G.O.P. Debate: A Broader Party or a Purer One?

On today's New York Times website an article appeared (see here) which outlined the debate going on within the Republican Party about how to recover from recent electoral losses and the defection of Pennsylvania Senator Arlen Specter to the Democratic Party.

Of all the quoted opinions contained in the article, I am going to lift two. Those of Senators Lindsay Graham and Jim Diment, both Republicans from South Carolina. I pick these two quotations because both come from dark red South Carolina and I think it is appropriate to point out how two men hailing from the same state have such differing opinions.

These quotes are:

Senator Lindsay Graham, Republican of South Carolina, said: “We are not losing blue states and shrinking as a party because we are not conservative enough. If we pursue a party that has no place for someone who agrees with me 70 percent of the time, that is based on an ideological purity test rather than a coalition test, then we are going to keep losing.”

And:

Senator Jim DeMint of South Carolina said ideological purity was the road to success. “The best way to get to 60 is to have a core group of Republicans who really do what they say and stand for their principles,” Mr. DeMint said.

I believe these two opinions accurately represent the two sides of the debate currently underway in the GOP.

First let me explain where my comments are coming from. I describe myself as a moderate. Many conservatives dismiss me as a liberal and many liberals label me a conservative. It is for this reason I describe myself as a moderate. With some of my opinions, I agree with the left and with some I agree with the right. Often I sit in the middle and would rather see compromise then an all or nothing victory by either side.

So where would I like to see the Republican Party in the future? I'd like to see them head in the direction of nominating more candidates that I would consider voting for. I would hope they would come to me rather then heading further to the ideologically pure right. I want choices when I go to the ballot box, and I would rather not be forced to always vote for the Democratic candidate.

Now let me explain that I understand that I am never going to get everything I want in a candidate unless I were to run for office myself. My opinions are so varied, that it is highly unlikely that a candidate will always agree with me. I also am not claiming to be the voice of the moderate voter. I will state that if another voter has opinions diametrically opposed to mine, that this voter too is a moderate because that voter will have a variety of opinions.

I view very favorably someone who has a variety of opinions. If someone always agrees with the most extreme portions of their party on everything, that person is unacceptable to me. I realize that both parties are going to have some of "those types" serving in government because both parties do contain sizable numbers of voters who prefer them as representatives. However, I do not want to see these types representing me.

But what does a voter like me do when faced with candidates for office, both of whom are what I would call extremists? When the Democratic nominee is from the far left and the Republican nominee is from the far right? How do I choose whom to vote for then? Do I just abstain? Maybe, depending on the candidates, some of my opinions are more important to me then others. However I am also then strongly influenced by which party is most inclusive of moderate voices in other races for other offices, in races in other districts, and in races throughout the nation. In other words, if I vote to add one more vote up on Capitol Hill to one party or the other, are there enough moderate voices within that party so that I can at least hope someone will still be open to debate and help keep things from spinning out of control?

It is my hope that the Republican Party seeks to appeal to more moderate voters by broadening its appeal rather then narrowing its focus by fielding only ideologically pure candidates. I hope the party changes and comes to me rather then narrowing its focus and trying to force me to come to it.

I believe the recent successes of the Democratic Party are at least partially due to the signaling by party leadership that they valued and welcomed moderate candidates who often disagreed with majority of Democratic party members and that if these candidates were elected they often might vote against party leadership in order to represent the opinions of those who elected them. I do know that is how the Democratic Party increased its appeal me, an independent voter.

The Democratic Party has been so successful with me, that I have considered abandoning describing myself as an independent, and affiliating myself with the Democrats (although I would describe myself as a Blue Dog Democrat). However I think it is better and safer for me to continue to stick with being an independent. I value my freedom to vote for what I consider to be the best candidate no matter which party that nominee runs under. I do not want to have to deal with being described as being disloyal for sometimes voting for the nominee from another party. However if it looks like the Republican Party is going to circle the wagons around the extreme right wing core? Well then I might be forced to abandon my independence, become more active in the Democratic Party and just do my best to ensure the Democrats nominate as many moderate candidates as possible. (Since I live in Virginia where independents are allowed to vote in whichever primary they wish, I can do some of that already.)

As far as I am concerned, the choice is up to the Republican Party. If the wagons are tightly circled, that will send to me a strong signal they do not want my vote, and if they do not want it, they are not going to get it.

Tax Rate Debate

Due to concerns about President Barack Obama's intentions to raise taxes on our wealthiest citizens, there has been a lot of discussion in the media, on blogs and on talk radio about how such tax increases would affect small businesses. Today the Washington Post website had an example (see here) from which I intend to lift this quote:

Other business owners are also nervous. Jim Murphy, president of EST Analytical in Fairfield, Ohio, which sells analytical instruments to environmental testing labs and pharmaceuticals, said his company is struggling in the sluggish economy. But if profit returns to pre-recession levels -- about $455,000 -- Murphy said his accountant estimates that Obama's proposals could add $60,000 to his $120,000 tax bill.

"The misconception is that guys like me take [our profits] and put it into our pockets," said Murphy, who employs 47 people. "But the money the company earns in a given year is used to buy additional inventory so we can grow and hire." A 50 percent tax increase, he said, would be "really painful."

The above serves as an example where small business owners sometimes try to mislead the public when discussing this issue. I have to think that this must be deliberate. Surely Mr Murphy is not so ill informed about how the profits of his company are figured and how the bottom line is arrived at that he must pay taxes on.

Mr Murphy is not paying taxes on his companies gross profits, at least not to the feds (he may be paying local taxes on gross receipts, but that is not a federal tax). The money that is "used to buy additional inventory so we can grow and hire" is deducted from his gross profits and he and/or his company (it depends on how his business is organized which entity pays the taxes) would only pay taxes on net profits. Thus if Mr Murphy's company plows 100% of his gross profits back into the company, he would end up with a federal tax bill of zero. That's right, he would not owe a dime in taxes so he would have completely escaped Barack Obama's proposed tax increases.

Mr Murphy attempts to call this into question by directly stating: "The misconception is that guys like me take [our profits] and put it into our pockets." But the only profits he pays taxes on are those he puts into his pocket. Anything reinvested in the company is an allowed business expense which is deducted from the gross before taxes are paid.

Now there are some genuine arguments that can be made for why increasing taxes on small businesses would be undesirable. (The strength of these arguments could be debated as well.) However fabricating outright false arguments in an attempt to mislead those who do not know any better does nothing to win the debate.

Actually, it could be argued that increasing taxes on net profits could motivate additional reinvestment of gross profits back into the company in order to escape the tax increase. Perhaps Mr Murphy is not smart enough to figure out how this might be so, but if he seeks the advice of a competent tax accountant he might come to understand how it works. A good accountant can also offer him advice on how to structure his company so as to minimize his tax exposure.

I am self employed (a small business) and I know that I enjoy many tax advantages that most average citizens are unable to take advantage of. Perhaps I just have a better tax accountant.

Who Pays Unemployment Taxes?

Recently while I was trucking in Pennsylvania, the subject of unemployment taxes came up on my CB (Citizen's Band) radio.

A trucker was grousing about how he did think it was fair that he had to pay unemployment taxes to provide benefits for all the unemployed. He thought it was just another form of welfare. I made the contention that it was only employers, not employees who paid unemployment taxes. Another truck driver chimed in that he had his pay stub handy and it clearly showed withholding for unemployment.

With some exploration, I found that both of these truckers were local drivers who resided in Pennsylvania. I then stated that this was something new to my experience. I had always assumed unemployment taxes were paid only by employers and the expense hidden from employees (it is still an expense to the employer - an expense for each employee he takes on), but perhaps Pennsylvania was different. I stated that I did not think this was true in most states. None of the truckers listening to the conversation from other states contradicted me.

I was motivated to do a little research on the internet. After starting my search using Google, I was not coming up with any real pages that solved the mystery for me. In fact, one website I visited claimed it was illegal to withhold money from employee paychecks to pay for unemployment compensation insurance. It seemed like most of the sites I visited were guilty of the same assumptions I had made. If unemployment is paid for in their state entirely by the employer, then this must be true in all states. Remembering that www.ask.com allows queries in plain language, I expanded my search there.

With the assistance of Ask I came upon a page (see here) at the Business Owner's Toolkit website that yielded some light on the subject. Please note that the linked to page states that only two states assess unemployment taxes on employees, and these are New Jersey and Alaska. But what about Pennsylvania? At the bottom of this page is a graph that allows you to click on individual states to find tailored information about unemployment taxes for the state in which you do business. Clicking on Pennsylvania, I noted that, yup, there is withholding in Pennsylvania from employees checks for unemployment taxes. Clicking on all the rest of the states, I noted that two states, Alabama and Washington, allow withholding as an option (perhaps to force the employees to pay a portion of the employers taxes). Anyone want to place a bet that in these two "optional" states it will not take long before the withholding becomes the norm?

So there we have it. Three of fifty states have mandatory withholding from employees paychecks to pay for unemployment. An additional two states have this as an option for employers.

Perhaps we are starting to see cracks in the dam. With the current economy, most state's are finding it difficult to fund unemployment compensation benefits and they are looking for additional revenue. I will not be surprised if an increasing number of states resort to passing part of the burden onto employees as part of the solution to their deficit woes now that the first cracks have appeared in the dam. Those most capable of making campaign contributions are going to have the loudest voices in the debate, and they (the employers) are going to be arguing they should not have to shoulder the entire cost alone.