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I got an email from Obama yesterday, and the subject was "Forward this"

I didn't even read the email, I just could not resist simply forwarding it to my sister, without comment. She sent me an email about how it's different in Indiana, and then related an anecdote that she had told my Nephew to educate him.

Feel free to poke the holes, we'll summarize.

We told a story to Blake. It's an example remember.
Blake and Jacob made 500 shoveling walks (we do that here in Indiana)
Now Blake you get 1/2 -$250.
You said you have to pay taxes -ok $50
You said you need to pay me back for equipment $50
You said you need to pay Payton for making sure you have hot chocolate and gloves $25
Luke and Ryan your friends stop by for their $25 each. What you say you don't understand? They were playing video games every weekend when you were working in the cold? Oh well we still have to give them some. So $50 gone
So how much do you have? $75

Blake - I don't want to work. I want to play video games with Luke and Ryan and Jacob can give me money.

So for example, if Blake is shoveling walks for a living, he's not paying 20% in taxes.

Help me concoct a clear an elegant anecdote to tell my Nephew at Xmas as I tell him about how our President Obama will be building a future for him over the next four years.

UPDATE: You guys are great. Here is the response.

OK - let's dissect this one.
1) Blake is making maybe $9500 a year shoveling snow, assuming he also mows lawn in the winter. In which case he pays zero income taxes.
2) Blake's parents didn't do a very good job teaching him about money if he is buying a $50 snow shovel. Even if he is being a model citizen by shopping at a local business instead of Wal-Mart, a snow shovel is ten bucks. Mom is being quite the "Mitt Romney" by ripping off her flesh and blood for a snow shovel. Also, next time Blake goes out to shovel the snow, he already has a snow shovel. And Blake needs a better accountant - the snow shovel is deductable.
3) Payton is charging $25 for a hot chocolate and gloves! Nice sister! I mean, a nice pair of kids gloves is maybe $10, and even Starbucks doesn't charge more than $3. Not to mention, even if Blake were playing Video Games he'd probably want something to drink. And again, the gloves would be tax deductable, and a one time expense.
4) It's a good thing Blake is shoveling the snow for $250, because Mitt Romney thinks that if Payton did the shoveling, she should only get $200 for it.
5) Luke and Ryan are apparently collecting welfare. That comes from the government. Which comes from taxes. Which Blake apparently already paid in bullet #1. So there is no extra pinch from Blake here. And if it isn't a government program, which Luke and Ryan need to qualify for, for some reason, Blake should tell them to get fixed. Maybe Tom needs to teach Blake to grow a pair. Stephen Colbert can maybe give him some advice on this topic.
6) The big problem here is a lot of the people who want their walks shoveled worked for companies that were bought our by Bain Consulting. Their jobs were outsourced to China and they can't afford to hire Blake anymore.
7) Hopefully Obama gets re-elected so at least the UC and Illinois University systems stay intact and Blake can get a solid college education so he doesn't have to shovel snow for a living.
:)
Go Giants!
John

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Comment Preferences

  •  She makes her own kids pay her (7+ / 0-)

    to use her snow shovel? Your sister's mean.

    Yeah, well, you know, that's just, like, your opinion, man.

    by NMDad on Fri Oct 26, 2012 at 05:18:50 PM PDT

  •  tell her (5+ / 0-)

    everyone wants to work and ask her who she's thinking doesn't want to work? Ask her to explain what this has to do with investing in our future? With equal pay for women? With access to health care?  

    Mention that Mitt made a joke about being unemployed, to really unemployed people, but that it was true enough that he didn't have a job, and ask her if that's what she meant.  

    Don't tell her, make her explain.

    reelect the president

    by anna shane on Fri Oct 26, 2012 at 05:20:59 PM PDT

  •  Tell Her to Report on Her Spending a Week With (2+ / 0-)
    Recommended by:
    NotGeorgeWill, happymisanthropy

    her kids living in the video game world of food stamp income.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Fri Oct 26, 2012 at 05:26:30 PM PDT

  •  If Blake is stupid enough to turn down revenue (8+ / 0-)

    Then he doesn't deserve the job.

    BB gets a job making $50K a year.
    BB has to pay taxes on the $50K a year.
    Other people aren't working and aren't paying taxes.
    So BB says, fuck this, I'm just going to stay home and not work because I can get $600/month just sitting at home doing nothing.
    Which means BB is a fucking idiot because she's still making more with her taxed income than sitting at home collecting "welfare."
    So BB really doesn't deserve the $50K a year because someone much less stupid can do the job for her.

    P.S. I am not a crackpot.

    by BoiseBlue on Fri Oct 26, 2012 at 05:27:48 PM PDT

    •  Excellent. (10+ / 0-)
      Now Blake you get 1/2 -$250.
      You said you have to pay taxes -ok $50
      I'm assuming the taxes go, at least in part, to social welfare programs to feed, as you would put it, the lazy bums who choose to sit on their asses all day? Taxes cover the miiiiillions of not-really-needy-fakers in real life, don't they?
      You said you need to pay me back for equipment $50
      Look! Investment! Paying off business debt so that you don't owe money NEXT week! Next Saturday, you're going to "get it back."
      You said you need to pay Payton for making sure you have hot chocolate and gloves $25
      Paying for business services! You're helping the American economy by making purchases from other business owners from other suppliers. Good for you. But wait, hot chocolate sounds like one of those things you might spend your ultimate "profit" on anyway. Along with clothes (gloves?) and sodas and video games and movie tickets. So you're really just spending your money. You're not being FORCED to make these purchases, are you? Certainly not by the big bad government! So we'll have to give you back this $25 as discretionary income.
      Luke and Ryan your friends stop by for their $25 each. What you say you don't understand? They were playing video games every weekend when you were working in the cold? Oh well we still have to give them some. So $50 gone
      Now wait a minute. Don't those taxes you paid up in the beginning take care of the parasites like Luke and Ryan? They do in the nefarious government-conspires-to-take-your-money scheme this story is meant to allegorize.
      So how much do you have? $75
      Actually, $150. And next Saturday it will be $200 since you'll have paid off your equipment.
  •  Okay let's think about this. (11+ / 0-)

    Why is she lying to Blake about his tax rate?

    The tax system is progressive.  Blake is young and needs to understand how that works.

    Blake is a kid and is poor.  So he pays no income tax.

    Blake pays no tax unless he makes at least $9500 shoveling sidewalks this year.

    So let's take another look at his mother's example:

    Blake makes $250.

    Blake pays no tax on the $250.  The sidewalks he is shoveling are provided free by his city government, but he pays no taxes to use them and no commission to charge for cleaning them.

    Pay back for equipment - one snow shovel is $10, not $50.

    If you got him a $50 snow shovel, who's the idiot?

    So Blake has $240.

    You can get a cup of gourmet hot chocolate for $5 at Starbucks and a pair of gloves for $4 at Walmart.  So, $9 for "Payton."

    Blake has $231.

    When his friends come over for their money, Blake tells them too bad, he did the work, he keeps the $231.

    Blake can take that $231 and combine it with perhaps a Pell Grant and a federally guaranteed student loan - both programs expanded by Obama that Romney wants to cut - and go to college and learn better arithmetic than his mother.

    Still enjoying my stimulus package.

    by Kevvboy on Fri Oct 26, 2012 at 05:39:08 PM PDT

  •  Luke and Ryan (6+ / 0-)

    I assume are some kind of welfare freeloaders?  Why is Blake paying them directly?  Their welfare would be coming out of the $50 Blake is already paying in taxes.  And the portion for welfare would be measured in pennies out of the $50.  If we are going to break out welfare separately then why not add a category for corporate welfare that line the 1%ers pockets which would dwarf the regular welfare.

  •  She needs to confiscate the $75 for college (6+ / 0-)

    fund and ground him from associating with lazy friends for not standing up for himself.  

    Buy him a copy of The Little Red Hen.   Start a garden so he can grow his own food.  

    Democracy is messy.  We've got to close loopholes so Mittwitt stops getting paid for doing nothing.

    Tell sis she's lucky Luke isn't a daughter -- because Romney/Ryan cadre plan on not even allowing girls the right to work, especially at a pay rate that would have let her keep $75 for her finger numbing equal shovelling.

    Mowed lawns summer, did snow in winter, and got up early to deliver newspapers.    It bought me education enough to know she's passing on garbage some other narrow mind wrote for her.

    De fund + de bunk = de EXIT--->>>>>

    by Neon Mama on Fri Oct 26, 2012 at 05:52:22 PM PDT

  •  If Blake wants to maximize . . . (7+ / 0-)

    his returns:

    1. He could economize on equipment costs.  The $50+ shovel is highway robbery.  Tell him to cut the middle man (his Mom) out of the equation and purchase his equipment, salt, sand bags, hot chocolate and gloves from a better, more reasonable supplier.  Right off the top he could easily trim $25 in expenses, which would increase his take-home pay to $100.

    2. His mother's idea of how taxation works is a complete joke.  100 percent of taxes don't get immediately transferred to people who don't work.  His buddies are probably getting a fraction of the money.  How much of our tax dollars get spend on social services for the unemployed, and how many of those dollars are getting divided between how many people?  There is no way that his buddies are getting $25 for doing nothing.  More likely they are getting something closer to $2.50 a piece for doing nothing, and it's doubtful that they are enjoying their time.  Odds are they are struggling to get by.  That's a REAL analogy.

    3. Additionally, we get some of the taxes that we pay back.  Some of this might come in the form of social insurance.  If Blake gets injured on the job, there's a pretty good chance that a portion of his money will come from money that he has paid into the unemployment compensation system.  Even if he stays healthy, he will get a portion of those funds back in the form of police protection, fire protection, some portion of his $500 is probably coming directly from transfer payments.  (e.g. the senior citizen who pays for the walk to be shoveled out of social security payments).  So sure he's getting taxed, but it's not a pure zero sum transfer to his buddies.

    4. Additionally, what kind of contractor who gets paid in cash pays a 25 percent tax rate?  If Blake is like a real world contractor, 1. there's a good chance that he's not reporting all of his income (paid in cash!).  2. Even if he gets paid in the form of checks, he would be able to deduct business expenses, and would only be taxed on salary, and net profits.  At $250, in the real world, the only taxes that he would be paying are sales taxes for the purchase of goods.  Odds are he qualifies for tax credits too, which would offset his tax burden.  

    The biggest problem with the analogy is that it has no basis in how the world actually operates.  His mother, if she is serving as the "tax collector" and his "supplier" sounds a lot more like an employer skimming off huge chunks of income that her son has earned.  It sounds like she's just concocted some story about his buddies in order to distract him from the fact that Mommy is screwing him over six ways to Sunday.

    What does the real world look like?  

    In Obama's world, Blake would be able to keep a lot more of his pre-tax income.  He would pay less for health care, and would receive more support for education, if he decided to leave the world of manual labor aside.

    In Romney's world, in order to pay for tax-cuts for the super-wealthy, he would "broaden the base" and levy higher taxes on lower income workers, while also eliminating benefits that they need and use (creating the real disincentives for work as he would see more income disappear both pre- and post-tax).  Additionally, under a Romney administration, the Dept. of Labor would be even more dysfunctional than it is, which would mean there is a higher probability that even pre-tax he might not get paid for his work.

    In a Romney world, he might be better off simply working in the black-market shadow economy where the risks are greater, but at least there is some potential reward for work (e.g. gambling, selling drugs, prostitution).  

    In the Obama world, there might at least be some hope that if he plays by the rules, he can get ahead over time, and perhaps even pay something back to the next generation of kids who are able to make decent money shoveling snow, and there might be even more opportunities that he finds more lucrative, and perhaps more gratifying, if he decides he wants to do something other than manual labor.

    •  Note: tax rate in hypothetical is 20 percent . . . (1+ / 0-)
      Recommended by:
      Julia Grey

      not 25 percent.

      Still, if he's as adept at gaming the tax code as Mitt, there are plenty of ways that he could maximize his returns.

      e.g. incorporate, and rather than paying himself a salary, classify the income as capital gains from stock or dividends.  He'd get taxed at a 15 percent rate on the profits via capital gains, but wouldn't have to contribute a dime to social security, Medicare, or Medicaid.

      He could reduce his tax burden further by setting up an offshore account.  With some creative accounting, and lawyering, he might even be able to move the profits around so that the expenses are booked in a high tax country, which reduces his effective tax rate, and the profits are booked in a low to no-tax country, which makes him wealthy even faster.  If Mitt's tax plan goes through on off-shore earnings too, he might be able to avoid any tax whatsoever when he tries to bring that money back into the U.S.

      Another option, if he went the Romney way would be to simply buy up an existing snow shoveller's business, rather than doing the hard work of creating his own business.  There are many advantages to going this route.  

      He'd want to target a mature business with low debt, initially, with the goal of leveraging the snow shoveling buy-out target to the gills.  He'd put up $5 dollars.  He could take out a loan for $495 in the name of the company against the business assets and future earnings.  A portion of the proceeds to buy out the company would go to the original business owner.  He could then use a portion of the debt to pay himself a management fee, which would be transferred to the LBO firm that's he's set up to make the acquisition.  If the snow shovelling business fails, the money in the LBO firm will probably be safe from the businesses creditors.  He's already made money at this point on his $5 "investment" through some creative accounting.  Another couple wrinkles to the process would be to talk to other LBO firms and to convince them not to bid on the company that he wants to take over.  He would agree to leave their take over targets high and dry too.  Granted this is illegal, but it's only a problem if he gets caught.  The advantage of doing this is that he can under-bid on the price of the take-over target, which would guarantee even more money in his piggy bank.

      Note too that the interest payments on debt on his recently acquired snow shovelling business are tax deductible, so he can use the funds to reduce the effective tax rate of the take-over target.  If he runs into problems with cash flow, he can use the threat of bankruptcy to force his snow shovelling labor force to take wage cuts.  That extra money now is added to his own bottom line, which he can now transfer to his LBO firm, so that his own spoils are partitioned off if his business fails.  

      If he can find some new investors, he might even be able to buy up some other snow shoveling businesses using a combination of debt and a small upfront down payment, and repeat the process many times over.  

      If he's lucky he might even be able to corner the market.  He might have to give some money to politicians who share his values about not enforcing anti-trust, monopoly laws.  

      Of course there can't be an explicit quid pro quo.  Just an understanding about having "shared values". Once he's cornered the snow shovelling market, he can start charging his customers a premium, and he will make even more profit as he's been able to use the threat of layoffs -- and actual layoffs -- to extract additional concessions from his work force, so that his operating costs are about as low as possible.  He's minimizing business expenses, and maximizing profits the old fashioned way.

      If he ends up destroying the business, it's no big deal.  He's already recovered his initial investment and then some, by shifting money from his take-over target to his leveraged buy-out firm.  If he pushes the mega-company into bankruptcy and there are contingent pension liabilities, the taxpayers have to pick up the costs through our pension guaranty system, so it's no loss from his bottom line.

      That approach may not be good for America, or for the workers who have the misfortune of being his employees, but it could make him very rich in a very short amount of time.  He'll be a regular old Mitt Romney before he knows it.  And some people will admire him simply because he is rich, without asking too many questions about how he actually made his money.

  •  Hey, dad, (8+ / 0-)

    I went around the neighborhood offering to shovel walks.
    One neighbor can't pay because you outsourced his job to China.
    One neighbor can't pay because you pay her half as much as an equally capable man.
    One neighbor can't pay because you looted his pension fund.
    One neighbor can't pay because you foreclosed on the house and it's been empty since 2008.
    One neighbor can't pay because he's 54 and you won't hire him.
    One neighbor can't pay because your subsidized foreign subsidiary put her start-up out of business.
    One neighbor can't pay because she refused to put up with your humiliating working conditions.
    One neighbor can't pay because he refused to put up with your unsafe working conditions.
    One neighbor can't pay because you fired him to make an example to the others.
    One neighbor can't pay because she's getting paid minimum wage, but is afraid of being the next example.
    One neighbor can't pay because he's paranoid and spent all his money on guns.

    Don't worry, though.  They all blame Obama.

    It's been a hundred years, isn't it time we stopped blaming Captain Smith for sinking the Titanic?

    by happymisanthropy on Fri Oct 26, 2012 at 06:11:49 PM PDT

  •  You could (6+ / 0-)

    explain to him that President Obama is trying to make sure that he doesn't have to shovel snow for a living (unless he happens to like that kind of work).

    I would take the example that your sister used, but have Luke and Ryan be on his initial work crew.  Luke fell down on the ice and broke his leg.  Ryan is going to take time off of work to help him recuperate (lets pretend that they are in the same family).  In president Obama's America, Luke would be able to go to the doctor and get his leg fixed.  Ryan could take time off of work to take care of him, and would not have to worry about losing his job.

    Because everyone in this story paid their taxes, Luke could have workers compensation so he could still eat and have a place to live until he got better.

    In the other America, Blake would still have to pay taxes.  They would be higher because he is not in the 1%.  So $75 dollars go to taxes, expenses stay the same, Mom gets her $50, Payton gets her $25.  So Blake would 'take home' $100.

    But, his friend does not have insurance or workman's compensation, so he either can't get his leg fixed, or he has thousands of dollars of medical bills.  Ryan can't help him, or he will be fired.

    This is how it would look in the first year.  After the first year, Blake and Jacob only make $250 combined income.  Because their neighbors have all lost their jobs (they were shipped overseas).   They can no longer pay to have someone shovel snow.  In addition to this, some of them are out hustling his business, because they no longer have a job and they need to feed their families.  

    Half of $250 is $125, less expenses, less taxes, etc.

    And the cycle continues . . .

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