Who Pays?
Financial advisor Mike Donahue writes in the WSJ that he mowed lawns as a kid, shoveled snow, had a paper route, sold sandwiches, and cut up dead trees to sell firewood. He graduated in '83, then worked for commissions, putting in many 60 to 70-hour work weeks. He says the first 20 years were tough, but it's starting to pay off -- and now he's being taxed like crazy:
Why then does the government feel so entitled to take my money and give it to others? Why should I have to carry so many people on my back? Call me cruel. I don't care. I give to whom I choose--but since so much is confiscated (and wasted in the process) I have little left I wish to give.During the 1990 recession I could have qualified for state and federal assistance, but my wife and I managed to get by as she worked nights while we juggled our infant daughter between us. It was hard. However, it never occurred to us to take from others to subsidize our shortage. It's not our way.
Life is hard. You learn when you fail and you make changes when things hurt. Why then is the liberal agenda trying to make sure nobody feels any pain? And why does the government feel so entitled to steal from many in order to give it to others. What has happened to personal responsibility and accountability?
My patience and pocketbook are reaching the breaking point. I am not for equal outcomes regardless of effort. I'm tired of being the mule. Maybe I will quit and live on the dole for awhile. I probably even have enough health issues to join the one in seven adults categorized as disabled. I've been poor and I'm not afraid to go back.
Remember it was social mobility that made America great--the ability to earn and get ahead. If Congress continues to buy votes at the expense of social mobility we will no longer be a great nation. The truly rich will stay that way but many "Henrys" (high earners, not rich yet) like me will quit. We may be only a small percentage of the population but we pay a large portion of the taxes and employ many. If you take the incentives away you will lose Henrys.
Sounds like he's about to "go Galt."
Since various people are contemplating attacking retirement accounts in order to satiate the government beast, I'm going to start using the money I normally contribute to retirement to pay down my mortgage instead. Heh.
mpetrie98 at April 16, 2010 1:13 AM
Quit - or emigrate. Pick a country with politics you like better. Many Americans have emigrated to Asia, to Central America, to Europe or elsewhere. Don't be the "ugly American" - be willing to integrate, learn the local language and customs, start a new life.
Of course, the IRS claims the right to tax you anyway; the US is the only Western country (very possibly the only country) that taxes its expats. If you like where you are living, you can get local citizenship, hand in your US passport, and tell the IRS where to stuff it.
Come on in, the water's fine...
bradley13 at April 16, 2010 2:24 AM
Is there still an ability to earn and get ahead? How many successes of the American Dream are there currently alive? Seriously.
Patrick at April 16, 2010 4:47 AM
I hear ya Mike. I hear ya.
Sabrina at April 16, 2010 4:49 AM
Whine, whine, whine.
This guy just sounds like a complainer with a very superficial grasp of the situation. Nothing groundbreaking here
Shannon at April 16, 2010 4:52 AM
"This guy just sounds like a complainer with a very superficial grasp of the situation. Nothing groundbreaking here"
All he needs to grasp is that he is working for nearly half the year to give the government money that is then handed out to other people. Add to that utility fees, sales tax, gasoline tax and the rest. It is already too much and with the debts that Obama is racking up it will only get worse.
The trouble with socialism is that you eventually run out of other people's money. - Margaret Thatcher
This guy is one of the people whose money is being tapped, and he's sick and tired of it. More power to him.
bradley13 at April 16, 2010 4:59 AM
People in California, for example, don't get it. When they vote in all sorts of boondoggles, the money doesn't rain from the rafters. Someone has to pay for it. Lots of someones who work hard for their money.
Amy Alkon at April 16, 2010 5:47 AM
What I want to know is WTF are they doing with all the money? Because I look around and see roads with gaping holes in them, miles and miles of ghetto neighborhoods with collapsing houses (my morning commute), crappy schools that don't teach anything... what exactly are they spending the money ON???
NicoleK at April 16, 2010 5:51 AM
One of the more interesting moments in any discussion over taxes and spending is when you ask someone--it doesn't really matter where they stand on things--what the current government "take" of national (or state) GDP is, and what it should be, in their view.
Very few (I am talking one out of maybe thirty or forty) people can give you an accurate answer to the first question. And I have yet to run into a single person who gives me hard numbers regarding the second, in all the years I have asked it. At best I get that taxes should be "more" or "less".
Thereupon the person, rather than analyze the matter in numbers, usually just vituperates about how the rich should pay more, the poor are bleeding us dry, we spend too much on defense, or whatever their particular bugaboo is. The speaker's grip on reality then fades, as the speaker's voice typically rises as he rails on about injustice, unfairness, tyranny or some such.
And I never get answers to the third and fourth questions: (3) Where do governments at all levels cumulatively spend our tax money now? (4) Where should we spend it, in a perfect world?
But to my mind, unless you can provide some rough outline of answers to these questions--i.e. current tax levels (as shown by both GDP measures and progressivity within income bands) *and* current expenditures for different categories of spending--how can you have a strong opinion in favor of changes? After all, the world may be precisely what you want right now, and you would not even know it.
Spartee at April 16, 2010 5:53 AM
Amy Alkon
http://www.advicegoddess.com/archives/2010/04/16/who_pays_2.html#comment-1708777">comment from NicoleKwhat exactly are they spending the money ON???
Pensions for themselves and their fellow government workers. Former police chief Bernard Parks gets $22K a month -- in addition to his salary ($164K, I believe) for being a citycouncilman.
Amy Alkon at April 16, 2010 6:25 AM
The Progressives WANT to lose the henry's. They can't control you if you aren't dependent on them. Why other people can't see this I don't know.
momof4 at April 16, 2010 6:35 AM
Spartee asks good questions. Here are my answers.
1. I'm guessing around 40% for all levels of government together. A bit of googling, and here is the frightening truth 40% for the federal government alone! State and local governments add to the load.
2. A maximum of 10% for the federal government, and another 10% for state and local governments combined.
For the remaining questions, we can debate. I have my opinions, other people will have theirs. Whatever they may be, the first step is to set a spending limit - the government cannot spend more than 10% of the average GDP of the previous 5 years. Given the budget, we can then decide how to allocate it.
bradley13 at April 16, 2010 6:38 AM
"what exactly are they spending the money ON???"
Depends on which level of government you are focused on. It sounds like you are thinking of local and state, primarily. In that case, Ms. Alkon is partly right--salaries and benefits of current and retired workers tend to dominate such budgets, with some states also engaging in some relatively limited income-transfers in the form of social entitlement programs run and funded at the state level.
At the federal level, it is much more an income-transfer-oriented budget, with defense also forming a material (but still a minority portion) chunk.
That is broadly speaking, mind you.
Budgets for almost any government entity in the US are available online. Google the ones you care about and find out.
Spartee at April 16, 2010 6:39 AM
The LW makes a great point. Take away people's incentive (money) away, then why work? Get enough people with that attitude, and who's going to work?
David M. at April 16, 2010 6:39 AM
Interestingly, David, when you posit that simple question to people who support higher marginal tax rates, they scoff, point to Europe, which has higher tax rates in some nations and say, "they still work there!" Same too for some Asian nations.
True. But Europeans work less than we do. And it shows in their nations' relative levels of prosperity as compared to us. Some nations there also face rampant tax cheating, as people opt to do work off the books rather than pay taxes on it.
Moreover, Europe is able to engage in such things thanks to American defense spending and continued innovations, which then diffuse and benefit Europeans, who do not arm themselves or invest in new R&D (IIRC) the same way we do. They prefer to spend that GDP on income transfers instead, forever losing the ROI that would come from not spending the money on leisure.
As the baby boomers age, and seek to continue their consumptive lifestyles, even as they age into lower income brackets, I expect that cohort to start prefering higher income transfers from workers to retirees, like Europe has. You are seeing this already in things like the health care plans of President Obama, which is in the end, simply a plan for healthy (i.e., younger) people to pay more for insurance in order to subsidize sicker (i.e., older) people.
Spartee at April 16, 2010 6:55 AM
Mpetrie98, I already did that, and it's worth it. For years I drank the Kool-Aid that it was always better to invest in the stock market than pay off your mortgage. I started putting money into the stock market through IRAs, 401Ks, Roths, etc., fifteen years ago, and you know how I've made out? I'm ahead less than 500 bucks. The markets are going up right now, but I don't believe it will last. Reason did a story last month, showing that all the growth we had in the economy last year was because of government mortgage bailouts (including first-time home buyer credits) and the cash for clunkers program. You need a strong underlying economy to support a market that is truly getting better and not merely bubbling, and our government has made sure we no longer have a strong economy.
I used to think it was cool to save and invest money - I imagined that someday my money would work for me, so I wouldn't have to. Now I know that the people telling me this were simply selling investments, and the truth is my money will be given to other people. So about two years ago I gave up on all that and started applying every spare penny to the mortgage. Earlier this year, when the markets had finally recovered enough that I was at least broke-even and not underwater anymore, I pulled out the rest of what I needed and paid the mortgage off completely. I also have two years' worth of living expenses in cash.
It's awesome. I have no bills, no debts, no kids, no mortgage, no burdens of any kind. It costs so little to live now, I'm able to make my living as a temp and take two months a year off. This is WAY better than when I was making twice as much money and working 60-70 hours a week. TWO MONTHS A YEAR! Part of that is because I pay lower taxes. I used to pay around $7-$8K a year in taxes, and now it's more like $1-$2K. The difference is enough to live on for two months. Plus I only work 40 hours a week now (all that overtime I used to put in was unpaid) and it's easy work, instead of stressful work. Now you might put up with a little hell during your day if the opportunity cost is that you're giving up the chance to invest money and watch it grow. But that opportunity no longer exists. If I'm wrong about that, I can always start investing again. As it is, I am damn happy to be hedged.
Pirate Jo at April 16, 2010 7:18 AM
>>Quit - or emigrate. Pick a country with politics you like better. Many Americans have emigrated to Asia, to Central America, to Europe or elsewhere. Don't be the "ugly American" - be willing to integrate, learn the local language and customs, start a new life.
>>Of course, the IRS claims the right to tax you anyway; the US is the only Western country (very possibly the only country) that taxes its expats. If you like where you are living, you can get local citizenship, hand in your US passport, and tell the IRS where to stuff it.
>>Come on in, the water's fine...
Good for you, Bradley13. I write from Mexico. You are correct about the arrogance of the US claiming taxes from expats as if they own them.
But, everyone needs to know under current US law, last time I read, if you turn in your passport, all assets anywhere on the planet are subject to final taxation by the USA at that moment. This is extreme arrogance on the order of the Roman Empire.
I participated in a Men's forum for two or three years. My contribution was mostly writing little tales about daily life here in rural Mexico.
The admin within weeks flew to Guadalajara for the weekend to check it out.
A few months ago, he told me that not only is he living in a small rural city in China. But, every other moderator on that board I mentioned is gone, that is, currently lives outside the US. All they needed was the ability to visualize life outside the US and they were gone.
UK census officials have admitted a million male Brits are 'missing'. Even though they already "imputed" nearly a million men, that is, reported they think they are there, they just can't find them, they still know there are a million missing. So, to me it seems rather obvious more like 2 million male Brits are missing.
For 45 years, laws have been passed that are not acceptable to men, yet they are rammed through to get female votes. It is assumed men will keep doing the same things no matter what changes are made. This is not true.
I refer to men, mostly because it is men who benefit most from leaving. Except for Coldfoot, Alaska, there are few places women can go for a better life. Many online reports exist telling about women who expat and simply cannot get dates.
irlandes at April 16, 2010 7:36 AM
Oh, I've thought about leaving, but for me, Canada, the UK and Ireland are pretty much out without a Master's Degree (the economy has killed any job opportunities there) and I don't have the assets to just move over and not work. I've thought about Costa Rica, Belize or somewhere like that but I'm not sure I could find work there, either. The more the government continues to tax the crap out of me to support a bunch of lazy people who have no incentive to get off their asses, the better the chance that I am trapped in this nightmare.
I'm open to suggestions.
Ann at April 16, 2010 7:43 AM
Amy Alkon
http://www.advicegoddess.com/archives/2010/04/16/who_pays_2.html#comment-1708793">comment from AnnFreedom of speech in the USA is unparalleled.
I prefer to stick around and try to change things.
Amy Alkon at April 16, 2010 7:56 AM
I would say that the government should take, all total, between every level, local, state, and federal put together, 25% of a citizen's taxes.
Now of course if a person decides they're going to try to buy a 300,000 home on 30,000 a year income, well property taxes will bury them. But stupid people will always find a way to ruin themselves.
My point is though, that a fixed rate of 1/4 should be the maximum amount allowed to be garnished by taxation, on that amount, it should further be restricted that no government is allowed to pass a budget that is not fundable from the income taken in.
Yes we'll have to cut our defense budget.
Europe, your defense is your responsibility from now on.
Empire is expensive, and ultimately only benefits a relatively small number of the population.
We'll have to start pulling our people out from overseas.
We'll have to start cutting the federal dollars that go to the states. Our states are addicted to getting federal money to support federal boondoggles anyway. When federal money falls into state hands, the state has much less incentive to listen to its own residents when it comes to the educations of the children in that state.
Do a little digging and find out how much YOUR states get from the federal government, and for WHAT. You'll be appalled by much of it.
The federal government is basically buying your states rights. And states DO have rights. The federal authority is not dictatorial, we do not live in an absolutist 17th century French Monarchy.
Start demanding that your state refuse federal money, and when the bribes dry up your rights will start to return, and almost as importantly, the federal budget will start to stabalize.
And yes, we will have to cut social programs, it would be nice if we could help more people out, but the best help is to make sure people can help themselves.
Robin Hood was a thief, a crook, we do not need a Robin Hood government.
Robert at April 16, 2010 8:03 AM
I would like to see the elimination of income taxes, replaced by sales taxes.
If you and I both make $50,000 a year, you might decide to save $10,000 a year for your retirement and I might decide to spend all of my money on a large house or fancy car. You would likely have a comfortable retirement while I could end up living in poverty due to my poor choice. As it stands now, your retirement income would be heavily taxed, while I would likely live pretty well on government programs.
That would also give us a great incentive to work overtime, work toward a promotion or start a business.
I'm a Henry (at least in my opinion) having risen in salary quite a bit in the last few years, but starting over at 43 with nothing after my divorce, so my assets are limited. I'll be working 5 hours of OT tomorrow, but I'll be banking the time to take off this summer rather than taking the pay because I would only get half of it after the government takes it's bite.
Steamer at April 16, 2010 9:00 AM
"People in California, for example, don't get it. When they vote in all sorts of boondoggles, the money doesn't rain from the rafters."
It's possible that the new computerized voting machines are rigged, which is real easy to do.
Think Diebold.......
So it's possible that they are voting against these boondoggles with the vote counters lying about it.
-------------------------------------------
"What I want to know is WTF are they doing with all the money? Because I look around and see roads with gaping holes in them, miles and miles of ghetto neighborhoods with collapsing houses (my morning commute), crappy schools that don't teach anything... what exactly are they spending the money ON???"
Well, the TARP money went right into the pockets of the major banking executives. Then there's the criminal syndicates which have infiltrated the gov. at certain levels and siphons off funds there. Then, of course, is the standard theft and corruption at the higher levels. Really, they are just stealing approx. 75% of the money you pay, putting it in their pockets and spending only 25% or less on infrastructure. The same thing happens in third world countries............oh, that's where we are headed.
SM777 at April 16, 2010 9:07 AM
Mike Donahue hit on a very real issue here. The government is slowly taking away any incentive to work and earn money. With only 50% of Americans currently paying taxes, it appears to be working.
I've unfortunately seen this in action in my own family. My spoiled rotten niece who has been handed everything on a platter by my sister and her ex got pregnant at the age of 22. When my father (her grandfather) said that she had a responsibility to marry the father of the baby, get a job, and grow up, my niece looked him right in the eye and said "Oh no. I can't get married. Then I couldn't go on welfare". Her boyfriend was an employee of Hilton Hotels, and making an acceptable salary. But they figured out that if they didn't marry, the government would pay for all of their health care, groceries, and subsidize their rent.
So baby was born, and sure enough, we the taxpayers got to shell out the cash for all the health care for both baby and mother, buy groceries to the tune of $200 a week, and pay their rent. This all despite the fact that the father was making over 25k a year and living with my niece and their baby in said apartment. Think my niece made a move in that time to get a job? Har har.
And now the government has extended unemployment benefits for 99 full weeks. Peachy.
I get an itemized bill when I spend money to get my car fixed. I'm starting to think we need to demand this from the government for each individual who files taxes too.
UW Girl at April 16, 2010 9:39 AM
I am 100% in support of a national sales tax. Exempt the same things that states exempt now in food and meds. It also "helps the environment" by encouraging people to reuse and buy used instead of buying new. And each person can choose for themselves how much they want to pay in taxes by the lifestyle choices they make. But it can't be so prohibitively high that the rich just go buy elsewhere.
momof4 at April 16, 2010 10:15 AM
Yeah, before the article's author "shrugs" and takes his ball and goes home (whaaa!), perhaps he should have read the article below before making this statement:
"Remember it was social mobility that made America great--the ability to earn and get ahead."
While I'm sure that in the past, this may have been true, nowadays, um, not so much, in our "beat down economy" that uses so much "guard labor".
http://sfreporter.com/stories/born_poor/5339/all/
From the linked article:
"Again with the numbers:
30
32
The first number is the likelihood, expressed as a percentage, that a child born to parents whose incomes fall within the top 10 percent of Americans will grow up to be at least as wealthy.
The second is the percentage likelihood that a person born into the bottom 10 percent of society will stay at the bottom.
Just to drive the point home, here’s a third number: 1.3
That’s the percentage likelihood that a bottom 10 percenter will ever make it to the top 10 percent. For 99 out of 100 people, rags never lead to riches."
Pete at April 16, 2010 10:50 AM
UW Girl, your niece might as well have made the comment I read elsewhere:
"I am not a big advocate of "planning" children; makes it too business like....like planning out some kind of big financial maneuver or building a big house....so impersonal."
Well, good luck with that ...
Pirate Jo at April 16, 2010 10:54 AM
I'd support a national sales tax, EXCEPT, I would limit it in some ways.
First of all, a national sales tax has a negative impact on sales of goods, so you're immediately cutting demand. Such a tax would have to be minimal in order to minimize the reduction in demand that would mean a reduced level of employment.
Second of all, I would exempt certain items from this list so as to avoid making it a dangerously regressive tax.
I would for example, tax cable t.v. and fast food, but I wouldn't tax food stuffs from a grocery store.
I would tax a magazine subscription, but I would not tax medication.
I would tax a brand new car, but I wouldn't tax a used car or a home.
I would tax any article of clothing that cost over $50, but nothing underneath.
Follow me? The basic necessities of living remain unaffected, so that those who are poor:
A. are less likely to waste money on stupid shit.
B. are still able to afford the basic necessities of life, food, shelter, clothing.
Plus, this means the rest of us, the middle class, can still operate on a budget and "pay the tax" sotospeak, only when we have the disposable income to pay for luxeries.
Plus we could save a bundle ditching most of the IRS.
Robert at April 16, 2010 10:55 AM
Robert, those things are addressed in the book by Boortz and Linder.
"What I want to know is WTF are they doing with all the money?"
My county's School Board put all of it into administration buildings. Administrators are more important than students, you see.
Radwaste at April 16, 2010 12:02 PM
"The government is slowly taking away any incentive to work and earn money."
It's worse than that. Companies are making it harder and harder to actually make a decent living. Too much money is flowing up the "chain of command". So the board of directors make obscene amounts of money while the lay off %20 of their workforce. CEOs can make enough money in 1 year to pay 1 Administrative Assistant for 1,000 years!! Yet these same companies downsize, outsource and pretend that they have to cut costs in order to survive. All this makes it tougher for your average person to make a living who needs more and more education for fewer and fewer good jobs. If you do get a reasonably decent job, it's at risk.
Also - as most managers will tell you, money isn't really an incentive. It doesn't really motivate people the way you think it will.
karen at April 16, 2010 12:35 PM
"Also - as most managers will tell you, money isn't really an incentive. It doesn't really motivate people the way you think it will."
So why are you making such a big deal about it? Give people conch shells and watch them keeping working, right?
0_o
Spartee at April 16, 2010 1:38 PM
Money is the only thing that motivates me to do something that isn't otherwise in my own self-interest.
momof4 at April 16, 2010 2:22 PM
I'm sorry to hear that, Momof4. You're missing out.
NicoleK at April 16, 2010 3:19 PM
Why pay taxes? GE doesn't.
http://money.cnn.com/2010/04/16/news/companies/ge_7000_tax_returns/index.htm?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29
Gog_Magog_Carpet_Reclaimers at April 16, 2010 3:21 PM
I've never read it Radwaste. I'll have to look it up.
I have to say, I REALLY like the idea of an itimized list of where my tax dollars go.
Robert at April 16, 2010 4:40 PM
Not to nit-pick, but "ugly" was a term of affection for the red-headed American in the book.
KateC at April 16, 2010 4:45 PM
I don't live to work, I work to live. And if I can live cheaper, I'll do it and cut down on my funding of Uncle Sugar. The faster we bankrupt this monster, the better.
I predict a lot more disc golf in my future.
As far as a national sales tax goes - not until they repeal the 16th amendment. Otherwise we'll end up with the government getting 30% off the front and another 25% off the back.
brian at April 16, 2010 5:53 PM
What a fucking crybaby.
I recently graduated with a bachelors degree in Finance and Applied Economics from a university that has a top 25 Finance program . But because the economy is so shitty in my state; we have the highest unemployment rate since the state started keeping track, and because I can't afford to move; I'm making $10 in a dead end job.
After Federal income taxes, the state sales tax, and child support for a fraudulently conceived child that I don't get a tax deduction from, I'm left with $12,950 a year to live on. I risked my life by serving in the military and being deployed to the front line during two major wars, so I could get the GI bill, attend a decent university, and receive a career oriented degree. This is the outcome.
On top of all of this, if I am somehow unable to pay my monthly child support payment, for a child that I didn't want, which goes to a woman I hate; I get thrown in the fucking slammer.
Once this blubbering pussy is looking at jail time if a judge arbitrarily deems that he is voluntarily unemployed or underemployed; then I'll give two shits about the unfairness of his financial situation. Until then he can pound broken glass up his cornhole!
Mike Hunter at April 16, 2010 7:53 PM
Hey, Mike. Wow. I'm sorry to hear about your situation. That's terrible. I hope you find a better job soon.
I have mixed feelings about this "injustice" of taxes going to pay for someone else's soft life, to be blunt. On the one hand, it's manifestly unfair, to take from one to give to another. That's a Marxist philosophy.
On the other, left unchecked, I think the obscenity lies on the part of corporations and their vast sense of entitlement. As Karen points out, the salaries paid to the upper levels are obscene.
Salary for Jeffrey Katzenberg CEO of DreamWorks last year was 23.4 million. Let's assume Katzenberg is a koff-koff generous koff-koff guy and his lowest paid employee makes 30,000 a year.
So, Katzenberg makes 780 times as much as his lowest paid employee.
How do you justify that discrepancy? Does Katzenberg work 780 times as hard? Not possible. Did his education cost 780 times as much? Doubtful. Does Katzenberg bring in 780 times as much money to the company as his lowest paid animator? Do any of these factors, combined, amount to 780 times the contribution of his lowest paid employee?
Does he really need 23.4 million to live on?
I don't believe it is realistic to think that if you simply pour your heart and soul into a company and scrimp and scrape to get by, that you'll attain the American dream. I'm sure it still happens, but these are fluke occurrences, not a reward for diligence.
Sure, point to Bill Gates, but let's not forget, he didn't get to where he was by hard work and discipline. He got where he was by theft. He's really not the person to point to as an example of the American Dream.
Patrick at April 17, 2010 4:56 AM
"Whine, whine, whine."
Yeah Shannon these people who whine when others steal their hard-earned money from them continually, can you imagine. Something tells me you're on the receiving side of the theft in one way or another.
Lobster at April 17, 2010 5:35 AM
"Companies are making it harder and harder to actually make a decent living. Too much money is flowing up the "chain of command""
The real reason companies are finding it harder and harder to make a decent living is that more and more of the money is flowing into the hands of bureaucrats ... who incidentally are also the ones conveniently pushing the propaganda that it's the 'evil' CEOs and boards of directors that are causing this.
Lobster at April 17, 2010 5:39 AM
"Also - as most managers will tell you, money isn't really an incentive. It doesn't really motivate people the way you think it will."
Yeah, that's why I told all my employees last year that I would no longer be paying them a salary. Unfortunately it wasn't met with the reaction I expected --- they all quit, every last one of them. I'm quite puzzled by that. I thought they would be intrinsically motivated, and I thought that people were noble and wanted to serve others.
"Companies are making it harder and harder to actually make a decent living."
Why does everyone so blindly assume that 'business owner' = 'automatically rich'? You would be very surprised at how many business owners actually only just make ends meet for themselves, often working at substantially lower salaries than many of their employees, in order to keep things afloat. One reason you don't hear of this is that one of the rules of business is that you have to project an image of success. People often assume I'm rich because I'm a CEO and business owner and employ over half a dozen people in my small business. In fact I make less than half what I would be making doing easier work for someone else, and earn a lower salary than several of my employees. And who gets the biggest cut of what little profit we make? The government. I would easily be able to either pay myself much more or hire several new employees (what I would actually do) were it not for the huge chunks we keep having to give to the government.
And no, I am not the exception. Again, you would be surprised how many business owners are just regular people earning regular amounts. Open your eyes a little and stop blindly believing the propaganda / stereotype of the evil rich executive. Yes they exist, yes there are too many of them, but they are in fact a minority of business owners.
Look around, make friends with some actual real business owners, look closely, see how they really live. It takes decades of hard work to build a business up to the point where it really pays off --- and that's *if* it even does. Probably my business will pay off one day. Probably I will be an old man by that time.
Lobster at April 17, 2010 5:49 AM
"For years I drank the Kool-Aid that it was always better to invest in the stock market than pay off your mortgage"
Heh ... as a general rule, you will be paying more in debt costs on things like mortgage loans (and worse, credit card debt) than you will get in interest earnings from any non-high-risk investment (and you should only gamble fully disposable income on high-risk investments). In other words, it's generally always better, as you've now learned, to try pay off your debts first (or get them much lower) - paying off what may seems like very small amounts early on can lead to very big savings down the line (thanks to how compound interest etc. works). It seems like common sense but most people don't realise this. Pay off things like your car and home as quickly as possible; once you're no longer "bonded" by debt (in the old-fashioned sense of the word) you can actually start putting away for yourself.
Lobster at April 17, 2010 6:17 AM
Lobster - we're not talking about your small business. I am a CEO too...for a teeny weenie little company. Hon - we are talking about the real companies out there. The ones that make real money. Not you and me. We are just average schmucks. Obviously you pay your employees...but let me tell you - if you treated them like crap they wouldn't stay so obviously, as I said, it's not just the money that motivates them
Patrick sees what I am talking about. Companies like Dreamworks pump millions of dollars up the chain of command and then claim poor and layoff or outsource. Then the employees left are doing the jobs of everyone that are gone. I think it's a big problem...but then again I am no friend of very large, global corporations. I think that they are as corrupt as the government, even more so.
karen at April 17, 2010 6:38 AM
Karen - you'd do well to note that the majority of those multinational megacorps give money exclusively to the Democratic party.
The reason is left as an exercise for the student.
brian at April 17, 2010 7:16 AM
For our rather small mortgage, with a low (below 5%) interest rate, every dollar we spend on our mortgage saves us right at $1 in interest. Not many things give you a 100% return like that. We pay extra every month and are on track to pay it off in 20 years (it's a 30 year loan). As we can pay more, we will. The only money we invest is the 7.5% we have to put in out 401k to get the full company match. And that is well diversified. And finally going up a bit after losing 2/3 of it's value.
momof4 at April 17, 2010 7:47 AM
I'm emigrating this summer. My husband got a job in Switzerland, where professors are paid enough to live on a single salary. Since we're having a baby (assuming no tragedies between now and October, knock on wood), I won't be working at first. We will file separately, since he's not a US citizen, and so the whole Americans being taxed abroad thing won't apply as I won't be earning enough money.
We will have good schools, free university for our kid, and lower taxes. The roads are even smooth, there's great public trans and the country is clean! (Thank you gnomes of Zurich!) The catch is if our kid is a boy he will have to do military service. Since Switzerland doesn't regularly go attack other countries, I'm not terribly worried.
It's a very regulated country, though, so Amy wouldn't like it. Too many rules for her. Everything in life is a trade-off.
So, yay ex-pats!
Wasn't there someone else on this board living in CH?
NicoleK at April 17, 2010 7:59 AM
"Does Katzenberg bring in 780 times as much money to the company as his lowest paid animator?"
Probably he does, yeah.
"Does he really need 23.4 million to live on?"
Doubtful, but there are people in third world countries who are probably asking if you really need $7.25 an hour to live on.
I don't understand the hate towards high-paid CEOs. The company and the stock holder pay them that much because presumably they think the individual and their contributions is worth it. Certainly some people have abused the system with a combination of incompetence and golden parachutes, but overall the whole thing strikes me as envy disguised as rage at easy targets. It's class envy and it's an ugly impulse.
"32 . . . the percentage likelihood that a person born into the bottom 10 percent of society will stay at the bottom."
So they've got a 68% chance of making it to a better station in life. That's not bad. I imagine the number would be dramatically improved if we taught basic economics and debt management in high schools. Kids learn economic habits from their parents, if their parents aren't good with money likely the kids won't be either.
I'd be very interested to see what the numbers are for other countries. 32% is kind of meaningless without something to compare it to.
Elle at April 17, 2010 9:41 AM
No, he doesn't. Don't be ridiculous.
They wouldn't ask that if they had any idea what our overhead is. Property taxes, food, clothing, shelter, whatever it is we need to have to do our jobs, etc.
Patrick at April 17, 2010 11:02 AM
"32 . . . the percentage likelihood that a person born into the bottom 10 percent of society will stay at the bottom." they've got a 68% chance of making it to a better station in life. "
Yep. I dare anyone to name a country with a better chance of improving yourself. Go on. Try. I've got all afternoon, the kids are at a party.
My DH was raised dirt poor by an uneducated military dad. DH joined the military, let them educate and train him for a good job, then joined a good company when he got out and worked his ass off. Now, in his mid-30's, all his friends are just amazed at his "overnight success". Um, no, he's been working on that success 17 years now. Working hard, a heck of a lot more than 40 hours a week.
Patrick, they would ask how on earth a person could spend that on housing, cars etc. They would not understand you "need" it. People "need" what they are able to command on the job market. If you aren't worth much, and other people think someone else is, that's not their fault. Don't get me wrong, I think that CEO's are paid obscenely, but I have no intention of letting the government tell them they can't make it, because I don't want the government telling me what I or DH can earn, either.
momof4 at April 17, 2010 11:55 AM
"Probably he does, yeah.
No, he doesn't. Don't be ridiculous."
Do you know how much an individual animator contributes to a finished film? If a animator could crank out 25 frames a day (one frame every fifteen minutes for an 8 hour work day - probably doable for Spongebob, but not for a Miyazaki film), over the course of six months of animation he'd contribute about 2.5% of the 140,000 frames needed to make a 90 minute film. That's just the frames. That doesn't count the parts of animation like storyboarding, background art, pencil tests, painting, and shooting the cells.** And that's just the animation, it doesn't include voice work (expensive with big name stars), soundtrack with full orchestra (expensive with licensed songs), foley, editing, writing, directing, or infrastructure. A single animator's contribution to a movie's profit is minimal.
Now, what draws people to see a cartoon like Shrek? Popular voice actors, a director they like, an appealing story, or a marketing push that draws in the kidlets. These are all things that the CEO would be involved in (maybe not the writing directly, but putting out only 1 big cartoon a year you bet the CEO has a hand in figuring out just which one it will be). As well as getting distribution for the film across the nation. There is a reason 9 made more money as a feature length film with nationwide distribution than it did as a very well animated short. In short, being able to pull the pieces together and knowing how to do it brings in more money than drawing 3,000 frames. Quite possibly 780 times more.
Incidentally, average animator salary in the US is 51,000.
**That's for traditional cell animation. CGI is different but I don't know the breakdown as well. Animation there might not have Ink & Paint, but it does have software development and debugging, lighting, animation fixers, and texture artists.
Elle at April 17, 2010 1:11 PM
The rage at the pay of CEOs is because of the widening gap between the rich and the poor. Costs of living are much higher now. Yes, we can buy more electronic trinkets, but the costs of the basics... housing, food, etc are going up at a much higher rate than salaries. So CEOs are perceived, rightly or wrongly, at getting all that money at the expense of the poor and middle classes.
Don't forget, we need poor and middle class jobs... we need janitors, gardiners, doctors, lawyers, teachers, nurses, electricians, etc. I think that there is a lot of anger because the quality of life of people who hold those jobs is going down, while the rich are getting, well, richer. The Wall Street crisis hasn't helped the rage.
NicoleK at April 17, 2010 1:31 PM
Amy Alkon
http://www.advicegoddess.com/archives/2010/04/16/who_pays_2.html#comment-1708988">comment from ElleA single animator's contribution to a movie's profit is minimal. Now, what draws people to see a cartoon like Shrek?
It starts here, with the writer, my friend Terry Rossio.
http://www.wordplayer.com/
Amy Alkon at April 17, 2010 2:27 PM
Thanks for the link Amy. That's a really cool site.
Elle at April 17, 2010 7:11 PM
Terry's not only very interesting and talented, but a great guy, and has been very generous about helping people learn to write.
Amy Alkon at April 17, 2010 9:04 PM
" ... you should only gamble fully disposable income on high-risk investments"
I completely agree. I wish I had known this back when I was 25 years old and starting my first 401K. All the financial advisors said that since I was young, I had a lot more time to take on more risk. I was told to start investing in the riskiest things the stock market had to offer and then gradually move investments into lower-risk stuff later in life, when I got closer to retirement.
I don't think these people were trying to make me lose money. I think they were trying to make themselves rich, and that many of them truly believed the economy would grow and get better over time. Back then, maybe this was a reasonable assumption. Although even back then, what did we think would happen when Social Security and Medicare went bankrupt? We knew it would happen, it was just a matter of when.
The amount of money I can make at any given temporary assignment varies somewhat. The higher-paying ones leave me with more money left over at the end of the month than the lower-paying ones. What will I do when I get to the end of a high-paying gig and have a lot of money left over? Invest it? Mmm, probably just take more time off before starting the next one. I am 40 and assume I will work until at least the age of 70, maybe more like 75. I'm fine with that. But that's 30-35 years from now. I'm going to take at least the next 15 and enjoy all the time off I can afford. Do some cycling tours while I'm still young and healthy.
Maybe during the next four years we will see a huge turnover in government, and our economy can finally be freed from its shackles. If not, life is going to suck bad enough in my old age without me worrying about it and not enjoying my life now.
Pirate Jo at April 18, 2010 5:50 AM
You and me both, Jo. I'm going to be working on eliminating all of my debt over the next couple years, and then it's minimalist city for me unless there's some major change in DC and Hartford.
brian at April 18, 2010 6:25 AM
I'm one of those upward-mobility data points. My grandfather worked in a cotton mill and lived in a company-owned house in a mill village. Just two generations removed, I'm an aerospace engineer who has worked inside spacecraft and trained astronauts. My lovely bride's grandfather was a coal miner, and when she was young she lived in a house with no indoor plumbing. Now she's the regional manager for a medical lab company. We live in our dream house on top of a mountain with a fantastic view of the city. I got no complaints on the upward-mobility score.
It's interesting to me that people who complain about CEO salaries never have anything to say about the amount of money made by politicians, athletes, and movie stars. Lots of these people make far more money than most CEOs, and they do a lot less work for it. Isn't Al Gore a billionaire now? Does he really "need" all of that money?
Cousin Dave at April 18, 2010 7:55 PM
When it comes to CEOs I think of were I last worked. We were a small company at one point but had some major investors. The CEO actually knew what the company did. He was not very good but at least he was involved. We made ridiculous amounts of profit - particularly the part I worked in. The CEO made in the 250K - 500K a year range.
We got bought by a bigger company. The CEO probably isn't even aware we existed. The CEO of the larger company made a ridiculous wage - over 20 million a year. Yet provided zero benefit to us - this was is guidance in total to our sub-company (~2000 people) "Increase profit growth and keep costs down." Really? Like everyone didn't know that.
The Former Banker at April 19, 2010 1:47 AM
Oh, boo-hoo. Waa-waa.
I worked hard all my life too.
BOTU at April 19, 2010 5:31 PM
Then volunteer to pay more taxes, fuckhead.
I'm sick of having a third of my income confiscated so the imbeciles in DC can buy the votes of the perpetual losers.
brian at April 19, 2010 10:46 PM
Frankly I'd support a constitutional ammendment that specifically limited the percentage of income that can be taxed, fined, or taken out in "fees" from the citizens.
We're seeing an increased burden on the citizens and a rapidly diminishing return for our investment.
Between federal, state, and local government we should not be shelling out more than 25% of our income in taxes.
Robert at April 21, 2010 12:48 PM
Leave a comment