Of all the stories coming out of the 2008 US Presidential Elections, the one about Joe the Plumber is potentially the most fascinating one.
This guy (who is called Samuel Wurzelbacher) went up to Obama last Sunday. "Wurzelbacher told Obama that, after 15 years of working as a plumber, he's now preparing to purchase a company that makes more than $250,000 a year. "Your new tax plan is going to tax me more, isn't it?" he asked."
Look at the man (left). Now consider that Obama's tax increases don't cut in until someone is earning more than $250,000. Something's not right is it? Knowing that he is a plumber, one is bound to ask: does this man really earn over $250,000? Does he have a chance of purchasing a firm that would provide him with salary and profit in excess of $250,000?
It turns out that the answers to those questions are: No and no.
He earns an estimated salary of around $48,000 currently.
The firm he wants to purchase would provide him with earnings of about $6,000 on top of that. So, Mr Wurzelbacher, even if he bought the firm, would be about $200,000 under the threshold at which Obama's tax increases start. Indeed, he would get a bigger tax cut from Obama than he would from McCain.
Why all the confusion? Well, dear old Joe was getting his numbers a bit mixed up. The company he wants to buy has a gross worth of $250,000 but annual sales of only $100,000 with estimated profit after salaries of $6,000.
So, in essence the whole saga has blown up because of an error where either Joe's earnings were multiplied by a factor of five, or Obama's tax rise threshold was divided by a factor of five.
Andrew Romano has the full and fascinating details here:
This presents us with an interesting--and illustrative--case study. Whether or not Wurzelbacher buys his business, he's guaranteeed to get a larger tax cut from Obama than McCain--and yet he still prefers McCain's plan to Obama's. Ultimately, then, we end up with two potential voting blocs. First there are the people who earn less than $250,000 and want the largest possible tax cut for themselves--a group that doesn't include Joe the Plumber OR Joe the Small-Business Owner. Then there are the people--like Joe--who earn less than $250,000 a year, but are willing to turn down the bigger tax cut for one of three reasons. Some are trickle-down/free-market adherents who believe that larger tax cuts for those richer than themselves will best serve the economy. Others simply don't trust Obama to keep his word. And then there are those who identify with the wealthy, believe they're bound strike it rich someday and don't want to pay higher taxes when they do.
Both groups--Group Joe and Group Non-Joe--have valid positions. But the question facing McCain--who hopes to make taxes the centerpiece of his closing argument--is which group is bigger. All told, voters making less than $250,000 a year represent 98 percent of the electorate, so they'll be picking the next president. Traditionally, many of these folks resent the idea of having to pay more money if they ever become part of the other two percent, so they side with Republicans on taxes. After all, that's why George H.W. Bush closed the gap with Bill Clinton in the final days of the 1992 race. McCain may still benefit from a similar shift. But one has to wonder whether the traditional GOP message on taxes has lost some of its luster amid a financial crisis that suddenly makes it significantly easier for people like Joe the Plumber--if not Joe himself--to picture themselves earning much less in the future, not much more. In which case Obama--who offers more people more money more quickly--would stand to gain.