Coming Soon:

The following books by Robert Paul Wolff are available on Amazon.com as e-books: KANT'S THEORY OF MENTAL ACTIVITY, THE AUTONOMY OF REASON, UNDERSTANDING MARX, UNDERSTANDING RAWLS, THE POVERTY OF LIBERALISM, A LIFE IN THE ACADEMY, MONEYBAGS MUST BE SO LUCKY, AN INTRODUCTION TO THE USE OF FORMAL METHODS IN POLITICAL PHILOSOPHY.
Now Available: Volumes I, II, III, and IV of the Collected Published and Unpublished Papers.

NOW AVAILABLE ON YOUTUBE: LECTURES ON KANT'S CRITIQUE OF PURE REASON. To view the lectures, go to YouTube and search for "Robert Paul Wolff Kant." There they will be.

NOW AVAILABLE ON YOUTUBE: LECTURES ON THE THOUGHT OF KARL MARX. To view the lectures, go to YouTube and search for Robert Paul Wolff Marx."





Total Pageviews

Wednesday, February 13, 2019

NUMBER CRUNCHING


A rebellion is brewing in Trump Land.  Trump voters are starting to send in their tax returns, and a growing number of them are shocked to discover that their refunds are much, much less than in years past.  Indeed, some are even having to write checks to the IRS.  This isn’t what the Great Man promised.  What is going on?  The real answer is rather intriguing, and says something about the difference between people and corporations.  [I know, I know, a long time ago the Supreme Court said that corporations are, for all intents and purposes, people, but what do they know?]

Now, set to one side the fact that the great Trump tax cut was mostly for rich people and corporations.  And set to one side, as well, the fact that the tax bill capped deductions taken mostly by people in high tax states [a.k.a. blue states], thereby delivering a tax increase to poor benighted Trumpites who made the mistake of failing to settle in Trumpian safe zones.  I mean, if a MAGA hat wearer living in New York did not do the decent, American thing and move to West Virginia, so much the worse for him.  No, I am talking here about your typical red state white Trumpian.

Why do folks get big checks from the IRS every spring?  Because too much is withheld from their paychecks, that is why.  They are, in effect, making an interest free loan to the gummint.  The Trump tax bill, among other things, made some adjustments designed to bring the withholding into alignment with the actual tax owed.  So why the uproar?  Didn’t folks notice that they were getting a little extra in their pay checks every two weeks?  A corporation would notice, and aren’t people just very small corporations [if I may turn the Supreme Court on its head]?

Well, no, actually, they aren’t.  Let’s consider some numbers.  The typical Trump voter, contrary to popular mythology, comes from a middle class or slightly upper middle class White family.  Median household income for white families is about $64,000, give or take.  Median income for Trump voters is rather more than that, maybe $72,000 [surprise, surprise.]

Let’s suppose a median Trump voter is paid every week, and suppose as well that this Trumpite routinely gets a refund in April from the IRS of $1000.  Assuming this is a single income household, gross pay for the wage earner every week is ~$1384.  Suppose after all deductions, the paycheck is $1,000.  If the IRS is refunding $1000 every year, then this means that it is withholding roughly $19.25 too much every week.

Now let us suppose that under the new tax regime, the weekly pay check, deposited directly into the Trumpian’s bank account, goes up from $1000 to $1019.25.  At the end of the year, the household has received $1000 more in pay, and its withholding matches what it owes in taxes, so it gets no refund.

Where’s the beef?

I think we all know the answer intuitively.  It is just millionaire Representatives and Senators who don’t.  That extra $19.25 goes virtually unnoticed by the members of the household.  That is $77 a month, hardly enough for Papa, Mama, and the two teenage children, all wearing their MAGA hats, to go to a movie and have the usual supply of slurpies and supersized popcorns.  But the $1000 check in April is different.  That is real money.  That is enough to do something with.

Only rich people manage their household finances the way the CFO of a corporation manages the corporation’s finances.  Ordinary people, living fairly close to their incomes, just go along making small, unnoticed adjustments to small variations in their weekly income.  The burden of a large unusual expense [the purchase of a car, maybe] is managed by buying on time and then integrating that cost into the monthly expenses.  That, after all, is how ordinary people buy a house.  The arrival of a large windfall [the tax refund] is treated as a welcome break from the grind of paying the bills.

I sincerely hope that this wise, rational, totally defensible IRS adjustment makes everybody mad, and I also hope all those mad people take their anger out on the Republicans, who are to blame.

6 comments:

Unknown said...

Very nice. So enjoyably snarky. Further evidence that your back pains have subsided.

howard b said...

Professor Wolff, you taught a course all about false consciousness. Wouldn't that concept apply if Trump retains his popularity among the working class of America, despite the glaring evidence of exploitation by their idol?

F Lengyel said...
This comment has been removed by the author.
David Y. said...

I love this, but I believe "gross pay for the wage earner every two weeks is ~$1384" should read "every week" not "every two weeks" to get to annual pay of about $72,000.

The following paragraph indeed refers to a weekly pay check.

Robert Paul Wolff said...

Quite right. My bad. After breakfast I will correct it. Nobody but me is up at this hour anyway. :)

Robert Paul Wolff said...

I think I have it right now. Thanks.