Minnesota GOP Gubenatorial Candiate Tom Emmer has finally started in with his campaign advertisements, and as expected, it's the same tired, out and (imho) highly discredited saw of "lower taxes and the rich will give you good jobs."
Emmer talks about 'job killing taxes" and "pro-growth tax cuts" in a clip that could have been played in 1983 or 2003, nothing changes, tax cuts for the rich, tax cuts, tax cuts, tax cuts for all ills - it is the only policy position on which the GOP seems consistent.
In boom times, in normal times in lean times, it's tax cuts, first, last and always. The saw remains as always, "you don't need it, not only send it back, readjust the codes, you're taking in too much." Now, notwithstanding that tax burdens decrease as those who used to be on welfare find employment in boom times, and notwithstanding that receipts naturally grow, this attitude of cutting taxes in boom times seems unable to grasp that you build up reserves, you plan for when times return to normal (that is, you do if you are prudent).
In normal times, it's tax cuts to stimulate higher growth. I remember when Jason Lewis used to claim that "we cut tax rates on the upper incomes by .5% and look what happened, receipts increased $200M per anum."
Now, Mr. Lewis of course didn't bother to mention that this was done during the mid-90's, that wages in general were in high growth, nor did he bother to mention that later cuts seemed to have no effect - nope, just point to fact A which happened to be in time coincidence with point B, and say "A caused B."
Some realities, when we cut taxes dramatically on the wealthy in the middle 80's, in what was supposed to lead to the creation of new factories, new industrial sectors and (yes, you guessed it), "better jobs", what instead happened was that industrial manufacturing was gutted, moved overseas, and was only EVENTUALLY replaced by technology more as an outgrowth of the expansion of technology in general than investment by the "uber-rich" in the mid and late 80's. What we also saw was an explosion in real estate investment, an explosion in speculation on real estate as well that ultimately lead to the Savings and Loan collapse (and bailouts and Resolution Trust Corp). It was a collapse Japan in many ways still hasn't recovered from.
In the 2000's, the tax cuts (again mostly for the wealthy), didn't, by any means, result in new jobs. Instead, again we saw speculation in real estate, again we saw a over-concentration of assets chasing too few good investments, and again, we see no materialization of new jobs, new factories, new industries. Those tax cuts (the Bush cuts) have been in place for eight years, presumably we're supposed to have seen these 'new jobs' by now, but where are they? We've moved 10 Million technology jobs to China and India between the US and Europe - most heavy manufacturing is done offshore now.
No, instead we're looking to lower the minimum wage so the poor get less and lower the taxes on the rich so that they can keep much more? The rich have seen their assets vastly increase in the past 30 years, income of the upper 5% is four times what it was in 1981, while the rest of us languish. If giving them more is supposed to mean a better life for the rest of us, I have to ask, "WHEN??!!!" It hasn't happened, and it won't happen quite simply because those who are at the top of the food chain economically didn't get there by giving their money away, they got their by being shrewd enough to move jobs overseas while asking the US populace to pay the same price for a cheaper product. They got their by getting water-boys like Tom Emmer to propose wage cuts for the poor, and they got there by duping voters into believing they are "job creators", that they'll spend tax savings to create factories to make products which their isn't a demand for (supply side economics) or at factories which they have to pay more for labor than they do offshore.
Why exactly should I give them more in tax savings? So they can gut my country/state by shredding tax receipts, outsource my job, and walk away to live like kings? We've played this game twice before, once in the 80's where debt driven/speculation based service sector job growth made it appear the economy did "ok" and in the 2000's where it was an indisputable failure, no jobs, weak economy, vast debt - well, I've been fooled once (maybe twice), but I think I'll try my hand at a different game now. I don't think Tom Emmer (or any of the 2012 GOP Presidential contenders) have the best interests of the country at heart when they enable people to gut our country for their benefit. They may wrap themselves in the flag, but they're nothing more than economic hit men.
Those Bush tax breaks for the wealthy should have ended before now.
ReplyDeleteFunny how the conservatives are always hot to balance the budget, but only with the taxes on those who have the least.
Redistribution of wealth - upwards - isn't a dirty word to conservatives. ONLY when it applies to redistribution of wealth downwards in the form of lower taxes for the majority, is it a word the don't like.
Trickle down econmics only get it partly right, the 'trick' part of fooling people.
I would like to point out that the Bush tax cuts are not "only for the wealthy". If you owe $200k in taxes a 10% cut will benefit you a thousand times more than the guy that owes $200 in taxes. That is simple math.Also more than 50% of people who claim capital gains on their income tax make under $200k a yr. Also part of the Bush cuts doubled the child tax credit from $500 to $1000, so letting that expire effectively raises taxes on everyone with children by $500 per child. You might be right about the rich not spending the money to create jobs but I would bet over 75% of the middle class spends that $500 per child on big ticket items they cannot afford other times of the yr. That is a lot of spending to take out of a down economy.
ReplyDeleteA person earning $200k a year (either head of household, single, married filing jointly, etc) does not qualify for the Child Tax Credit. It starts phasing out at $110k per year for married filing jointly.
ReplyDeleteThe Bush tax cuts were based on what seems to be a Republican premise that no taxes will somehow allow the economy will grow. However, how will the Republicans then fund the wars that their Republican president, Bush II, started? Iraq, fortunately, is winding down. However, Iraq, a war for which there was no national security justification, has cost at least $735 billion. The cost in human casualties, both civilian and military, is incalculable. The war in Afghanistan is not winding down, in fact, after almost a decade of neglect, its now getting attention that it should have had all along. This war has cost $286 billion so far, at least. Without taxes, who will fund these wars? Who will fund the massive defense empires that Republicans demand, in the sake of "national security".
Of course, the Republican answer is that we can cut social spending. Yet, I don't see Republicans with suggestions for cutting Social Security or Medicare. In fact, it was a Republican congress and president who engineered the largest expansion of Medicare entitlements in recent history, with the prescription drug benefit. According to the annual report of the Medicare Trust Fund Trustees, the estimated cost of the program from 2009 to 2018 is $727 billion. Part of this cost could be reduced had Congress authorized medicare to negotiate with pharmaceutical companies, but instead, at the behest of those companies, Congress prohibited such negotiations.
The point of all this is that tax cuts have NOT shown the growth of the economy that has been claimed, there is no empirical evidence in recent history to support that. Yet, Republicans insist that the deficit be reduced. Republicans need to get a dose of reality.
Tuck,
ReplyDeleteThe facts I use below are from memory, but I will substantiate them later and amend as necessary.
I find facts like 50% of the populace benefited from a capital gains cut to be like pointing out that half the people have brown hair. It is true, but it is not meaningful.
While 50% of people may have stock through a company 401(k) or an IRA, their holdings are de minimis. The value of such savings are so inconsequential as to be of no legitimate value to the shareholder.
By contrast, the actual dollars saved, were very very heavily concentrated upward. In fact, far in excess of even the split of income, this is because the ultrawealthy not only make more in direct income (accounting for nearly half of all income in the upper 10%), but because where the real wealth is held is in property (stock included). As such, the wealthiest 5% of the country now owns roughly 92% of all property, and was the beneficiary of 75% of capital gains savings will go to just the upper 1 percent! (98% to the upper 20%) - so the fact that 50% of the people get a savings seems to suggest something which it isn't, it isn't a broadly effective cut, it primarily lands money in the upper echelons of affluence.
"Any windfall that taxpayers receive from a capital gains tax cut is unlikely to be spent quickly. The main beneficiaries of capital gains tax cuts would be high-income taxpayers, who own the vast majority of assets. For example, the Urban-Brookings Tax Policy Center has estimated that 98 percent of the benefit of temporarily cutting the capital gains rate in half would flow to the top 20 percent of households; 75 percent of the benefit would flow just to the top 1 percent of households.[3]"
Thus, while you or I may have saved a few dollars (or even a couple hundred if we did very well), the tax break for the rich was measured in the hundreds of billions of dollars - a tax break which ultimately then lead to vast deficits.
(continued)...
ReplyDeleteConsequently, since you and I now owe the rest of us (and China) for those deficits stemming from those breaks which fell vastly disproportionately to the rich, in fact you did not get a tax break at all, you got at best a tax deferment, a loan written out in YOUR name, benefits and proceeds to the most wealthy, without your consent, to the tune of roughly $25,000 per person in your family. For that, you got a savings of around $1500 per year. That's not a tax cut for you, that's a tax increase, no matter what way you slice it. Even if we assume the top 1% of rich will ultimately have to pay 33% (that's the share of income tax they pay) of that debt (in alignment with current tax burdens) - you still are picking up the other 41% of the share they got - so you took out a loan of at least $10,000 per person which you will eventually pay and which they will not. In the end, what Capital Gains cuts were, just as virtually all cuts have been since 1980, was a vast shift of the tax percentages away from the wealthy and to the middle class. They wealthy pay more as a percentage of total tax receipts, but that quite simply is because they GET SOOOO MUCH MORE - and they changed the laws so that they could keep it.
Further, in that same period, your energy costs went up about $3000 per year - so any savings you had in taxes, due to the lack of oversight of oil company operations - were instead effectively just a promisory and direct subsidy back to energy companies who allowed their own traders to "speculate" on the spot market and drive their profits and your costs up dramatically.
So, I'm sorry, but no, you did not benefit from the "tax cuts" Bush enacted - you got a slight immediate reduction in taxes today, for a heavy and shifted burden tomorrow.
Lastly, and ultimately, where are the promised jobs? They don't exist, and they never have - cutting taxes on the rich has resulted in offshore factories, lost jobs, and a vast transfer of overall wealth upward, not in high paying jobs, and in the end, wasn't that what we were promised would be the result?
Exactly, Pen. What you outline is tax cuts favoring the extremely wealthy at the expense of people who make up the majority of this country.
ReplyDeleteREAL redistribution of wealth, not the fake kind that the right likes to wave like some kind of big red danger signal. EAL distribution to the wealthy FROM the middle and lower class.
As I look at the candidates in Minnesota more carefully, I see candidates on the right who are consistently, time and time again, willing to sell out the overwhelming majority of people who make up this nation, to benefit corporations and the wealthy.
What I do not understand is why more people - and that would include you, Tuck - don't seem to understand they are being had, taken advantage of, used, exploited, and just plain HARMED financially by the right.
Because if you understood the shift in income to the wealthy from your own hard earned money in your pocket, you could not for a moment agree to it.
I will elaborate in an upcoming post EXACTLY what I mean by selling out real people, ordinary, every-day middle class people, to corporations, without the slightest genuine concern for those people.
Three little letters that few know but everyone SHOULD know, as just one example - BPA.
No, not the oil company BP. Bisphenol A.
Point well made Pen. Point well made ToE (your background in tax preparation was invaluable expertise).
One more thing I would like to point out on tax theory:
ReplyDeleteYes, the Bush tax cuts did raise the Child Tax Credit to $1,000 per child. However, the tax credit is what's known as a non-refundable credit. In other words, if a family has 3 children, and is thus eligible for a tax credit of $3,000, but the taxable income after the standard deduction ($11,400 MFJ in 2009) and the personal exemptions ($3,650 per person or $18,250) generates a tax less than that amount, (and you would need to have taxable income of $25,550 or gross income of $55,200 to produce that result), the child tax credit only is credited against the tax due. So, for many families, the child tax credit is greatly reduced. This means that the "extra $500 spending" that Tuck has talked about doesn't necessarily happen, and I've seen it time and time again in my tax practice.
Demonstrating yet again your invaluable contribution, ToE, to a substantive discussion on Penigma.
ReplyDeleteYou know I might take your arguments more seriously if the government did not waste so much money. Lots of military contracts are for things the military no longer wants or needs, while things they do want and need (better armor for Humvees?) gets delayed. Now we find out that a lot of the bailout money Goldman Sachs got went to pay off overseas investors they gave bad advice to, since when are the taxpayers on the hook for some business screwing up. The health care bill probably benefits insurance companies far more than any of the insured and GM was recently in the news as paying back part of their bailout with money from another payment of the same bailout. Our entire welfare system is screwed up, Bill Clinton tried and did make it somewhat better but it still gives people no incentive to get off welfare. We may at some point need to raise taxes but we need to start controlling spending first. It is just like your personal finances, it really does not matter how much money you make if you always spend your paycheck + $100 you will always be in debt. And that is exactly what the government does every time. All through Reagan, Bush, Clinton, Bush over the term of office revenues increased but spending increased more.
ReplyDeletePen, I took the liberty of looking up some stats on income inequality, to demonstrate how poorly the lower taxes / give money to the rich / trickle down theory works. from wikipedia:
ReplyDelete"Data from the United States Department of Commerce and Internal Revenue Service indicate that income inequality has been increasing since the 1970s,[9][10][11][12][13] whereas it had been declining during the mid 20th century.[14][15] As of 2006, the United States had one of the highest levels of income inequality, as measured through the Gini index, among high income countries, comparable to that of some middle income countries such as Russia or Turkey,[16] being one of only few developed countries where inequality has increased since 1980.[17]"
and from Social Science Quarterly,
"Americans have the highest income inequality in the rich world and over the past 20–30 years Americans have also experienced the greatest increase in income inequality among rich nations. The more detailed the data we can use to observe this change, the more skewed the change appears to be... the majority of large gains are indeed at the top of the distribution."
So, to continue to push this favor-the-rich agenda, including in taxation, I guess suggests that conservatives must not be very widely read. This data is not only available from completely neutral sources here (I doubt anyone would call the IRS radical liberals), but from non-US sources.
As a pundit recently pointed out, the conservatives have no new agenda, no new ideas. The right is pushing the same old same old things they pushed before "W", and during "W" -- and look how disastrous that worked out for everyone.
Well, everyone except the very very few who were rich and just got richer.
At our expense.