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Comic Strip of the Day

CSotD: Fueling the Link Wars arms race

Published: February 7, 2012 1 minute 11 comments

Doones
Doonesbury is gearing up for the elections with an arc about "facts."

I wouldn't worry too much about all the people who must have been laid off when Big Tobacco finally surrendered. I think the professional liars of the Tobacco Institute landed good jobs at various think tanks around the country where they come up with elaborate explanations and outright lies to promote and protect their designated turf.

It's not just spin.

Spin is when Newt Gingrich announces that Egypt's current holding of Americans who were part of the revolution there is "Obama's Iran Hostage Crisis."

You don't have to be very bright to see how few parallels there are between what is happening in Egypt and what happened in Tehran, and, if you want to believe it bad enough to embrace it, you're not really interested in figuring it all out anyway.

But there's a strong industry in creating facts that aren't facts but that can be pulled out in the endless Link Wars waged in comments sections.

You know "Link Wars" — that's where one person links to an article that shows the economy in perfect shape before Obama took office and ran up $X-trillion in debt, to which someone replies with an article that shows Bush was responsible for the deficit, and then they start trading self-serving graphs and charts, each of which provides incontroverible proof that the other is a doodoo head.

I love the idea of taking it to the retail level, mostly because it's one of those horrible ideas that is even funnier because it would probably work.

Doonesbury is taking a safe route in today's strip by playing to birther claims, because even most conservatives know that birthers are delusional. Their votes count just as much as the votes of people with a grounding in this dimension, so you don't want to offend them, but they are absolute loonies, and I'd be kind of surprised if this strip got pulled by some timid editor.

Hey, I said "kind of."

Link Wars, however, are fueled with bogus accounting facts, which are much more slippery.

The nice thing about accounting is that, depending on what system you use and what your predetermined outcome is, you can prove damn near anything with a spreadsheet.

When I was in a band, we used to hear tales of woe from bar owners about how they lost money pouring beer, which was true, but only if they deducted their own salaries, cars, houses, boats and diamond pinkie rings before declaring a profit or loss from running the bar.

And that's Amateur Hour, compared to the way liars work the major political discussions of the day, especially in the areas of "Class Warfare" and "The Deficit."

I think those issues were test-marketed in the last election with Joe the Plumber, who, as we all know but few seem to acknowledge, was not named Joe, was not a plumber, did not own his own business and was not clearing a quarter-million a year as he claimed.

With the pro-Joe crowd willing to swallow that wheelbarrow load of cow manure, it wasn't hard to let them also believe that

(Whopper #1) if you made more than $250,000, you would be taxed at the higher rate for the entire amount and not just the part that stuck up over the line, and

(Whopper #2) that someone who made that kind of profit would not have at least hired a smart accountant to keep it below the line, or, even smarter, formed some kind of corporation to split up and hide the profits.

(For instance, if this small business cleared $270,000 and the accountant really just couldn't find a few more expenses to eat up that extra twenty grand, it would help to have paid Joe a generous, even bonus-laden, salary before settling the books, instead of simply letting him list the whole amount under the line item labeled "mine." Bearing in mind, of course, that he was going to pay the same taxes on the quarter-million regardless of whether you could hide, defer or deny the existence of that extra twenty grand.)

When the True Believers proved willing to swallow this nonsense, it seemed reasonable to move on to bigger, better and more persuasive things.

And now we get into what should be the "Are you an idiot, or do you think I am?" zone, in which people say things that are so nonsensical that it's plain they aren't even trying to tell the truth.

And they do it so confidently and blandly that they appear, to the True Believers, to be telling the truth.

My favorite explains why Warren Buffett pays more taxes than his secretary, and it starts with the lie that Warren Buffett ever claimed he paid less taxes than his secretary.

He said he paid at a lower rate. Of course the dollar amount was larger. But that's the part where Joe isn't a Plumber — if they'll swallow the easy one, you don't need to roll out the Big Lie.

But roll it out they do, explaining that, because he owns stock in a corporation and the corporation pays taxes, he has already paid those taxes as well as his own personal income tax, so he's being "taxed twice."

To which the only rational response is "Say what?"

I've owned stock that paid a dividend. I never owned as many shares of anything as Warren Buffett — hell, I've never owned as many shares of stock as Warren Buffett owns pairs of socks — but I never got a dividend check and then later got a bill asking me to return a share of the money to cover the company's taxes. They took out the taxes before figuring out their profits and declaring a dividend, just like they took out all their other costs of doing business.

And — bulletin here, people — you pay income tax on what you got, not on what you coulda got.

The argument is so screamingly moronic that it's amazing they can present it with a straight face. And yet they do, leaving the question:

Are they so stupid that they actually believe it, or do they think that I'm that stupid?

If that were a sensible way to discuss Warren Buffett's taxes, why not use it to discuss his utility bills?

Surely the factory pays for electricity. So Warren Buffett should not have to pay for the electricity at his home, and, in fact, based on the utilities he has already paid, the Omaha Public Power District owes him a substantial rebate.

And there's no point in posting this explanation, because some True Believer will simply post a link showing that, in fact, poor Warren's dividends are figured after they pay their utilities but before they pay their taxes.

This week's Doonesbury will be fun, but I'm not expecting it to impact the coming campaign season.

 

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Comments 11

  1. I am that True Believer. I won’t post a link as it won’t do any good.
    What Mr. Buffett appears to want to do is to lump every federal tax into his secretary’s tax rate (including the “employer half” of FICA and Medicare), but then selectively exclude some of the federal taxes he pays from the calculation of his tax burden.
    A full release of all tax documentation would clear this up in a jiffy!
    Regards,
    Dann

  2. “Are they so stupid that they actually believe it, or do they think that I’m that stupid?”
    I don’t think stupid is fair. People come to their beliefs through parents and other influential adults, then it’s a process of motivated reasoning that keeps them there. I have liberal, educated friends ( and a President) who, by the same process, think that there’s a creator-being living in the clouds somewhere who may or may not intercede on my behalf based on his mysterious “reasons.” I could apply your quote above to them as well.

  3. Interesting, Dann — you can disprove the claim, which I don’t mind because the reasoning I attacked remains bogus.
    Going by FactCheck.org, she probably pays a lower rate, but, as you note, without numbers, we don’t know. But a fictional woman in a Moveon.org ad would certainly because she’s got three kids.
    And, as you note, they seem to be lumping in some of the employer-paid payroll taxes, which is one of those bogus accounting tricks I mentioned.
    Since I’m self-employed, I pay all those taxes myself (ouch), so I ran some quick numbers from the last year I worked for someone, and, with no kids to exempt, with those earnings, at current rates, I’d have paid about 11 percent — less than Mitt or Warren’s rate.
    Note that Mitt and Warren’s personal exemptions are a much smaller percentage of their AGI. But if they’re smart, they’ve found some shelters here and there, too, and may be driving company cars and so forth. As said, without firm numbers (and that would take more than tax forms to establish) we can’t really tell.
    So point to Dann, but I’m holding on to my central assertion that both sides can roll out their accountants to make the numbers come out however they want, as well as the specific point that the “taxed twice” argument is nonsense.
    And, Owen, I would put this in a different place than religious belief, because the more educated/intelligent/whatever religious believers I know line up with Tertullian’s “I believe because it is impossible” stance, or the more literary, “There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.”
    They recognize the illogic of belief, but also recognize that science is an ongoing process and that the universe has not been fully explained. Which a good scientist would also concede. Fundamentalist skeptics are as difficult to reason with as fundamentalist believers.
    It’s possible, in other words, to believe in God without believing in the Big Man With The Beard. There are a lot of Deists working in laboratories.
    There are also basic secular beliefs that are beyond reason — for instance, that society has an actual obligation to the less fortunate, as well as both the libertarian “to hell with ’em” view and the more moderate “it’s up to the churches and not the government” view. Those are secular articles of faith.
    But one should be able to be logically argued out of a belief in Obama’s Kenyan birth, Al Gore’s claim to have invented the Internet or Dan Quayle’s misspelling of “potato” in the same way you should be able to be argued out of belief in a seven-day creation, Noah’s Ark or Joshua stopping the sun. There is a point at which “invincible ignorance” crosses a line, yes?

  4. Hi Mike,
    I readily concede that (2) opposing battalions of tax attorneys and accountants could readily cook the respective numbers to force (2) fairly divergent answers. I think most of us are smart enough to recognize the wool for what it is before it slips over our eyes.
    There’s a big surprise coming up shortly….
    Wait for it….
    I disagree about the attribution of corporate taxes. Imputing income taxes paid by a corporation to the investors makes just as much sense as crediting the “employer half” of FICA/Medicare taxes to the worker who’s labor created the taxable event in the first place.
    Because corporations are not people. (Citizen’s United being the subject of another discussion entirely.)
    I knew you’d be surprised!!
    People exist without corporations. Corporations do not exist unless they are created and maintained by people.
    If a $10 million a year company generates $1 million in profits (after deductions and other accounting flimflammery). Those profits are subjected to a 35% tax ($350k). The balance is then paid out to the owners of the company. To keep it simple, assume (2) owners each receiving $325k. If the profits are disbursed as dividends or other investment income, it is taxed at the lower rate (15%?) (~49k each). Shouldn’t an accurate accounting of the taxes paid by these two people include that original $350k?
    In my opinion, it should. Just as you find it blitheringly idiotic to use such an accounting rule, I find it equally gobsmackingly obtuse to not use such a rule.
    What I apparently lack is persuasive skill.
    As I noted on my blog raising taxes on Mr. Buffett and his income cohort might be a sound policy. I don’t think the current discussion about relative tax rates makes or breaks that decision.
    http://libertyatallcosts.blogspot.com/2012/01/myth-of-free-buffet.html
    (hope the self promotion is OK)
    Regards,
    Dann

  5. It’s like the old story of the man who lost his wallet in a dark alley deciding to search for it under a nearby street lamp because “the light is better over here.”
    Yes, the birthers and their ilk are on a different level. I get that. But, whether your ignorance and fear is being manipulated by Rush Limbaugh or the Pope or The First Church of Make Up Your Own Version of God And That’s Cool, Brotha makes no difference to me. (Those spirituality books sell, man!)
    Yes, I know that the universe has not been fully explained, but would I still be a good scientist if I did not allow the illogic belief that the universe was created by a frog named Stan?
    I think our invisible ignorance lines are closer in the case of the Link Wars perpetrators than the real True Believers, as I may one of those fundamentalist skeptics.
    Let’s face it, those nuns did a good job scaring the shit out of us.

  6. We’re going to have to disagree on that one, Dann. I certainly don’t count the share of FICA paid by employers in her income tax — another accounting dodge, as I said above — and I just as certainly don’t count any costs of doing business as pre-income-income deduction-deductions for the owners. Profits are profits. You are taxed on what you take in, not on what you might have taken in. That’s not very high level accounting. You pay income tax on income.
    “Purported income” is another matter. If the boss’s house is technically owned by the company, his avoided housing costs are an element of income/benefit involved that can be and should be taxable.
    But the money you might have made if the cost of doing business were lower is not income. It’s a delusion.
    Speaking of delusions — Owen — Tolstoy said something about how, if you were to discover that your wooden idol was simply a wooden statue, it would not prove that God does not exist, simply that he is not made of wood. I’m a true agnostic in that I don’t know what’s out there, but I’m not prepared to eliminate all possibilities. Just the ones I’ve seen proposed thus far, including wood.

  7. Oh, crap.
    I wonder what I could get on EBay for my carving of Stan the Frog in the shrine out back.

  8. Are you just going to sell the carving, or were you planning on excavating the upturned bathtub as well?

  9. No, excavating stuff in these mountains sometimes doesn’t work out well. My son Adam can tell you all about that, since during one of his “clean up Dad’s place” episodes he dug up the remains of a long-forgotten, overgrown outhouse. Also, it’s suspected that a couple of our home-grown mass murderers (Ed Kemper and Herbert Mullin) haven’t been completely forthcoming about how many victims they notched.

  10. Mike, I’d really like to understand your perspective. Is the issue that tax deductions exist that allow company owners to potentially bury personal expenses in the corporate accounting?

  11. No, it’s that, with a good accountant, you can shift stuff around to prove anything — including that Buffett pays at a lower rate than his secretary. My point about personal expenses is that some small business owners do try to hide assetts by labeling them as part of the business — for instance, a boat that, once a year, they take their sales team out on and that, the rest of the year, is their personal toy. Which is a dishonest way of keeping “income” at a lower level. Sometimes to cheat the tax man, sometimes to cheat the ex-wife and kids.
    Example from the Big League: You take the corporate jet to Hawaii, speak to the chamber of commerce luncheon and write it off as a business trip, but then spend a few days on the beach. You write off your transportation and one night in the hotel, not the three extra days.
    Legal, yes, but only ethical if that speech was genuinely important and not just a way to get a trip to Hawaii without leaving a trail of taxable income.
    Perfectly okay to bring the family, plant them on the beach and spend the week in meetings, stay the weekend, go home. Goes downhill from there.
    But there is a lot of putting assetts various places where they aren’t “yours” but are there for your enjoyment. You’d better have a good tax attorney, because the IRS will hang you by your thumbs if you mess it up, but it can be done.
    And the thing is, there are perfectly legitimate reasons to do these things — for instance, farms are often owned in trust or by a family corporation because of inheritance issues.
    But if you’re intent on gaming the system, there are ways to do it. And if you’re intent on proving a bogus point, you can also game the system to make your assertions appear to be true.
    Any point, either side of the spectrum.

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