Thursday, October 18, 2007

Republicans: Getting Our Point Across to Voters

BMars mentioned to me today that he supports John McCain for the Republican presidential nomination. For a variety of reasons, I'm supporting Rudy Giuliani, and I'll have a lot to say about why, but I have very high regard for Senator McCain. I've also become a fan of Mike Huckabee. So, my favorites are: (1) Giuliani; (2) McCain; and (3) Huckabee. My choice for the vice-presidential spot remains Gov. Sarah Heath Palin of Alaska. She would have great appeal throughout the nation. I've said that I intend to support the Republican nominees, and I meant it.

Christopher Wensley ( and BMars wrote to me about my October 14 piece on taxes (based on Tax Foundation and IRS information) -- what people generally believe about them and what's actually the case. I responded to Christopher and BMars as follows:

Dear BMars & Christopher:

Thanks very much for your comments.I'm going to continue writing every Sunday and Monday about issues where there is wide misunderstanding among the public. In fact, today (Thursday) I'm going to talk more about federal income taxes.

The problem with Republican canidates is that they often don't get across the reality of the situation in a way that makes sense to average Americans. I keep recommending the books of economic historian Niall Ferguson.

He makes the point that the "unfunded liability" for Social Security and Medicare is about $70 TRILLION. (Now, it's closer to $80-$90 trillion, which means that we need to raise lots of money. Ferguson says that raising taxes by 70% or so would do it! However, there don't seem to be any candidates recommending that.

President Bush came up with a partial solution, but he got accused (along with Republicans generally) of "damaging" Social Security, and the charges hurt in the 2006 election.

We need simple, compelling explanations of issues like Social Security -- and equally compelling solutions. We're not there yet. My father collected Social Security and Medicare for more than 30 years. He may have paid $25,000 into the system -- most of it from relatively small Medicare "premiums" after he retired. He probably got back roughly $500,000.

However, my father, like many other people, always insisted that he was getting back only what he put in. His thinking was not so much a question of misinformation as it was a psychological matter of not wanting to believe he was dependent on the government. As more people live to ripe old ages, people like my father are becoming quite common.

The rich pay a lot in taxes, much more than MOST people (and not only Democrats) think. Republicans need to figure out ways to present this reality in compelling ways. We don't need to feel sorry for the rich (unless we're rich ourselves), but we do need to look at issues fairly and intelligently.

Most people jumble "taxes" together, not making much distinction between state taxes, sales taxes, and payroll taxes, all of which are different from federal income taxes.

One way to pitch this is to say to an audience: okay, say you're a resident of New York state, you buy one PowerBall ticket in the $100 million lottery -- and you hit it.

You go to the PowerBall people and the check isn't $100 million. You find out that the federal government has taken out its "share," which happens to be $35 million.

Oh, and you also find that New York state also extracted its share, which is $6.8 million.

So, the check you get is not $100 million. In fact, it's $59.2 million. Not bad, of course, but nothing like the advertised $100 million.

Perhaps you'll have some friends who will assume that since you're newly rich, you have all sorts of loopholes. You explain to them -- perhaps in vain -- that you just paid nearly $42 million in taxes, and trust me, you won't even get a thank-you note, either from the U.S. government or New York state.

As my super accountant, Pete Glyptis, explains, you can always be comforted by the knowledge that the feds took $35 million to "buy more bombs." In fact, you can never have too many bombs, right?

Relax, it could be worse. If your spouse takes this occasion to decide he or she would like a divorce, your erstwhile partner might take half of what's left -- in this case, $29.6 million. You're still rich, but a lot less so than you originally thought.

To bring the numbers down to some relevant to ordinary mortals, it's something like going into a bank and asking for a change for a dollar bill. The teller hands you back 58 cents. Maybe the teller used to work for the IRS . . .

As the old saying puts it, "easy come, easy go."

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