March 2, 2009
THE DOW-JONES INDUSTRIAL AVERAGE since the passage of the stimulus bill. Looks like a vote of “no confidence” to me.
UPDATE: Can you say “going John Galt?” Upper-Income Taxpayers Look for Ways to Sidestep Obama Tax-Hike Plan. “A 63-year-old attorney based in Lafayette, La., who asked not to be named, told ABCNews.com that she plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law. So far, Obama’s tax plan is being looked at skeptically by both Democrats and Republicans and therefore may not pass at all.”
But wait, there’s more:
Dr. Sharon Poczatek, who runs her own dental practice in Boulder, Colo., said that she too is trying to figure out ways to get out of paying the taxes proposed in Obama’s plan.
“I’ve put thought into how to get under $250,000,” said Poczatek. “It would mean working fewer days which means having fewer employees, seeing fewer patients and taking time off.”
“Generally it means being less productive,” she said.
“The motivation for a lot of people like me – dentists, entrepreneurs, lawyers – is that the more you work the more money you make,” said Poczatek. “But if I’m going to be working just to give it back to the government — it’s de-motivating and demoralizing.”
Via Doug Bandow, who comments: “Now that’s going to help us get out of the recession! Punish hard-working professionals and convince them to cut back services for the rest of us. Great thinking Mr. President. Or, to paraphrase George W. Bush: Heck of a job, Barack!”
ANOTHER UPDATE: Reader Jorge Gonzalez writes:
I don’t make enough to put me in the $250K+ bracket that Obama will be targeting. Despite that, I am doing everything I can to lower my tax footprint by maximizing my 401K contributions and perhaps working less overtime at work. I simply do not want to work harder so I can fund these socialist programs that will damage our economy.
Considering what others in the targeted $250K+ bracket are planning on doing to decrease taxable incomes, the Obama economic plan is looking much much worse by the minute!
When you punish the productive, you get less productivity. Meanwhile, reader Brad Bettin writes:
The problem with changing behavior to get below a certain threshold is the politicians will simply lower the threshold. It’s bad economics, but the politicians don’t understand (or particularly care) about economics.
The bigger problem is the underlying narrative – Obama, et al. are selling the mindset that high earners are bad Americans who should be treated as such.
There’s a reason your Lafayette, Louisiana attorney didn’t want his/her name used …
It’s true that they’ll lower the threshold, but the more they do that, the worse their “tax the minority to feed the majority” plan works. To raise enough money to fund his plans, Obama will have to tax ordinary middle-class folks heavily. By accelerating this trend, those who avoid the higher brackets bring about a political reckoning sooner. Will Wilkinson has some related thoughts.
I’ll just add that to the extent the withdrawal of high-earners pushes markets down, it inflicts a lot of pain on non-rich demographics via declines in 401(k), IRA, 457, 403(b) accounts, etc. This is likely to lower satisfaction with Obama, too.
MORE: The Obama bear market?
STILL MORE: Reader Neil Sorens writes:
I have a friend in Denmark who tells me that workers there don’t especially value pay raises because they’ll lose 70% to taxes. Instead, their preferred bonus is extra vacation time, as the government can’t claim 70% of that (yet).
Me? I’ll probably go back to school and ride out the recession with education entitlements instead of doing anything productive. The best way to fight entitlement programs, after all, is to bleed them dry instead of feeding them.
I wonder if our intrepid social engineers simply don’t understand basic human behavior and the correlation between productivity and quality of life, or if they simply see economic equality as a more noble goal for society than high quality of life.
Economic equality, political power, whatever.
Plus, “take this TARP and shove it.” “The markets are of course imperfect, but they offer a rough means of distinguishing between the disease and the cure. Obama isn’t responsible for what happened before he got elected (except, of course, to the extent that he bears responsibility as a Senator). But the Dow stood at 9,625 on Election Day. I don’t see how what has happened since then can be seen as anything but a vote of no confidence in Obamanomics, both as projected during the campaign and as implemented since Obama’s inauguration.”
MORE STILL: The Dow Jones Limbo Dance.
Plus this: “Maybe the Dow will rally tomorrow, and here’s hoping it does. But so far the markets have greeted Obama’s program with a resounding thud. . . . Obama is temporizing with his financial crisis in favor of moving quickly on his big spending plans, and watching the Dow trip steadily downward by the day. It’s as if FDR skipped the bank holiday and focused first on passing the CCC. The last day before Obama was inaugurated, the Dow was at 8,281. Today, it closed at 6,763. Two political points: 1) Every day the markets continue to slide, it makes it harder on Obama to blame the mess on President Bush and forswear any responsibility himself; 2) if I were Eric Cantor or John Boehner, I’d be talking about a ‘real recovery package’ every day— payroll and corporate tax cuts, regulatory reforms for the financial and auto industries, relief for small business. None of it is going to pass, of course, but it will dispel the idea that they aren’t for anything and show they are zealous about trying to check the economy’s downward slide.”
And Donald Sensing observes: “One thing I am convinced of. I am now 53, and I will not see for the remainder of my life the value of my house return to the level that identical houses in my neighborhood were selling for in 2006. Once the present administration gets through socializing the economy of this country, I am far from convinced that the DJIA will return to its previous peak, or even close to it, during my lifetime.”