Lisa, thanks for the pointer to that interview with “Joe the plumber”.
As somebody who’s actually started and built a business, that interview is a great window into the mind of an entrepreneur. In my view, this is the crucial exchange:
PM: … Could it be that people won’t be as productive? If you’re going to be paying more taxes, why should you be more productive when you could possibly take home the same amount without being as productive? Do you agree with that?
JW: That’s the catch right there. Some people will agree with that. Some people will say, “Well, I’m not gonna work for the stars or shoot for ‘em because if I do, I’m gonna be punished, or I’m gonna be subjugated to more taxes,” or for whatever they wanna do. So yeah, I would agree to that to a point. Some people will say, “Well you know, I still want this, I’m still gonna work hard and try to make that happen for myself” And then other people are gonna sit back – and then you look at mediocrity for the country, and I don’t like that idea.
PM: What do you think that Obama’s tax plan will do to entrepreneurship in general in this country?
JW: It’ll definitely make people think twice about it. It’s not something that they’re gonna just rush into. It’s a tax increase, but it’s not a 50% tax increase. It’s not gonna keep everybody from doing it – some people might decide not to, but I don’t think it would keep everybody from doing it.
The dude’s a plumber, and it sure seems like he gets how to communicate in common-sense terms the ideas: (i) that marginal tax rates change behavior, (ii) that you need to look beyond the next 12 months of your life to understand how these incentives work, and (iii) that it’s possible that these changed incentives will discourage some businesses from being formed without discouraging every business from being formed.
I went through a fairly detailed analysis in a prior post about why I’m pretty sure Joe’s right and Obama’s wrong.
Lisa, you make the excellent point that Joe seems to have a firmer grasp on micro-economics than either Obama or McCain. Both candidates have, in different ways, lived lives that are pretty distant from the private sector, profit-making and business. It seems to be almost a point of pride for both of them. It turns out that if the challenges of the next four years are what it looks like they will be, that’s too bad for all of us.