, and "give-backs" from the government (OOPS - I mean our tax dollars!) that I'd bet he hasn't paid even a small portion of what it looks like he's paid when we look at his tax returns. When I go out to dinner, I pay the bill. When he does it, it's a business expense. Ditto vacations. (Oh that's right, I can't afford a vacation, I have to pay my taxes!)

      I hate that the vocal right wing extremists, who claim to be patriots, are acting in ways that will turn this country into a plutocracy. I miss the intelligent debate we use to have in this country.

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  12. The problem that you have now is that honest to Pete Marxists, want desperately to convert our country, way of life, children, absolutely everything into a collectivist/Marxist way of life, with them in control of absolutely everything. Using of course the Marxist's only tools (until latter) of lies, propaganda, fear and indoctrination.

    But it's not a conspiracy, or plan, or anything like that. Even if you can show them actually doing it on video with sound......

    Of course it can't be true because the media don't report any of it, right? Of course those who write articles/rebuttals/opinion pieces parroting the Marxist talking points couldn't be anything but fine upstanding, truth seeking people without an agenda, right?

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