Monday, September 26, 2011

Perspective and Conversation

I am prone to flying off the handle and producing some towering rants on the matter of political sheistiness, usually that coming from the right because frankly I think they are wrong about the way we should be governed, but the left doesn't get all the way off the hook either.  However, I always make a conscious effort to calm down in reasonably short order, and it's because of statements like this little nugget from Rep. John Fleming (LA):

‎"By the time I feed my family, I have maybe $400,000 left over."

On its face, this looks like a supercrappy "let them eat cake" type statement, as Dr. Bill pointed out on Facebook.  However, Dr. Bill offered this observation in reaction to my commentary, that being that this may not be said so much out of cold-heartedness as of ignorance, much as Marie Antoinette's famous line likely was (if she said it at all, over which there is some debate).    For the sake of discussion, let's look at the whole exchange, which is available in video here.

Chris Jansing: With all due respect, Congressman, the Wall Street Journal estimated that your businesses,  which I believe are Subway sandwich shops and UPS stores - very successful - brought you last year over 6 million dollars.

Congressman Fleming: Yeah, that's before you pay 500 employees, you pay rent, you pay equipment, buy food...the actual net income of that was actually only a mere fraction of that amount."

Jansing: So you're saying that if you have to pay more in taxes you would get rid of some of those employees?  These are not as successful business as one would want to indicate?

Fleming: I would say that since my net income - and again that's the individual rate that I told you about - the amount that I have to reinvest in my business and feed my family is more like $600k of that 6.3 million, so by the time I feed my family I have maybe $400,000 left over to invest in new locations, upgrade my locations, buy more equipment and all of that.

Jansing: You do understand, Congressman, that the average person out there making 40, 50, 60 thousand a year, when they hear that you only have $400,000 left's not exactly a sympathetic position.

Fleming: Well again, class warfare has never created a job, and that's people that will not get jobs.  This is all about creating jobs Chris, this is not about attacking people who make certain incomes. You know, in this country most people feel that being successful in their businesses is a virtue, not a vice.

Boy, lots to unpack here.  

So first of all, the reason that comments like this prompt me to calm down when I'm angry is that I'm pretty sure Fleming is speaking here out of ignorance rather than any kind of mean-spiritedness.  I'm guessing that he thinks $400,000 is obviously a meagre amount, and does not question his decision to bring this up.  Here are the principal problems with his statements.

  • By his own math, Fleming is taking about $200,000 to feed and support his family.  About 30% of Americans live below the lowest tax bracket, which kicks in around $20,000.  Fleming is opting to take about ten times what a significant proportion of the US population must live on to support his family.  I don't begrudge him that, but I do think he should avoid acting like he's scraping by.  $200,000 is certainly making good money; his family does not need to worry about where their next meal is coming from or about keeping the lights and heat on.  He is a successful businessman.
  • Having $400,000 to reinvest in your business may not be the same as being awash in millions that will allow you to buy your own private army to solidify your market dominance, but it's not doing terribly, either.  What he's actually saying in this exchange is not that he only makes $400,000 a year but that he has that amount to reinvest in his businesses.  If he's routinely getting that amount out of his businesses, he is doing fairly well and is able to sustain his existing franchises and consider expansion.  
  • Lest we forget, his businesses did bring in $6 million.  We can deduce that these businesses would net him a fair amount - maybe not $6 million, but a good solid chunk of change - if he was to sell them.  Not all wealth is completely liquid or completely cash.  These businesses, particularly in their current state as stable enterprises in the black, are assets for Congressman Fleming, even if he cannot go out tomorrow and buy a Lambo with Subway sandwiches.  He is doing fine.
The thing that's most galling to me about this, though, is his closing statements.  In them, he suggests that tax reform is about penalizing certain incomes, and that it views success as a vice.  This is not the case.  What he seems to fail to grasp is that having a business does not entitle you to some exemption from tax liability.  Not every business does - or should - succeed, and not every business should - or does - make massive profits.  You do not gain a higher moral, social or political status by being daring enough to start a business, nor by creating a successful one.  What people calling for tax reform - particularly for taxing the rich - want is for everyone to pay their fair share, whether they own the business or are employed by it.  It is that simple, and I hope that Fleming and his ilk can understand it.

No comments:

Post a Comment