Election tip

I'm not US citizen, so I cannot vote in the election. However I do have an opinion, but opinion is something everyone has and no one really cares about the others's. So I wouldn't bother you with my ideas about gun ownership or Iraq, they are just as good as yours.

However if you are still reading this blog, you found it a good source about its topic, making money. So I feel entitled to compare the tax plans of the candidates, based on their plans as they are published in the press.

It's not an easy task to do and if I were an American voter I'd be at trouble to make final decision. The reason of being uncertain is that the net value and the structure of their tax plans give exactly the opposite answer.

Net value: McCain would cut the taxes by the average 2% while Obama would cut it by 0.3%. 2 > 0.3, period. The less tax is the better. The human civilization exists because we people work. Income is the reward of working (either as business owners or employees), tax decreases this reward, it's kind of punishment for working. One could claim that from the tax we pay the policemen, soldiers, firefighters and other state employees so it's a price of their services but it's a lie. The policemen give the same protection to the one who pays $100000 tax and to the guy with 0 tax. The fair thing would be that everyone pays the same sum regardless of his income, just like we pay the same sum for playing WoW regardless our income. However this fair system cannot be implemented since the poor simply cannot pay. Anyway as long as tax is a percentage of income and increases with more work it's a punishment for working harder (or smarter). So less is better, go McCain!

The structure however is a different issue. As you can see the picture, McCain would cut the tax of those who make high money while Obama would increase their tax and would cut the tax of those who make little money.

I've said the fair thing to do would everyone pays the same amount. If this amount is $5000 than the tax should be 50% for those who make $10000, 10% for those who make $50000 and 1% for those who make $500000. So I should support McCain, just as most businessmen and economists does. However on the structure side I support Obama. The reason is pretty complicated and anti-intuitive so brace yourself (or stop reading).

I strongly believe that the businessmen and economists supporting the flat tax and other low-tax-for-high-salary schemes are making a huge mistake and the economy pays the price of it. They make this mistake because they simply don't see and understand the life of the poor people. They assume that what is true for themselves is true for the poors. However even the word "poor" is inadequate as it is used for two drastically different groups.

Usually (=/= always) a job with higher salary is better than the job with lower salary. It's usually a more creative work, with more power over yourself and over others, higher social status, and the more money itself is a good thing. So you, just like an economist would assume that someone with a $100000 job would usually replace it with a $110000 job. And it is true.

Someone with a $90000 job would like to have a $100000 job, someone with a $80000 job would rather have a $90000 job and so on. No! I mean the examples are true but the "and so on" part is not always. The point where it breaks is the very bottom. Someone with a $0 job would not surely prefer a $10000 job. Why?

The $10000 job must be some nasty one, janitors, streetsweeps, errand boys and such make that money. A $0 job on the other hand is having no job. Since these people don't starve on the streets like in the Sahel-belt, they must get more than $0. They either got welfare money or they get money from crime. These activities are much more fun than being janitor. You don't have to go to work, you can watch TV all day, you don't have a boss and even you get more respect (or less disrespect).

So under the incorrect term "poor" there are two, drastically different groups. One is a working man like us. He contribute to the society, pulls weight for us. Definitely contribute less than most off us and maybe pulls less weight than his own (he consumes more resources than produce) but still, he pulls some weight. And what matters most, he accepts and lives by the moral of our society, the puritan work ethic. He shows an example to his children, friends and family that the right thing to do is wake up at the morning and go to work instead of being drunk by 9 AM.

The other "poor" is either a welfare-leech or a criminal. He refuses to produce anything, refuses to pull any (even symbolic) weight and openly uses the resources that we produce. His "ethic" is the "I deserve to get stuff without giving anything in return and f... you all"! Pretty similar to the zombie-kids if you ask me. He not just shows a bad example to the people around him but actively disrupt their efforts by stealing from them, assaulting them, littering the streets, destroying city lights and such common commodities and disturbing their sleep making noise.

A senior engineer with $200000 definitely won't wake up one morning and says "f... working, I quit and will live as low profile pickpocket so I don't have to spend my time in the office for that ridiculous 200K". But a janitor, after a long day of dirty work, and after the boss shouted with him can say "F... that 8K I make with this s... job, I rather go for welfare where I don't see any more filthy toilets and no one threat me like piece of s...". If that happens, the world lost around $12000 GDP ($8K at the janitor, $4K at his employer), the taxpayers lost around $5K for the welfare and the house block lost another example of work and gained an another source of trouble and disarray. A real zombie!

It's obvious that the poor worker is much better for the world than the troublemaker zombie. It's also obvious (or become, if you read sociological studies about the life of the poor people) that the poor person has to make great sacrifice in both time and self respect to be a low level worker and not a zombie (high level jobs are unavailable to him due to lack of skills/education). His salary must be enough to reward him for this sacrifice. The easiest way to increase his salary is to decrease his tax. Obama's plan is 5.5% cut in the 0-19K salary region while McCain would cut only 0.2%. In the 19-38K region Obama would cut 3.6%, McCain would cut 0.5%. So that's why I support Obama structure-side.

So where would I vote? I think on the long run, Obama's poor-worker-support would provide more workers, less zombies, so higher GDP, less crime. This would increase the income in the upper salary regions despite the higher taxes, of course not instantly. So if all else are the same I'd vote for him.

However there is a very important question belonging to the topic: welfare system. If it turned out that Obama would spend more tax money on welfare, increasing the income of the zombies, I'd definitely vote against him. The reports on this topic is controversial since McCain's staff claims "Obama pays more welfare", Obama's deny it and since I'm not American I don't bother digging into it. The point is valid without this.


Appendix:
If you find it impossible to believe that someone would choose to be an unemployed person, check this EU official report, on employment rate (% of work-age population)

• USA: 72%
• EU-27 (Whole European Union): 63.4% (almost 10% more zombies!)
• EU-15 (Western Europe): 66%
• "EU-12" (mostly ex-communist-EU-members with high welfare): 58% (Braaaainssss!)

Scary, especially since it includes the legendary big Europen burocracy (state payed, mostly inproductive employees)! If we would fire them, we would have Zombie majority!