Sunday, October 19, 2008

The Real Point About "Joe The Plumber"

A hot issue recently in the U.S. Presidential campaign is the case of Joe the Plumber, who confronted Barack Obama during one of his meeting about his tax plans which would hit in the future if he expanded his company. Obama answered him that it was important to "spread the wealth" and McCain seized on this case in the final debate

For having embarrased The One, the left-leaning media started digging into Joe's past and it turned out that Joe was his middle name rather than first name, that he lacked the license and formalities required by him from the government and unions and that he didn't make anything close to the $250,000 that he would have to earn to get hit by Obama's tax hikes.

But really, I don't think it is that important of Joe is his first or middle name. And nor do I care avbout licensing (see Lew Rockwell on this issue). And Joe never claimed to make $250K now. What he said was that if he invested in expanding his business then he will hopefully make that kund of money.

The point here is that the Obama tax hike will make it less profitable to invest and expand your business and so might discourage some from doing so. This means less investments and less wealth-creation. And it should be emphasized, Obama's so-called tax cuts have the same effect as they are phased out as income rise, raising the marginal tax rate (See more on this issue here). And so Joe the Plumber himself is really not that important. What is important about this story is that it illustrates how both Obama's tax hike and his "tax cuts" will contribute to increased marginal tax rates across the board and so discourage wealth creation, leading to less of it. In the current cyclical downturn ,that kind of Herbert Hoover-type policies are the last thing America needs.

For more reading on this case, see Lew Rockwell and Mark Steyn


Anonymous Anonymous said...

How much of a tax increase is it? The left media says that it would only be a 3% increase. If that is true and Joe is not going to think about expanding his business because of that, then I don't buy his story at all.

7:41 PM  
Anonymous Fred said...

The point here is that the media set out to destroy Joe for exercising the free speech the media claims to honor. This is an attack that could happen to anyone - any Joe - who crosses the Chosen One.

7:42 PM  
Blogger stefankarlsson said...

Anonymous: it depends on which income level you're talking about, but if you're talking about the highest rate, it will be up by 13.2% (39.6/35). And at any rate, even seemingly small changes can and does impact behavior as they can push people who were doubtful on a decision into making a negative one.

11:36 PM  
Anonymous Anonymous said...

Joe the unlicensed plumber has a right to his opinion, of course. But "the media" can hardly be said to have set out to destroy Joe. He seemed to enjoy immensely his moment in the sun, telling everyone that he hates social security and that Obama was a socialist. In this era of robocalls and smear campaigns, it is only the media doing their job to ask, well, who really IS this Joe Plumber guy? Turns out he's the son-in-law of Charles Keating: the crooked close friend of John Mccain who went to jail for corruption -- and almost took McCain's career with him -- in regard to the LAST big financial scandal in the States: the savings and loan crisis. One might reasonably wonder if a guy with no immediate chance of earning $250,000 a year who happens to have family ties to McCain's good buddy might have been less an "everyman" than he appeared.

12:01 PM  
Anonymous Anonymous said...

I can see the point you are making, but in the context of the election campaign, you are missing the point completely.

Joe the plumber was presented to the US electorate as an easy to identify with average person. As it turns out people earning above 250000 $/year are not your average Joe the plumber.

Rather they are bankers, managers, high-flying consultants etc. The average US citizen does not identify with these people.

As for the core issue, whether wealth distribution is desireable and if incremental taxation is an appropriate tool to achieve this: I have my views on this and you have yours.


12:45 PM  

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