Allowing the Bush Tax Cuts on High Marginal Income to Expire will Stimulate the US Economy

    Last night on Inside Washington, Evan Thomas, the "moderate" on the panel said that while there's little doubt that allowing the Bush tax cuts to expire on everybody is going to hurt the economy, it's necessary because the government needs the money.  We certainly do need the money as the budget deficit is now into the double-digits.  But are Thomas and every right-wing pundit, blogger, and columnist who state with the absolute confidence of a used car salesman correct that tax cuts for the wealthy will hurt small businesses and the economy?

    Of course not.  As always, the right is dangerously wrong and fundamentally dishonest.  Successful small business owners (and big business ones too) get to choose how to disburse surplus monies that their businesses generate.  The higher the marginal tax rate on incomes above a certain level the greater the disincentive to distribute excess cash to those whose incomes are at or above that level.  So . . .  what does the business owner do when confronted with a rise on the government's bite on any take home pay above $250,000 a year?  (S)he will be more likely to keep at least more of the excess business surplus in the business itself.  Spending on capital improvements or employing more people or even raising wages are all ways that business people can keep assets out of the IRS's way.  And, last I checked, these activities, as opposed to purchasing shares in hedge funds, actually stimulate an economy .

    Of course, the super-rich do buy more than securities and derivatives, they buy yachts, 3rd and 4th houses, Maseratis, and dine at Michelin 3-star restaurants.  Higher tax rates on the highest income, will curtail some of this spending but since the wealthy save a far greater percentage of their income than anybody else does, incentivizing them through progressive tax policies to invest more in their own businesses will result in a boon to our ailing economy.

    Cons say that if we tax the rich at a higher rate, say 39% a opposed to 35%, entrepreneurs and other talented people will have less of an incentive to build successful businesses.  When closely or even distantly considered, this argument falls apart. 

    First, most entrepreneurs start businesses because they are creative and think they have a great idea not because of overweening cupidity.  Warren Buffett and Bill Gates started Berkshire Hathaway and Microsoft when marginal tax rates were 91% and 70% respectively.  They didn't say to themselves, hmmm, maybe I better not outperform the market by 20% every year or build software that will power billions of computers since when my business takes off into the stratsophere, I'll be taxed at a high rate.  Elvis Presley didn't decide not to put out hit singles because 50% of the profits went to Colonel Parker and, of the remainder, the U.S. government took over half.  No, he recorded hits because that's what musical geniuses do.  Second, to the extent that the most successful entrepeneurs retain less of the profits that their ideas generate, they will have a greater financial incentive to keep creating.  Third, history shows that low or non-existent income taxes do not result in a flowering of the entrepeneurial spirit.  The superrich of 120 years ago used their extraordinary wealth and power to keep labor unorganized and desperate, to game the stock market, to buy politicians, and to prevent competitors from gaining a toehold.  Sound familiar?



    I have never seen it explained so succinctly. Please cross-post this everywhere you can!

    Aside from not being sure that I would consider Elvis Presley a musical genius, this is spot on.  And it seems like the Dems should be able to turn this into serious political hay given the current climate.

    Elvis.... not.... genius?

    I want this fracker banned.

    Then killed.

    Ashes strewn across a parking lot in Jersey.

    Parking lot repaved. 

    Pavement dug up and dumped in sea.

    Not genius? Who talks this kinda shit?

    Your Mama'd roll over in her grave right now.

    And if she's still alive, then gimme her phone number, 'cause she sure as shit has one out-of-control-bad-mouthed-ill-thinking-excuse-for-a-son.

    Not genius. Pish.

    Gee, you would think that I had exalted the likes of Giant Octopus.  Dude was a great performer, but I think terms like "musical genius" should probably be reserved for those who exhibit exemplary skills in music, particularly composition - that is, if such terms are to mean anything.

    Ok, if "must be great composer" is your measure, then... I'll just back quietly toward the door, and let the music-wars commence. 'Cause no, as a straight up composer, Elvis wasn't a big deal. 

    "If such terms are to mean anything." ;-)

    Wait, you're going to "back quietly toward the door" after dumping my asphalt encased remains into the sea? ;)

    And that was just for having to gall to say that I don't think Elvis was a musical genius.  He wasn't a very skilled musician and he didn't really write any music of note.  He was a popular and prolific performer, but musical genius?

    FWIW, I don't really care too much for the "genius" trope at any rate, but it seems a lot more plausible when applied to someone like Beethoven, whose musical skills were obviously manifest, than it does when applied to Elvis Presley.

    The trick comes when someone writes a nice enough song, but then whether they sing it, or some conventional singer does it, it comes out flat, boring, so much pfaff.

    And then an Elvis or Aretha or Billie Holliday comes along and infuses it with something heavenly or raw or honeyed or ripped apart, and the song becomes something far far beyond what the composer originally created. 

    Same with bands who do tremendous covers. I mean, I love Dylan, but All Along The Watchtower, as done by Hendrix, is something else. (Not necessarily driven by his voice, but by his guitar.) 

    So, particulars aside, I'm happy to use the term "genius" for composers, singers, musicians of many types.

    I guess that's fine as far as it goes, but it seems too subjective to me to really mean much, like it just becomes another way to say, "I really like this."  Nothing wrong with that, but I think that usage pretty much reduces the word "genius" to the level of mere hyperbole.  But maybe that's all it is in the first place.

    BTW, I completely agree with you about "Watchtower."  Dylan does, too.

    In athletics, they talk about the "body genius," so it is not unreasonable to say that there is such a thing as a "performance genius" in music, acting, dance, etc.

    Unless there's some kind of standard metric, then it's just elusive and squishy.  Sure, that might be a valid concept, but Quinn obviously sees genius all over Elvis and I don't (at least I think he does - it seems a fair assumption given his response).  Well, there's no way to resolve that.  So basically the term "genius" just stands in for emphatic approval.

    A "standard metric?" For genius? To apply to music? By definition, genius means people and events/actions well outside the norm, highly original, beyond the capacity of most of us, etc. But a yardstick or hurdle or a metric? That'd mean we'd all have to be able to stand in a common spot, most likely "above" that hurdle, and then... measure? 

    Pretty tough requirements. Too tough, methinks.

    I won't bother to argue that Elvis was a genius, other than to say I didn't grow up a huge Elvis fan. It was only when I went back and made a chronological study of it, and really soaked myself in the music, that his difference jumped out. There really WAS some sort of magic admixture created at Sun Studios, and once it hit radio and was released, it triggered literally dozens of other singers to change what they were doing. It wasn't simply "copying" black artists, or Elvis "stealing" something, or that anybody was turning the handle and pumping out rock ' roll on any regular basis beforehand. There was a clearcut before and after Elvis. 

    Anyway, more widely, I'm not convinced that the arts, or social life, or maybe even most scientific and technological change, have any grand ways to measure "genius." I mean, even amongst the most knowledgeable hockey fans, there's no consensus on whether Gretzky or Orr or Howe or Esposito or Plante or 20 others created or contributed the most significant innovations to the game. In Literature, the same, I'd say. I'd take Thomas Wolfe and TS Eliot over damn near anyone else, but the debate is endless. 

    And yet, for me, it's not just people I "emphatically approve" of. The band I've seen the most often live is Midnight Oil. I approve of them, emphatically. And they did a lot of things really well. Genius? Probably not. Same with the Faces. Wilson Pickett. The Jam. Wilco. Great, not genius though. Not enough originality I guess.

    Let's just make Jimi the standard and we can all stop arguing. It slipped my mind to dig out some old vinyl to play as a tribute Saturday, but I'll find time this week. Big box of mostly unreleased material coming out in mid-November, by the way. Think I'll make that my Christmas gift to myself.

    Well, this is why I find the whole concept suspect to begin with.  It reminds me very much of Potter Stewart's definition of pornography or Plato's (via Socrates) definition of noesis.  We can't really know for sure whether it's there, but we're supposed to believe it is.  And we basically just identify by insisting that it's present.

    As for originality, I'm reminded of Jim Jarmusch describing his views on the matter:

    Nothing is original. Steal from anywhere that resonates with inspiration or fuels your imagination. Devour old films, new films, music, books, paintings, photographs, poems, dreams, random conversations, architecture, bridges, street signs, trees, clouds, bodies of water, light and shadows. Select only things to steal from that speak directly to your soul. If you do this, your work (and theft) will be authentic. Authenticity is invaluable; originality is nonexistent. And don’t bother concealing your thievery — celebrate it if you feel like it. In any case, always remember what Jean-Luc Godard said: “It’s not where you take things from — it’s where you take them to.”

    So maybe what Elvis did that was exceptional was to take the music (that some like to say he stole) to new places.  But that's still not exactly the same thing as originating the music, which I don't think anyone would really claim he did.

    Take Jimi in contrast.  He started out heavily influenced by blues guitar players.  And it's worth pointing out that, unlike Elvis, he had crazy chops on his instrument as well as the ability to write new material (even though he never developed skill with classical notation).  But something else he did was to create music that no one had ever heard before.  Had any music ever sounded like "Are You Experienced?" or "Third Stone From the Sun" or "Machine gun"?  I'm not sure that it had.

    So, if originality is what counts, and I'm not saying that I'm sure that it does, then I'm still not sure why Elvis gets the nod.  Jarmusch offers a cluse that this might not be the right way to look at it.

    But it still seems to me that a meaningful definition of "genius" remains elusive.

    Great Jarmusch quote about authenticity trumping originality. Bob Dylan, who has a decent claim to geniushood, started out by stealing everything he could get his hands on and putting his name to it. He literally "made it his own." Jarmusch would have approved.

    Does anyone give a hoot that the Righteous Brothers didn't write You've Lost That Loving Feeling? Or that Joplin didn't write Bobby McGee? House of the Rising Sun? That's Alright, Mama? Turn! Turn! Turn!? It can perhaps deepen appreciation to know all the layers, but the actual song is the thing. If it's great, forget about issues of provenance.

    I'll make an exception for people whose highly paid job it is to know better. I once heard Simon Cowell refer to someone singing "Jeff Buckley's Hallelujah" -- as if he'd never heard of Leonard Cohen. We're talking about a personal signature here. I was shocked.

    Joplin's version of "Bobby McGee" is certainly inspired, but she's another case where I wouldn't apply the "genius" label.  I'd say Kristofferson is a better candidate for that label, but not just because he wrote the song.  I'd say that same thing about the relationship between Patsy Cline and Willie Nelson - namely that I don't think Patsy Cline is a candidate for the "genius" moniker, but Nelson might be.

    Inspired performance is great.  And there might be a such thing as "performance genius."  I don't think that's implausible.  However, singing is not exactly the same as musicianship.  Elvis was absolutely not a great musician.  As a guitar player, we was passable (look to Bill Black for the real chops here).  And he wasn't a song-writer.  He sang songs that people like.  He had looks and pipes, but both of those things are just straight-up gifts.  And they don't necessarily imply any musical skill by themselves.  He might be a candidate for performance genius, but calling him a musical genius would seem to put him in the same category as people who manifestly possessed skills that he did not, like Hendrix or Mozart.  It just doesn't make sense to me.

    To put that in contrast, Dylan is someone who manifestly does not have looks or pipes - unless funny and hoarse are what you're looking for.  But I think he's a potential candidate for being a musical genius, even strictly just on the basis of his song-writing ability.  That's a musical skill that the guy has in spades.  Also, in his younger years that you reference, he spent a lot of time developing his guitar skills.  It wasn't something he used a lot later in his career, but he was a pretty mean Travis picker when he was a kid.  There's a live recording I have of him doing a version of the old folk song "Moonshiner" where you can hear a bit of this (cool, found it here!), but you can also hear it prominently on the Freewheelin' version of "Don't Think Twice."

    So, my point is that Dylan had musical skills that are manifest.  I don't see that with Elvis.  He might be a genius of a different kind (for whatever the label is actually worth - again, I'm not sure it's worth much in any case), but I don't think he qualifies as a musical genius.

    I wasn't trying to revive the who's-a-genius? debate. I think Jimi Hendrix and Bob Dylan clear that bar, but I wasn't arguing for anybody else, and I know it's totally subjective anyway.

    Except sometimes you're forced to acknowledge, "OK, that's pure genius." Dylan's Like a Rolling Stone pushed the reset button in a way nothing by the Beatles or Elvis ever did. Sorry, Q.

    But that's the rare exception. Hendrix's Star-Spangled Banner was truly inspired, but it built on what someone else had created. As did all the other examples I cited. The really good stuff often has multiple parents.

    The Animals recorded the definitive House of the Rising Sun, but the song had roots across the Atlantic, presumably at some point passed through New Orleans, was collected by the Lomaxes in Appalachia, got reworked, buffed and polished by three decades of fine musicians, including Lead Belly, The Weavers, Dave Van Ronk and Bob Dylan (who as usual tried to claim authorship). 

    It simply doesn't matter. The song only grew as generations of musicians added their inspired tweaks. Great music is almost always a collaboration, and that's the way it should be.

    In passing, I understand Dylan sticks mostly to the keyboard now because of arthritis in his fingers. He may strum a little in concert, but it's pro forma.

    Thanks for the Moonshiner link. Hadn't heard it before. Very nice.

    You two are silly.

    Sooo..... singing can't be genius - 'cause it's not like musicianship? Ahem. There are enormous differences amongst sung versions of songs, perhaps the most obvious examples of musical inspiration come through singing, singing requires not just "gifts" but years and years of work, and yet they're not in the same league as, say, drumming?

    And the idea - seriously - that there are no geniuses back at the birth of rock 'n roll, but somehow there ARE when Dylan comes along? (Cause if Elvis wasn't a mid-50's genius, then damn sure none of the others were.) Elvis, Chuck Berry, Little Richard, Jerry Lee Lewis and a handful of others (along with their producers, writers, musicians) CREATED what these other geniuses - like Dylan, the Beatles, Jimi - stood on. And the creators did this work in a very short period of time, during a very particular historical window which closed shortly thereafter (it all opens and explodes in 1955-56, then the boot comes down.)

    To take two types of music and bring them together, in a way which had not - simply had not - been done before, and to do so in a non-mechanical way, and then, across ballads, up tempo stuff, you name it... to do that, and once it's done, EVERYBODY ELSE IN THE WORLD SEES IT, AND CHANGES WHAT THEY'RE DOING.... that's not genius?

    Guys. I adore Jimi and Dylan. But there is no chance on God's good Earth either of them would agree with you. In fact, I was just talking with Dylan the other day........... Cool

    No, it's you who's silly.

    You nailed it!

    The notion that taxing INCOME over $250k prevents these "small businesses" from reinvesting is simply nonsense. It defies simple logic, as you so nicely point out here.

    The other point that gets conveniently missed in all this is that the "Obama Middle Class Tax Cuts" are equally shared with the wealthy. They, too, experience the benefit of the tax cut on their first $250k. What the Repubs propose is to extend the tax cuts on the remainder of their income as well. The result? You and I may gain a few hundred dollars in benefit, whilst the Hedge Fund Manager and other plutocrats receive benefit that can amount in hundreds of thousands of dollars in tax savings. Thus, at a time of high deficits and an increase in poverty and destitution among the general population, the Repubs would have all of us subsidize the wealthy.

    The GOP "tax cuts for the wealthy" plan is clearly indefensible. It should be a no-brainer for the Dems to seize this issue and ride it with a populist zeal that stirs enthusiasm among liberals and independents, alike.

    But the problem in this was well-stated in a comment from a former Congressional staffer that was passed on by Josh Marshall at TPM. In it, the staffer pointed out that the majority of "constituents" who are generally granted an audience at the Congressional offices are the lobbyists and the "owners/campaign contributors" who all make in excess of $250k. In addition, it was pointed out, most of the Members of Congress exceed this income threshold, as well. How can we expect these "blue-dog" Dems to vote against their friends and contributors? Indeed, how can we expect them to vote against their own self-interest?

    These were the questions posed by the former staffer, and they are legitimately considered. All the more reason to insist on campaign finance reform as the first step required to ever get our government back in the hands of "We, the People." Anything else is simply continued participation in this game of three-card monte in which we all continue to be played for suckers, nothing else.

    Excellent post!  Thanks!

    the super-rich always have the money for maseratis and missoni rugs.  they don't need the tax cuts to keep up conspicuous consumption. 

    great post. 

    sorry.  also meant to say and they will buy the maseratis and the missoni, tax cuts or not. 

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