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The Tired Donkey

Cocktails, Apple conundrums, taxes and other assorted stuff

Tired Donkey

The Tired Donkey

Sitting Donkey
The Tired Donkey blogs about cocktails, ways to get the most out of your Mac at home, work, college . . . wherever. He used to write about the unending abuse suffered by the 51% of Americans who actually pay the federal income tax. But this became too depressing, and, frankly, no one wanted to read it.

Nevertheless, if you came here looking for the Tired Donkey's brilliant analysis of our dim-witted tax system, you can still find his earlier posts. Just check the archives or the
Site Map.

Note: The Tired Donkey is not advertiser supported, and he gets no benefit from any product mentioned on his site.

The Tired Donkey

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Magical Bearded Gnome

Magical Bearded Gnome Tells More Lies

Reisch with Lancaster
Robert Reich, Magical Bearded Gnome and former Clinton Administration Secretary of Labor, told lies on the radio again yesterday, and the Tired Donkey—though he has no animosity toward magical bearded creatures in general—feels compelled to expose those lies. Are the lies tax related? Please allow the Tired Donkey to avoid the question; he believes he could construct an argument that they are, but he does not feel like going through the exercise. Instead, the Tired Donkey asks his readers to indulge his inability to resist engaging in battle with Magical Bearded Gnome Reich.

As most of you should be aware, the
Employee Free Choice Act was re-introduced in both the House and the Senate a few days ago. The Tired Donkey will not spend time attacking the ridiculous name of the Act, but will not use that name as it is very misleading; the Tired Donkey prefers to call this piece of legislation the Worker Intimidation at The Hands of Organized Union Thugs Act (“WITHOUT”) and will do so from here on. The WITHOUT Act would revise key provisions of the National Labor Relations Act, the 1935 law that established a federal right for workers to organize into labor unions and set out the procedures to be followed to establish such organizations.

One of the things the NLRA does is describe how a non-union workplace becomes a union workplace: (1) >50% of the workers sign a membership card with a union, (2) if the employer refuses to recognize the union (as is usually the case), a secret-ballot election is held, and (3) if >50% of the workers vote for the union, there is a union. The WITHOUT Act changes this to nothing but (1). Why is this a bad thing? Because it opens the door to massive intimidation of people who don’t really want a union. Today, employees often use their secret ballot to vote
against a union. This means—in case you weren’t following along—that >50% of the workers signed a union card, but when they had the election, they voted against the union. This happens for reasons the Tired Donkey thinks are obvious, but he will share them with you just to be sure you get it: the workers feel compelled by union thugs to sign union membership cards, but when they get the protection of the secret ballot, they are able to vote their conscience. Hence the name of the WITHOUT Act: it gives you a union without the protection of a secret ballot vote.

And here, in case you were concerned that the Tired Donkey had forgotten, is where we get to the lies of Magical Bearded Gnome Reich. In his little Marketplace piece, he asserts that “the most important feature of” WITHOUT is that it strengthens penalties against employers who intimidate union organizers. This is
tripe. While WITHOUT certainly does this, if that is all it did—or even the most important thing it did—it would not be very controversial. It is controversial because it seeks to eliminate the secret ballot from the organizational process. But the Tired Donkey understands why Magical Bearded Gnome Reich says what he says: MBG Reich is a shill for organized labor, and they want to pitch WITHOUT as a worker protection act when it is, in fact, exactly the opposite. The Tired Donkey urges you: don’t be fooled by the lies. Back to taxes tomorrow.
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Magical Bearded Gnome Declares Reaganomics Dead

Reisch with Chuck Mod
Robert Reich, Magical Bearded Gnome and former Clinton Administration Secretary of Labor, declared on the Marketplace Morning Report today that Reaganomics is dead. It has, apparently, been supplanted by Obamanomics. Magical Bearded Gnome Reich is crafty with his use of statistics, but the Tired Donkey urges you not to be fooled. Magical Bearded Gnome Reich uses two faulty assertions as his central thesis: (1) that the Reagan tax cuts of 1987 began a period of relative wealth transfer to the already-wealthy at the expense of the poor and middle class, and (2) that deregulation is bad. The Tired Donkey disagrees with both, and he will now explain why; what he is about to tell you will make some of you mad. Too bad.

President Reagan’s policies which both flattened the tax code and championed deregulation were proper and ushered in a long era of prosperity. Unfortunately, the people who championed Reagan’s ideas after he was gone were idiots, and
—as idiots often do—they carried things too far. There was too much regulation in the 1970s. The Tired Donkey can’t even locate a Stockholm Donkey who argues otherwise. The problem came later when dim-witted Republicans began arguing that constant deregulation is a good thing, an idea so dumb that only people running for elective office could champion it. Allow the Tired Donkey to state the obvious for a moment: too much regulation is bad and so is too little. That is a piece of why we are in the mess we are in right now. But there is another piece to this puzzle, and the Tired Donkey will now return to the tax question.

You may find yourself asking, “Tired Donkey, if Magical Bearded Gnome Reich is wrong, what did cause the wealth transfer and the terrible economic state we are in right now?” Here is the answer:
changes in the treatment of capital gains. As you can see at the link, in 1997—during the Clinton administration—the capital gains tax rate changed dramatically. Prior to 1997, capital gains were taxed as about the same rate as other income; after 1997—particularly for donkeys who made enough that most of their income was taxed at the highest marginal rate—the gap between long term capital gains taxes and the highest marginal tax rate was as high at 19.6%.

Now donkeys are not idiots, at least not most of them. So what did they do? They began shifting all the income-making activity they could into the stock market. And they were willing to take big risks to do it because a 19.6% tax gap can cover a lot of risk. This activity led to (1) the wealthiest of donkeys being taxed at rates much lower than the less well-healed donkeys; (2) the incredible stock runs of the past ten years; and (3) the long-term trend of the rich donkeys getting richer (which—were it not caused by stupid tax polices that messed up the country—would be fine with the Tired Donkey). And so—at the risk of alienating his readers—the Tired Donkey will once again state the obvious:
a tax incentive to take obscene risks in the stock market combined with deregulatory zeal beyond all reason will lead to disaster. So here we are. And here is what is going to make you mad: the Tired Donkey declares that capital gains taxes need to be raised at the same time as the Freeloaders begin contributing to this country again. Don’t like it? Send the Tired Donkey an email; there’s a link at the bottom of the page.
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The Tired Donkey

Sitting Donkey
The Tired Donkey blogs about cocktails, ways to get the most out of your Mac at home, work, college . . . wherever. He used to write about the unending abuse suffered by the 51% of Americans who actually pay the federal income tax. But this became too depressing, and, frankly, no one wanted to read it.

Nevertheless, if you came here looking for the Tired Donkey's brilliant analysis of our dim-witted tax system, you can still find his earlier posts. Just check the archives or the
Site Map.

Note: The Tired Donkey is not advertiser supported, and he gets no benefit from any product mentioned on his site.

The Tired Donkey

Archives