money

The other day I tweeted a paraphrase from one of my favorite bloggers Atrios regarding Mitt Romney's tax returns that went something like "the tax rate on any money the pile of cash earns is much lower than it is on the money earned by people who actually work." A couple people asked me to explain this a little more so I thought it would make a good bloggy topic.

I am a small business owner, and (so far) a successful one at that. I'm rather proud of that fact. I look forward to the day when my prosperity is cemented and I can be a new kind of class traitor.

Anyway, the entrepreneur tip is what I'm on right now, and I heard this on NPR and it got me mad enough to yell at the radio. I want to give a big, personal "I Lived Through 9/11 And You Didn't" Scranton-style dick-punch to both John Bohner and Mitch McConnel — and really anyone parroting the GOP party line — for turning people like me ("small businesses") into some GOP hump-fetish to defend the notion that we really need now are tax cuts for the top bracket of earners, those pocketing more than $250k a year.

Let's be clear. It is not many small businesses, or even good ones, that will be affected by these cuts. And those that are, that means the owners are making $250,000 or more, which regardless of your perception, makes you a wealthy individual here in Estados Unidos. Count your blessings. I do.

I'll break it down for you in bare brass tack terms. You only pay taxes on profits, not revenue. This is basic accounting, which I know they don't teach in the Senate, but it's something you learn if you stay in business more than a year: gross is not net, and you need to learn to tell the difference. A small business with six or ten employees may turn over around a million dollars in a year, but most of that is spent before year end.

This is how you roll in real life as you stack that cheese. Here's what I know:

Existential crisis of meaning. Four years in Chapter Three. Leaving Westhaven. A new life is coming, but what sort? Well dude, we just don't know.

So here's this table from a slide from a presentation my business partner sent me as part of our ongoing project to raise the level of our entrepreneurial game. It's about people's motivations for starting businesses:

Spent this past week at this little get-together called Drupalcon. I've done a poor job in general explaining what this "Drupal" is to my non-nerd quadrant of friends, and it's a pretty long story with a lot of angles and beautiful idiosyncrasies. And also now kind of a big deal on these old internets. Like, 3000 people showing up for a conference we organized, with major sponsorships from technology heavyweights and a presentation from the White House.

Yeah.

The first wave of my professional life was very startup-oriented. Silicon Alley from '98 to '01. I never made any money of course, but as a 19 to 22 year old kid it was amazing experience both on technical and business fronts. The second wave was all about politics, but definitely had that scrappy startup kind of vibe, bootstrapping an insurgent campaign and then getting the non-profit equivalent of venture financing to try out some totally unproven ideas, including building a professional space around Drupal and participating in the dot-org boom. After that I took some time off and freelanced, then started a company. While starting ones own company is an integral part of being an entrepreneur for real-real, the first few years of this were a lot of hard learning curve for me, and to be honest it was a lot harder than I thought.

Now, exhausted from an excessively busy week and battling a devilish low-grade cold, I still feel like, once again, the buzz is back. It's a new wave. I'm back to sleeping six hours a night and waking up jazzed.

I finally caved in and made a political donation, my first in the general election. Obama hasn't really needed my money -- and I volunteered about $2,500 worth of my market-rate time making this vote-call widget to help him out -- and the only other candidate I was tempted to contribute to was Jeff Merkley, who's on track to unseat the odious Gordon Smith back in Mighty Oregon.

But those hepcats at OpenLeft sent an email and I felt weak, so I threw some coin to Darcy Burner, because she's someone I've seen in action on the conference circuit and she seems honestly to be "one of us." And she's in a tight frickin' race.

So yeah, if you feel like donating to try and push the momentum to fever pitch, find a Congressperson or Senator (or a city council member) who's looking to knock off a bad guy and give down-ballot.

The taxman cometh. I just forked over about 52% of my total take-home income from the past year to the federal government and state of California. This is where having a business that works out becomes painful, though I can't help but think that a more devious accountant (yes, more devious than a ninja) could have done at least a little bit better.

In many ways the deck is stacked against us entrepreneurial types. We're taking advantage of the simplest and most flexible business structure, the LLC. We still pay self-employment tax, and our desire to build up the business and hire people means we're leaving money in the bank that we could be taking for ourselves, yet the IRS considers that as profit from a business and personal income whether we draw it or not.

So in an effort to expand we knock ourselves up a couple tax brackets without increasing our take-home pay a cent. I've been saving for it since last fall, but it still feels mightily deflating. No refund for me.

Oh well. First-world problems. If you're on the other side of the great class divide and wondering what to do with your Bush Money, here are some neat ideas.

Well, I'm glad I got out of debt, but I'm also glad I didn't do it early enough to sink any money into "the market." While I'm sure many funds will still do well and long-term investors have little to fear, the current economic trajectory is pretty ugly. The dow is headed towards 52-week lows, and there's more bad news to come.

This is what happens when you run things like the Soviets. It's increasingly obvious that our economy, beyond being unsustainably debt-based, is also build on a series of consensual hallucinations that don't map well to reality. Because our made-up-prowess is in "financial products" rather than steel and wheat production, we can get by for longer than they did in the USSR -- and we get hit with mortgage defaults rather than breadlines, which is an improvement -- but the books are no less cooked, and CNBC is a propaganda outlet, not a news channel.

The Big D may indeed be coming, although a new bubble/rally may emerge around alternative energy and infrastructure instead. Here are the fundamentals:

* Most major banks and financial firms are facing serious losses of capital and credibility as a result of the housing bubble. The "correction" for this will go on for several years, and though the effects will likely be mitigated by a bailout and other activity, the bottom remains a ways off.
* Consumer spending -- which is to say people buying shit -- has been the main thing keeping the boat floating, but has been based on second-mortgages and credit card debt.
* The falling dollar has been boosting exports, but is also driving inflation and exacerbating energy costs.
* The occupation of Iraq probably prevents any meaningful Federal action, cost-wise. It's also not doing anything to help out with the energy cost situation.

As the end of the year approaches and various spreadsheets are compiled, I am increasingly forced to face the uncomfortable reality that unless something changes I will soon cease to be legitimately bohemian in economic terms. Affluence awaits. While I'm sure this is the sort of thing that parents love, and people less fortunate hate to hear me bitch about, it actually does provoke a significant amount of anxiety for me. Hence the blogging.

Clearly, I don't buy into conventional American moires about what's polite to discuss, and I frequently carry on about religion, politics, sex, drugs, and all sorts of other topics that people tend to avoid in polite company. However, aside from the details of my own romantic life, money is probably the thing I'm most trepidatious talking about. Seems like a good way to give offense and/or invite ridicule. Nevertheless, it's on my mind and I feel like getting it out in the open, so here goes.

If I Had Money I'd Buy A New BMX
I grew up, for a number of reasons, with a certain amount of classism, although I wasn't too conscious of this until I went to NYU. There was always some vague resentment towards "rich kids" and a general anti-capitalist attitude (some of which still persists), but it wasn't until I got up-close to the children of idle wealth that I realized how much it set me off.

Part of this is justifiably utilitarian -- waste is bad and a lot of people are unreasonably extravagant -- but there's a difference between inequality/decadence and being financially successful (c.f. Warren Buffet). I've come to see Classism as no different at heart than any other -ism: a prejudice; something to be overcome.