Tornado Alley (PROG)

[StephanieVanbryce]

Prof. XXXXXXXXX original whine: We are the Super Rich « Truth on the Market:

The rhetoric in Washington about taxes is about millionaires and the super rich, but the relevant dividing line between millionaires and the middle class is pegged at family income of $250,000. (I’m not a math professor, but last time I checked $250,000 is less than $1 million.) That makes me super rich and subject to a big tax hike if the president has his way.

I’m the president’s neighbor in Chicago, but we’ve never met. I wish we could, because I would introduce him to my family and our lifestyle, one he believes is capable of financing the vast expansion of government he is planning. A quick look at our family budget, which I will happily share with the White House, will show him that like many Americans, we are just getting by despite seeming to be rich. We aren’t.

I, like the president before me, am a law professor at the University of Chicago Law School, and my wife, like the first lady before her, works at the University of Chicago Hospitals, where she is a doctor who treats children with cancer. Our combined income exceeds the $250,000 threshold for the super rich (but not by that much), and the president plans on raising my taxes. After all, we can afford it, and the world we are now living in has that familiar Marxian tone of those who need take and those who can afford it pay. The problem is, we can’t afford it. Here is why.

The biggest expense for us is financing government. Last year, my wife and I paid nearly $100,000 in federal and state taxes, not even including sales and other taxes. This amount is so high because we can’t afford fancy accountants and lawyers to help us evade taxes and we are penalized by the tax code because we choose to be married and we both work outside the home. (If my wife and I divorced or were never married, the government would write us a check for tens of thousands of dollars. Talk about perverse incentives.)

Our next biggest expense, like most people, is our mortgage. Homes near our work in Chicago aren’t cheap and we do not have friends who were willing to help us finance the deal. We chose to invest in the University community and renovate and old property, but we did so at an inopportune time.

We pay about $15,000 in property taxes, about half of which goes to fund public education in Chicago. Since we care the education of our three children, this means we also have to pay to send them to private school. My wife has school loans of nearly $250,000 and I do too, although becoming a lawyer is significantly cheaper. We try to invest in our retirement by putting some money in the stock market, something that these days sounds like a patriotic act. Our account isn’t worth much, and is worth a lot less than it used to be.

Like most working Americans, insurance, doctors’ bills, utilities, two cars, daycare, groceries, gasoline, cell phones, and cable TV (no movie channels) round out our monthly expenses. We also have someone who cuts our grass, cleans our house, and watches our new baby so we can both work outside the home. At the end of all this, we have less than a few hundred dollars per month of discretionary income. We occasionally eat out but with a baby sitter, these nights take a toll on our budget. Life in America is wonderful, but expensive.

If our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. But more importantly, what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout.

If these cuts don’t work, we will sell our house – into an already spiraling market of declining asset values – and our cars, assuming someone will buy them. The irony here, of course, is that the government is working to save both of these industries despite the impact that increasing taxes will have.

The problem with the president’s plan is that the super rich don’t pay taxes – they hide in the Cayman Islands or use fancy investment vehicles to shelter their income. We aren’t rich enough to afford this – I use Turbo Tax. But we are rich enough to be hurt by the president’s plan. The next time the president comes home to Chicago, he has a standing invitation to come to my house (two blocks from his) and judge for himself whether the Xxxxxxxxxs are as rich as he thinks.

Above this is Brad Delong's response. It's an excellent response also, hard to beat Michael O'hare's though .. hell they're all good ..... AND btw, We all know who this man is ... Yes, his original post has been taken down .. he said his wife didn't like it .. (I don't blame her) .. but it is still named all over the web as you can see here [ https://www.google.com/search?q=Brad+Delong+on+Prof.+Henderson&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a ] AND that's JUST Brad's replies and postings of Prof. XXXXXXXXXXxxx 's letter ... so ......I feel free in using his name as it is STILL used, in spite of his taking it down
http://delong.typepad.com/sdj/2010/09/in-which-mr-deling-responds-to-someone-who-might-be-professor-todd-henderson.html

.............and here is the one I stumbled upon & posted orginally here on this board ...

Repost: The whining of the rich

by Michael O'Hare - September 18th, 2010

Through Glenn Reynolds, whither I wandered because of Mark’s post about something else entirely, I came upon this truly amazing pasticcio of mendacity, ignorance, and small-minded cupidity. It’s worth a close look because the author is a law professor, not some high-school dropout Limbaugh lemming, and because the tone of entitlement and whining is typical of a fair number of the comments I got on my post about intergenerational equity (and by extension, equity).

Because Obama proposes to let the Bush tax cuts expire only on “incomes above $250K”, I was surprised that Prof. Henderson expected to be importantly worse off under the president’s plan, so I went here and plugged in what seemed to be reasonable numbers. He says his family’s “combined income exceeds the $250,000 threshhold for the super rich (but not by that much)” . I tried $140,000 each for him and his wife, $5000 in charitable deductions, and a 5% mortgage on a million-dollar house, which is what would cost about $15K in property tax per year in Chicago, with 80% 20% down [thanks JHA]: $40,000 per year in mortgage interest.

Under Obama’s plan, his federal tax would be $48,333, and his Illinois tax about $8400 (3% of AGI). Under current law (Bush tax cuts), $55,600 + $8400. Oops; what happened? Obama will greatly ease his AMT hit, and his taxable income is less than the $250,000 cutoff. If all the Bush tax cuts expire, his income taxes will be the same as now, $55,600, again because of AMT changes.

But wait a minute: he says he’s paying “nearly $100,000? in state and federal taxes, not including sales tax; let’s say $95,000. Leaving out his property tax, that’s $80,000 in income tax. How much income would lead to this kind of tax hit? I had to experiment with the calculator a little, but it’s a little less than $170,000 apiece. So his pretax family income exceeds $250,000 by at least $90,000. But this doesn’t include tax-free contributions to their 401Ks: anything they are socking away for retirement adds to his actual income; unless they’re at the $33,000 limit they must just like to pay taxes, or are too stupid to be walking around professing and treating sick kids. So we’re pretty close to $400K gross income, and on top of that their employers are surely putting money into their retirement funds. I guess $150,000 is “not that much” in some circles.

He is also whining about his and his wife’s education loans, $500,000, which are costing them about $50K per year in interest. Let’s just sketch out the family budget here:

Taxes $100,000

Housing* $65,000 mortgage + 15,000 insurance & maintenance = $80,000

Two really nice cars $.70/mile x 15,000** miles = $10,500

Student loan payments (20 year amortization at 10%) = $60,000

*Why a couple with a half-million dollars of debts decides it needs a million-dollar house in Chicago, where the Hyde Park average price ” near their work” is a third of that, is not entirely clear. Also note that $25,000 of this is going into their own pockets, building equity in their house.

**They live near their work, so this is probably generous.

This leaves about $90,000, a lousy $245 a day, for food, clothes, vacations, cable TV, and like that. You can walk into Nordstrom’s on Upper Michigan and spend that in a minute, and for stuff you really need. Really, I don’t know how these people get by; their adaptive skills, economical habits, and modest living style is an inspiration to all of us. Perhaps they are careful to tip no more than 15% at the Sizzler when they splurge.

So how does our third-of-a-million-a-year law prof/doctor couple and their three kids, barely scraping by already and falling before our eyes to the very bottom of the top 1% of US families by income, make out under Obama’s rapacious soak-the-rich commie attack on all that is holy and American and fine? Wait for it; take a guess

His taxes will go down $3700; he can buy one of those ties every two weeks! And this guy is threatening to fire the gardener and the house cleaner, take the kid out of art class, turn off his cell phones, and try to raise competent adults with only basic cable. Prof. Henderson, I’m ashamed to share my profession with you.

Henderson’s lying isn’t limited to misrepresenting his income and what the Obama tax plan really means for rich people like him (though I wonder if he actually knows what any of the numbers in his family finances really are). He also blithely says ” The biggest expense for us is financing government.” No it isn’t: their biggest expense, and it’s three times larger, is financing their private consumption. Any budget can be sliced up so the piece you want to look big is the biggest; Henderson is obviously dividing his private expenses up like the budget I constructed above, but choosing not to divide his public expenses into, say: education, policing, national defense, fire protection, keeping his street paved, subsidies to corn farmers and oil companies, etc. etc. If he did that to “financing government”, his largest expense would certainly be his housing. This is a familiar trick, but no less disreputable for that.

The next time you come upon a Chicago law professor in his scuffed Gucci loafers and tattered Armani on the sidewalk, holding up his libertarian down-with-government sign and shaking his tin cup to get his doctor wife and hollow-eyed waifs through another tough week in their million-dollar hovel, please don’t just walk by. Remember, it could be you. Be a mensch: throw a nice shiny 3/8? washer and couple of nickel slugs in there, with my blessings.

UPDATE 18/IX: my original calculations of the Obama tax plan effect ignored the deductibility of state income tax.


http://investorshub.advfn.com/boards/read_msg.aspx?message_id=54564541

Following up, Krugman wrote this on September 19th 2010. I don't think Prof. XXXXXXXXxxxxxx situation had anything to do with Krugmans column .. although it was fitting ... but aren't all of Pauls columns fitting ? ... ;) anyway, I think so.

The Angry Rich

By PAUL KRUGMAN
Published: September 19, 2010

Anger is sweeping America. True, this white-hot rage is a minority phenomenon, not something that characterizes most of our fellow citizens. But the angry minority is angry indeed, consisting of people who feel that things to which they are entitled are being taken away. And they’re out for revenge.

No, I’m not talking about the Tea Partiers. I’m talking about the rich.

These are terrible times for many people in this country. Poverty, especially acute poverty, has soared in the economic slump; millions of people have lost their homes. Young people can’t find jobs; laid-off 50-somethings fear that they’ll never work again.

Yet if you want to find real political rage — the kind of rage that makes people compare President Obama to Hitler, or accuse him of treason — you won’t find it among these suffering Americans. You’ll find it instead among the very privileged, people who don’t have to worry about losing their jobs, their homes, or their health insurance, but who are outraged, outraged, at the thought of paying modestly higher taxes.

The rage of the rich has been building ever since Mr. Obama took office. At first, however, it was largely confined to Wall Street. Thus when New York magazine published an article titled “The Wail Of the 1%,” [ http://nymag.com/news/businessfinance/56151/ ] it was talking about financial wheeler-dealers whose firms had been bailed out with taxpayer funds, but were furious at suggestions that the price of these bailouts should include temporary limits on bonuses. When the billionaire Stephen Schwarzman compared an Obama proposal to the Nazi invasion of Poland, the proposal in question would have closed a tax loophole that specifically benefits fund managers like him.

Now, however, as decision time looms for the fate of the Bush tax cuts — will top tax rates go back to Clinton-era levels? — the rage of the rich has broadened, and also in some ways changed its character.

For one thing, craziness has gone mainstream. It’s one thing when a billionaire rants at a dinner event. It’s another when Forbes magazine runs a cover story [ http://www.forbes.com/forbes/2010/0927/politics-socialism-capitalism-private-enterprises-obama-business-problem.html ] alleging that the president of the United States is deliberately trying to bring America down as part of his Kenyan, “anticolonialist” agenda, that “the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s.” When it comes to defending the interests of the rich, it seems, the normal rules of civilized (and rational) discourse no longer apply.

At the same time, self-pity among the privileged has become acceptable, even fashionable.

Tax-cut advocates used to pretend that they were mainly concerned about helping typical American families. Even tax breaks for the rich were justified in terms of trickle-down economics, the claim that lower taxes at the top would make the economy stronger for everyone.

These days, however, tax-cutters are hardly even trying to make the trickle-down case. Yes, Republicans are pushing the line that raising taxes at the top would hurt small businesses, but their hearts don’t really seem in it. Instead, it has become common to hear vehement denials that people making $400,000 or $500,000 a year are rich. I mean, look at the expenses of people in that income class — the property taxes they have to pay on their expensive houses, the cost of sending their kids to elite private schools, and so on. Why, they can barely make ends meet.

And among the undeniably rich, a belligerent sense of entitlement has taken hold: it’s their money, and they have the right to keep it. “Taxes are what we pay for civilized society,” said Oliver Wendell Holmes — but that was a long time ago.

The spectacle of high-income Americans, the world’s luckiest people, wallowing in self-pity and self-righteousness would be funny, except for one thing: they may well get their way. Never mind the $700 billion price tag for extending the high-end tax breaks: virtually all Republicans and some Democrats are rushing to the aid of the oppressed affluent.

You see, the rich are different from you and me: they have more influence. It’s partly a matter of campaign contributions, but it’s also a matter of social pressure, since politicians spend a lot of time hanging out with the wealthy. So when the rich face the prospect of paying an extra 3 or 4 percent of their income in taxes, politicians feel their pain — feel it much more acutely, it’s clear, than they feel the pain of families who are losing their jobs, their houses, and their hopes.

And when the tax fight is over, one way or another, you can be sure that the people currently defending the incomes of the elite will go back to demanding cuts in Social Security and aid to the unemployed. America must make hard choices, they’ll say; we all have to be willing to make sacrifices.

But when they say “we,” they mean “you.” Sacrifice is for the little people.

http://www.nytimes.com/2010/09/20/opinion/20krugman.html?_r=1&src=me&ref=general

no wonder they hate him so much. truth tellers are always despised and shunned.