Mountain Views News     Logo: MVNews     Saturday, December 8, 2012

MVNews this week:  Page 16



 Mountain Views News Saturday, December 8, 2012 

HOWARD Hays As I See It


 With apologies to Peter, Paul and Mary, “Where have all the rich folk gone, 
long time passing? Where have all the rich folk gone, long time ago? Where 
have all the rich folk gone? Gone to hiding everyone. When will they ever 
learn? When will they ever learn?” I could probably keep writing new verses 
for this popular old ballad, but you get the picture. If we’re going to tax the 
rich, it assumes that the rich stay around long enough to be taxed. Turns out 
that this is a pretty wild assumption, and the latest bit of evidence exposing 
just how unrealistic the assumption is comes from not-so-jolly old England.

 Her Majesty’s Revenue and Customs Service (the English always have better 
names; the IRS just doesn’t sound as high brow) just reported on tax collections for the 2011 fiscal 
year. This was the year when Britain’s new 50% millionaires’ income tax rate kicked in. The new 
rate represented a 25% increase from the previous rate and was supposed to generate a substantial 
amount of increased revenue for the cash-strapped British government. Apparently Americans and 
Greeks aren’t the only governments which spend more than they earn. Tax revenues were expected 
to increase by £2.5 billion, which would have only gone a small way towards fixing Britain’s problems 
in any event.

 Funny thing happened. Not only did tax revenues fail to increase as projected, they actually 
decreased, and they decreased substantially. Base line revenues from millionaires for the previous 
year were £13.4 billion, and the new tax rate was supposed to take them to £15.9 billion; instead, they 
dropped to £6.5 billion. The simple act of increasing taxes on “the rich” from 40% to 50% caused tax 
revenues from the rich to drop by 52%. 

 The naïve among the British media seem to believe that there has been a tidal wave of emigration. 
It seems that the total number of millionaires filing taxes in Britain dropped from 16,000 filers (when 
the tax rate was 40%) to 6,000 filers (when the tax rate was 50%). The simple truth is that the vast 
majority of the people who were millionaires one year have simply chosen not to be millionaires the 
next year. The ability of successful people to choose whether to make money or not is the single most 
important aspect of this issue that liberals politicians fail to grasp. 

 The most illuminating explanation of this I have ever heard goes something like this. “If the 
government tells people that they will be taxed 100% on whatever they earn on Monday, Wednesday 
and Friday, but only 25% on what they earn on Tuesday and Thursday, what do you think most people 
will do?” The answer is obvious: people will work very hard, indeed, on Tuesdays and Thursdays, 
but they won’t even go to work on the other three days. It’s not rocket science. It’s common sense!

 Tax rates do influence behavior. And the wealthier a person is the greater freedom the person 
has to invest his money and earn a profit, or to not invest his money and not earn a profit. Someone 
earning minimum wage who has to pay the rent and put food on the family table probably doesn’t 
have much freedom to skip a day of work. But someone who’s making $250,000 (the threshold 
Obama wants to use to punish “the rich”) can probably take some more time off if he’s getting taxed 
too much. And the person who’s making $1 million has even more freedom. 

 Beyond the revenue issue, raising taxes on the rich is devastating for the economy as a whole. 
Anyone who wants to start a business or to get a loan for an existing small business is absolutely 
dependent on “the rich” being willing to invest in small businesses or to put their money into banks 
which in turn lend it out. Investments and loans to small businesses and start ups are among the 
riskiest and thus demand higher potential returns or interest rates to convince “the rich” to make 
the investment. Several studies have shown that when tax rates are raised on “the rich”, they first 
cut back on their riskiest investments. After all, the riskier investment is likely to be the one that, 
if successful, earns the most money. But if “the rich” don’t get to keep the extra money they make 
from taking on the extra risk, they’ll simply stop taking on the extra risk. If Obama gets his way, 
we shouldn’t be surprised to see the level of new business start-ups decrease and the growth rate of 
existing small businesses decline.

 It may sound awfully satisfying to those who are envious or jealous of “the rich” to talk about 
taxing them more or making them pay their fair share, but the reality is, as Britain has just witnessed, 
that bad policies like this generate bad consequences. There is simply no way on earth to cover the 
U.S.’s $1 trillion deficit by taxing “the rich” any more than Britain could cover their billion pound 
deficits by doing it. “The rich” just don’t stick around long enough to get stuck.

 About the author: Gregory J. Welborn is a freelance writer and has spoken to several civic and 
religious organizations on cultural and moral issues. He lives in the Pasadena area with his wife and 
3 children and is active in the community. He can be reached at

“If you don't know history, it's as if you were born yesterday. If you were born yesterday, 
then any leader can tell you anything.” - Howard Zinn

Greg Welborn reminded us last week that “History has always been a cruel task master”, 
but I find it a helpful one in not allowing us to become too complacent in rigid 
ideologies. I was struck by his statement that our current projected annual deficit 
of $1 trillion is “without precedent”. So – I decided to consult with that “cruel task 
master” via online data available through the Congressional Budget Office.

It turns out to find such “precedent” you’d have to go all the way back – to the administration 
of George W. Bush. The 2009 deficit, the last one coming as a product of the Bush years 
on the heels of the 2008 Wall Street meltdown, came in at $1.4 trillion. The deficit was reduced $100 
billion to $1.3 trillion the first year after President Obama’s stimulus kicked in, and for 2012 will have 
come down another $200 billion to $1.1 trillion. As a portion of the economy, it will have come down 
from 10% of GDP for 2009 (the highest since WWII) to 7.3% of GDP this year.

 The CBO offers a look at what this “fiscal cliff” is all about. It provides forecasts for if a deal is 
reached, and if it isn’t. Major changes are set to occur come January 1 should nothing happen; the 
latest extension of the Bush tax cuts is set to expire and taxes will go up for everybody, extensions in 
unemployment benefits will end, payroll taxes will rise to what they were before, and mandated slashing 
of both domestic and military spending will take effect. 

 In case anyone’s forgotten their history, this was all the creation of Congressional Republicans – an 
arrangement they insisted on in return for agreeing not to allow the United States of America to default 
on its obligations.

 According to the CBO, the fiscal cliff would be great for the deficit – shrinking it to $641 billion for 
2013, or 4% of GDP. The problem is what it would do to the economy – bringing another recession, 
a half-percent drop in GDP, and unemployment hitting 9% by the end of the year. If all the Bush tax 
cuts were extended and those mandated budget cuts didn’t kick in, we’d see a 1.7% growth in GDP and 
unemployment would stay at 8% - but we’d still be carrying a $1 trillion deficit.

 The President and Congressional Democrats have proposed $1.6 trillion in revenue increases and 
$600 billion in spending cuts to maintain the recovery while reducing the deficit. Republicans have 
countered that you can’t raise taxes on rich people. Democrats have moved to preserve tax cuts for 
middle- and low-income Americans, along with extending unemployment benefits and providing 
additional stimulus to put Americans back to work. Republicans have refused to go along, because 
you can’t raise taxes on rich people.

 Democrats remind that everybody would get a tax cut; the rate would go up just on those dollars 
earned above $250,000 a year ($200,000 for individuals) by 3-4% - to what it was under President 
Clinton, when the rich did very well along with everybody else. But Republicans insist you can’t raise 
taxes on rich people.

 Mitt Romney argued on the campaign trail that you don’t need to raise taxes on anybody; you just 
fix the problem by trimming deductions and closing loopholes. As for specifics, that’s something that 
can be dealt with next year. Americans heard that argument and rejected it.

 Responding to the president’s proposals for avoiding the “fiscal cliff”, Republicans have come up with 
a counter-proposal: rather than raising tax rates on anybody, you just fix the problem by trimming 
deductions and closing loopholes. As for specifics, that’s something that can be dealt with next year.


 In case that’s not enough, Republicans have other ideas – like raising the eligibility age for Medicare, 
shifting more costs to beneficiaries, limiting cost-of-living increases for Social Security, halting unemployment 
benefits and allowing payroll taxes to rise. It would be a hard hit on seniors and those 
struggling to find work and support families - but you can’t raise taxes on rich people. The White 
House responded in a letter to House Speaker John Boehner (R-OH), “Independent analysts who 
have looked at plans like this one have concluded that middle class taxes will have to go up to pay for 
lower rates for millionaires and billionaires.”


 A Washington Post / Pew poll finds the sentiment of the American people to be basically unchanged 
over the past few weeks; should we all go over that “fiscal cliff”, 12% would blame both sides, 27% 
would blame President Obama, and a majority of 53% would place the blame on Congressional 

 President Obama knows his own history – how early on he’d hoped to reach accommodation with 
Republicans by proposing a stimulus bill comprised of one-third tax cuts, of basing his healthcare 
proposal on the private insurance market. According to White House communications director Dan 
Pfeiffer, “The President is not going to negotiate with himself . . . He’s laid out his position, and Republicans 
have to come to the table.”

 Some accused the president of having “caved” two years ago in agreeing to extend tax cuts for the 
top 2% in order to preserve middle-class tax cuts. As part of that deal, though, he also got through 
a “second stimulus” including a payroll tax cut, child tax credit, additional unemployment insurance 
and other measures to spur our recovery. Back then, he no doubt foresaw that soon after his reelection, 
with those mandatory budget cuts and tax hikes for everyone looming on the horizon, he’d have 
his opportunity to make sure those at the very top were made to share the costs like everyone else. 

 It’s clear our president, in addition to being aware of the history, also keeps a keen eye on the future.


The Naughty!

Former Diector of the CIA, General David Petraeus: And no he doesn’t 
make the list for having an extramarital affair with the co-author of his 
biography, Paula Broadwell. He makes the naughty list for being head 
of the CIA and choosing a mistress who clearly cannot keep a secret.

Secessionists: Who likes playing with a loser who flips the chessboard 
over and stomps out of the room? No one. Meet the current Party of 
Lincoln; Public Policy Polling (PPP) reported that 25 percent of Republicans 
want to secede. Let it be said here first: 25 percent of Republicans 
wish the United States were more like Europe.

Senator John McCain: Hopefully when looking back on John McCain’s career we will all focus on his 
2008 concession speech and ignore the last four years. He makes my naughty list because he spearheaded 
a nontroversy campaign to preemptively take down the highly qualified Ambassador Susan 
Rice for Secretary of State. “Not being very bright,” is how McCain described her. Who would McCain 
like to have as Secretary of State? John Kerry! Why? It would open up a senate seat the Republicans 
think they can fill with outgoing Senator Scott Brown. Painfully political. Disturbingly cynical. Country, 
apparently, is no longer first.

Tramplers: Whether it’s Black Friday stampedes or a sign-up for a private school that looked like a 
Running of the Bulls. Bad helicopter parents! Boooo!

Speaker of the House John Boehner: The Wikipedia entry for “Pyrrhic victory” should be the home 
for Boehner’s official Capital Hill portrait. I’ve personally worn out a keyboard writing about why the 
112th Congress is the worst in the history of the concept of worst. Under Boehner’s leadership the 
House has done nothing but re-name post offices, have approval ratings on par with ringworm and 
go on TV opining the president isn’t trying to get along with them. Now they’re, basically, promising 
(threatening) to do the same for the next two years. If we want to cut government waste – start with 
Boehner’s paycheck.

The Nice!

Hurricane Sandy volunteers/victims: New Yorkers didn’t really need to come together. They live together 
already. But they helped out their neighbors and the fallout from this Super Storm could have 
been much worse. Natural disasters can bring out the best and the worst. In the states hit directly by 
Sandy, with few exceptions, it was the best.

Candy Crowley: Fact checking a presidential candidate live in front of 40 million Americans takes two 
things: courage and being correct. At the second presidential debate, Mitt Romney declared President 
Obama took 14 days to say the word “terror” in regards to the attack on our embassy in Benghazi on 
September 11th of this year. There’s a transcript and a video from the Rose Garden the next morning 
proving otherwise. Crowley set the record straight. And to all those who know the facts, I say: “Can 
you say that a little louder?”

Newark Mayor Cory Booker: The problem with Cory Booker is that as far as public servants go, he’s 
the exception and not the rule. Yes, Booker went into a burning building to save a constituent. Yes, he 
expedites Newarkers’ issues on Twitter. But also this year he went on a food stamp diet of $4 a day for 
a week. Does your mayor do that? They should!

New York Times Blogger Nate Silver: He makes the nice list for putting the sexy back in statistics! 
It’s not just that Mr. Silver (swoon) got the election right; it’s that he’s a gracious host navigating us 
through the deluge of data we’re subjected to. He showed us science and math have a place in politics 
and sometimes that place is in the crosshairs of the conservative media complex.

My readers: Yes, I’m sucking up to all who read my column every week. But specifically the ones who 
read my 600-word pontifications on a regular basis and let me know (sometimes quite sweetly) they 
never agree with me. It’s you who are on my nice list. You’re what is cool about public discourse. And 
I thank you.

Tina Dupuy is an award-winning writer and the editor-in-chief of Tina can be 
reached at


‘Twas the night before Fiscal Cliff, and throughout the land,

Democrats, Republicans were taking a stand.

Their positions unwavering, intractably firm,

With donkey-like stubbornness or entrenched pachyderm.

But the public were hopeful all snug in their beds,

With visions of compromise alive in their heads.

“Come on!” said the people in frustrated dismay.

“Abandon this meaningless partisan fray.”

When Obama and Boehner finally met,

Their first thoughts were not of a country in debt.

And Obama, the chief, said to Boehner “Oh crap!

I’d rather depart for a nice winter’s nap.”

“I know,” sighed Boehner “I’ve plenty to do,

Was planning to take a vacation or two.”

“Never mind,” said the Prez, “we’ll just keep delaying,

Who cares what the grumbling public are saying.”

But out in the blogosphere there arose such a clatter,

The people revolted, resolving this matter:

“There’s only one way to deal with such fools

Obama and Boehner must settle by duel.”

“No way!” said Obama, “I’m renowned for my peace.

“With a medal of proof on my lounge mantlepiece.”

“I agree” cried Boehner, not eager to battle,

And caught the first plane heading out to Seattle.

“Come back,” yelled the people, “we demand this by right,

You’ve had chances to talk, now you settle this fight.”

But the pair, reunited, were far from impressed, 

As the thought of a duel made them rather depressed.

As he pondered alternative White House residents,

Obama now saw why we have the vice presidents.

Quick thinking, as always, to Biden he beckoned,

“Get over here Joe, and I’ll make you my second.”

“Now Joe I expect you’ll appear around dawn,

To face off with Boehner on the White House’s lawn.”

“Yeah right!” smiled old Joe, “Would love to assist,

I ain’t packing no pistol – what if I missed?”

And then, in a twinkling, Obama’s next step,

Was to call up more buddies, to be his next rep. 

"Now Pelosi! Now Clinton! Now Durbin and Reid! 

But all vanished from Washington with notable speed.

“Oh dear,” mused Obama, “now what shall I do?”

So he phoned up Boehner for a quick rendezvous.

“My friend, we are beaten, let’s abandon aggression.”

“Agreed,” said the Speaker, “it’s time for concession.”

So they sprang into action, both recommending, Adding some taxes and cutting some spending.

Then I heard them exclaim, “We’ve reached a consensus! 

Good-bye Fiscal Cliff, we’ve come to our senses.”