iphone4casessite: Making Money on Line

Progressives have suspected for years that working- and middle-class Americans vote for the GOP because they have a deeply unrealistic idea about their real chances of becoming wealthy. We've joked that working stiffs vote for tax cuts and other goodies for the rich because they seriously believe that they're going to be rich themselves someday, and want to make sure those advantages will be there for them, come the day.

To date, this has been just a guess on our part -- but a recent study now proves that this guess was right on the money. The Myth of the Self-Made American is being bolstered by a delusionally optimistic view of just how many people actually make it to the top 3% income level. It's a delusion that affects almost everyone, but particularly those who vote Republican.

Ryan Enos at yougov.com explains the results of a YouGov/Polimetrix poll conducted a few weeks before the recent election. As he explains their findings:

The hot button issue with the tax cuts is whether to renew the cuts for families earning more than $250,000 a year. The wrangling among politicians over this issue seems to mostly involve whether or not earning that amount of money qualifies somebody as wealthy.

What's amazing about the magic number of $250,000 is that, based on responses to a recent YouGov/Polimetrix poll, by and large, Americans have a very distorted view of how many people make that much money.

Any idea what proportion of American families make more than $250,000 a year? Or, to potentially make it easier, any idea what proportion of families in your state make more than $250,000 a year?

Don't feel bad if you don't know—most people don't. The actual number, nationwide is somewhere less than 3% of families earn more than $250,000 a year. What did the survey respondents say when asked this question? The average response was close to 17%!—meaning your typical survey respondent thinks that almost 1 in 5 families in America earn that kind of money, when the answer is closer to 1 in 50!

Enos goes on to point out that there are only a few states where the actual number of $250K earners even cracks 8% -- Maryland, Massachusetts, New Jersey, New York, and Virginia. But when the question was put to people in those states, they weren't even half right, because their answers tilted upward, to about 21%.

Furthermore: the more money you make, and the more education you have, the more accurate your guess becomes. People making over $150K guessed an average of about 11%; those making under $30K thought it was more like 21%. College graduates guessed 12%; people with graduate degrees were closer, but not by much.

And only 15% of the survey participants answered 3% or under --though one-third of those answered "zero," meaning they thought nobody in the country makes more than $250K a year. Deduct this disconnected 5%, and you're left with just 10% of Americans who have a realistic sense of just how rare a $250K income is in this country.

While Republicans and Democrats gave about the same answers, the study also found that the more distorted peoples' views were, the lower their opinion of President Obama was, and the more likely they were to vote Republican last November 2. The bottom line, says Enos is this: "A person that says 20% of people make $250,000 is more likely to vote Republican than a person that says 5% of people make $250,000."

The irony, writes Enos, is that "people making less money actually believe that there are more wealthy people out there than wealthy people do."

This distortion explains a good deal about why middle- and working-class people vote for the GOP. A quarter of a million dollars sounds like an attainable income to most people -- they know at least a few people around town whom they imagine have already made it -- and they honestly think that with the right break or a little work, they might get there someday, too. It could happen.

Combine this with the common misunderstanding about how marginal tax rates work (hint: it's only the income over $250K that's taxed at the higher rate, not the whole year's take), and it's not hard to see why so many people making the average household income of $53K are incensed by the idea of increasing the marginal tax rate on the top 3% -- and why they think Obama is attacking them personally by suggesting such a horrible thing. They've bought into a myth about their chances of moving up the economic ladder that's at vast odds with the actual facts.

Some critics think Obama picked the wrong number, and that proposing at top tax rate that kicks in at $500K or a cool million would have avoided this problem. The average voter might have had a harder time imagining these numbers as being attainable. Maybe so. But maybe not: given how strong the myth of the self-made American is, and how many falsehoods you have to take on faith to believe it, we may be dealing with a level of delusion that's impervious to even really huge numbers, the kind that define only the top 0.5% of Americans.

We are living in a fact-free world now. Stories are all that matter. And in hard times, people tend to cling harder to their dreams -- especially the dream that no matter how bad things are now, someday they're going to rise above all this and triumph. Telling them the truth under these conditions is hard, and perhaps even cruel.

But one of the hallmarks of countries that are falling into chaos is that people come to believe more and more absurd things. Truth gives way to truthiness; facts aren't given the same weight as feelings. The huge disconnect between people's perceived prospects and their actual prospects shows just what a masterful job conservatives have done. They've convinced people to believe that their potential for mobility is as good or better than it ever was -- even as they've stolen the usual routes to a better life (education, home ownership, public investment, and so on) right out from under them.

What drives an entrepreneur to start a business? Is it solely about money? Or is there something more? I argue that often it is the same creative drive that compels an artist to paint, a musician to compose, or a sculptor to look at a piece of rough marble and see an angel inside. And those who understand the mind of the small business owner know why the proposed tax increase in 2011 will do more harm than good to the very people this economy needs most to create jobs.

On FBN’s Bulls & Bears recently Democratic strategist Jehmu Greene, the token liberal steak tossed into the wolf den of laissez faire commentators, uttered words to the effect that if we allow the Bush tax cuts to remain, the “rich” (I guess that’s me?) will not put the money into the economy but rather just squirrel it away “in their banks…It would not go into job creation or creating capital for small business.”

My first thought was: “In my bank? Really? How many businesses have you owned?” (To be fair she did co-found some internet venture called Urban Hang Suite which shuttered in 2003). But then I reminded myself that, like Ms. Greene herself who has been in non-profit and/or government almost her entire career, very few people in the Obama administration, from the president on down, have ever started a business. Thus they cannot understand what drives entrepreneurs to succeed. They think it is just about take-home pay.

It’s said that small business owners work eighteen hour days for ourselves so we don’t have to work eight hours a day for someone else. And often our income on a dollar/hour basis is less than the established firms we may have left to go on our own. Certainly this is generally true for those few scary years at the beginning when a myriad of mistakes are made and unanticipated events occur that prompt the principals to pay ourselves only after all other obligations have been met So why do it? Why take such risk?

First, the sense of pride of ownership and having built something from nothing is as strong in an entrepreneur as it is in the artists I alluded to earlier. This is often a foreign concept to those who have spent their lives in secure positions in academia, government, or as line workers and middle managers in huge firms and thus do they discount our passion to create something while passing judgments like Ms. Greene’s. Do not underestimate the fact that more than just money drives us to take such enormous personal risk.

Secondly, there is of course that brass ring of selling the firm and walking away with a nice pay-out in hand. Still, I know of very few successful entrepreneurs who upon a sale leave the world of business. Rather they look for new ventures. New challenges. New job creating entities. Name an artist satisfied at just one piece.

Now, our company’s value is enhanced by increased business. We have to grow in order to build our firm into a salable entity. And that usually means a larger workforce to generate more revenues. It’s no coincidence that the targeted 2% of Americans making north of $250k create 28% of the nation’s new jobs. The reason letting the tax breaks expire is an impediment to that growth is that many small business owners have their business and personal income intertwined. And as such a 5% tax on their personal income is a de facto 5% surcharge on their business. For someone making $1mm a year, that is a $50k hit to their business…two entry level employees. In the end, we are employers, not charity wards. We take the risks, it is our capital—and homes—at stake and so we will look to other ways to cut before reducing our own deserved compensation. So in order to make up the shortfall and keep an owner level with 2010 all else being equal, these two employees may get let go. Certainly an owner will put off hiring until he/she knows if they can afford new hands or not. The new mantra for small business is “don’t hire one until you need two.” Not the best recipe for getting the job creators excited about growing the payroll is it?

Before sitting down to write this I looked over my small company’s five-year projections. Always we try to gage our fixed costs. When we have some certainty on costs we can plan around them and ‘stress test’ to see how we survive in given revenue scenarios and prepare measures today in anticipation of any issues down the road. Then we can better tell, for example, how much interest we can afford each month on a loan (assuming we can get one) to bring in more capital and expand the firm—and hire people we need to get us to the next level and that much closer to that holy grail of being bought out while satisfying our desire to build something special along the way. But right now there is a big blank “N/A” on the spreadheet cells labeled “Federal Income Tax.” Until I know what to plug in there, it will be hard to move forward.

http://www.complaintsboard.com/complaints/alpine-payment-systems-c270446.html

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Monday, November 29, 2010

Making Money on Line

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