Thursday, July 12, 2012

Watch Republicans Get It Wrong On Taxes

Knowledge of the history of their errors is the key to preventing their future errors. You can watch in this video Republican John Kasich in 1993 lamenting the just passed Clinton tax increases. He's not worried about the rich he tells us. It's the poorer people that are going to suffer from this. Yeah right.

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Chad said...

Finally had the chance to watch the this - I think SE Cupp was the star of the clip when she asked one simple question right at the end.

Clinton enjoyed a period of time in US history where there was really no wrong decision. The economy was working. A monkey could have pulled switch A or B (tax or no tax) and most likely the outcome would be exactly the same during his tenure.

My problem with politics and these types of arguements is that it is nearly impossible to accurately gauge the full weight of these decisions because the ripple effect may last 5, 10 or 20 years - far after said President left office. Who is to say that if Clinton reduced taxes that unemployment might have fallen to under 2%?

I think the economy was on a roll and there wasn't a whole lot that Clinton could do to screw it up especially with a Republican controlled Congress during his 8 years.

The one interesting thing about Bill Clinton is that his administration was on the throne when 22.5 million jobs were created, but what is most impressive to a guy like me is that something like 92% of those jobs were in the Private Sector. I think he was a closet Rupublican to be honest - smaller gov't and private sector job creation while helping to create a surplus.

Jon said...

But Republicans weren't saying back then that it didn't matter if taxes went up or down. They didn't say that even a monkey would succeed, tax or no tax. They said that the tax would be a catastrophe.

And of course the same goes for the Bush tax cuts. Well it wouldn't have mattered if Bush cut taxes or not. The economy would have tanked in either case. But that's not what they said at the time. They said it would be awesome.

And as I've pointed out many times the best economic performance our country has ever experienced was in the years where we had top marginal tax rates that were through the roof as compared to today.

If it always goes down the crapper when we follow your recommendations and always goes well when we do the opposite of what you say, at what point do you finally consider that maybe, just maybe, you don't understand things properly? It's like there is no state of affairs that could lead you to reconsider your positions.

I find that this is just an area where I'm different from a lot of people. When the right wing predictions about Iraq failed it had a huge impact on me. I reconsidered. I retained my right wing economic beliefs (some of them are expressed on this very blog). But when the right wing predictions about the economy failed again it shook my world view. I reconsidered. A lot of others just don't do that.

Chad said...

I doubt that my beliefs fall in lock step with the (R) party either. History tells us that politicians are wrong, economists are wrong so what is the shock there?

All I am saying is that it is nearly impossible to prove or disprove how only tax decisions have affected the economy at any given time and the affects over a longer period of time.

Look, this newly proposed tax hike will pay to run the government for just 18 days according to the what I have been hearing so what exactly are we talking about here? It doesn't create a job, it does not improve the unemployment levels and does not balance the budget or dent the deficit one bit.

This is a real flaming turd for or against and does not address any of the real problems is my issue here. This country has to create private sector jobs and the answer will never be taking additional money from those creators. Taxes should be cut across the board - deeply until unemployment gets under 5% and every measure to bring back jobs to the US needs to be made. I don't care if that means a tax free exemption for any company (manufacturing) that comes back to the US for ten years. The 51% not paying any income taxes has to get back into the tax pool and unemployment must drop to under 5% - then we can start a new argument about increasing taxes again, but I suspect we won't need to. Employment means less welfare, less food stamps, more houses, more cars so why not put as much money in the pockets of the people/corporations as physically possible?

The counter argument simply defies logic to me.

Jon said...

Tax hikes will cover 18 days you say. Here's how the right wing operates. When it comes to defunding NPR, which will save enough money to fund the government for about 10 minutes, then "every little bit helps" and "you gotta start somewhere." But when it comes to asking the rich to pay their fair share now it's "That by itself isn't going to solve the whole problem, so what's the point? Only 18 days." John Stewart had a hilarious bit on this showing the double standard.

Why do you think the country has to create private sector jobs? Why not public sector jobs, like school teachers, R&D for renewable energy, etc? Public sector jobs can fix the economy too, like they have in the past.

Why in the hell would you think tax cuts would spur employment? Corporate profits are at record levels. Corporations are hoarding cash like never before. Tax cits will allow them to retain more cash. The fact that they don't hire has nothing to do with lack of cash. They just don't see the demand for the purchase of produced items. There's no point in producing more things that won't be purchased. So what good would tax cuts for the rich do?

You're getting closer to the truth when you say 51% don't pay any INCOME tax. But then you say they need to get "back in the tax pool." The poor are paying more taxes than the rich already.

I just did a quick back of the envelop calculation. Romney made $21.6 million in 2010. The median income family made $44K. What that means is it takes 487 median income families to make what Romney made.

So the 487 families share $21.6 million and Romney alone gets $21.6 million. Who sends more money to the federal government via taxes? Is it Romney, who keeps all the money for himself? Or the 487 families that must share $21.6 million?

In fact the poorer people that must share that amount of money send MORE than Romney. Romney sent 14.3% to the government. The 487 families send about 15% in payroll taxes alone. Then they send some income tax money. Romeny puts $18.5 million in his pocket. The 487 families will have to share a lesser amount.

Reading you one would think that this is unfair to Romney, not the 487 families. These 487 families need to "get in the tax pool." They're already in. It's Romney that needs to get in.

Jon said...

Chad, read this and tell me why you think takes cuts would help.

Chad said...

Your not going to get an arguement from me that the actual income tax code is balled up.

For Romney, isn't the majority of his tax rate predicated on investments so his rate is tied to Capital Gains? Which means he already paid taxes on a portion or all of that money at a higher rate already? So your complaint is that when he has to pay a second time on the already taxed money he is not paying enough?

Full disclosure - I honestly don't know if that is the case it sounds like you've done the research and I expect you will be honest, but I suspect that Romney's income is based on Capital Gains and he did not make $21.6 Mill in salary right? So your analogy - although correct mathmatically - does not take in account that Romney has already paid taxes on that money?

Public sector jobs are paid for by private sector money - you know this. The relationship between the two needs to be heavily weighted in favor of the private sector to appropriately support the burden of the public sector. My neighbor is a firefighter, he moved in just 30 days ago and his wife is a teacher. We got into Politics and what not one night over some adult bevs - they were classic Lib's in the sense that the did not recognize the relationship they have with the private sector. To shorten the long story, by the end of the evening they actually thanked me, my wife, my other neighbors for the work we do to help support them and they both agreed that they need to re-think their skewed views created by both their unions. Their job, their earnings, their future is dictated by making sure the private sector is full of jobs.

Corporate Taxes in the US are the highest in the world sir - again you know this. How can you say that lowering corporate taxes would not create jobs with a straight face sir? Forget record profits for a moment, that is just white noise. I know it bothers you, but would you rather have record profits with unemployment at 4% or record profits with unemployment at 8%?

Chad said...

Thanks for the link, it was insightful.

Honestly the big corporation BS in regards to tax havens and all that garbage is over my head and it is frustrating. Again you will not get much of an arguement from me that the tax code is junk.

In this case - unless other evidence comes to light - I will yield that big corporation loop holes need to be closed up permanetly. I am a man (clearly) who believes in keeping as much of your personal earnings as possible, but I would not cheat to do it.

Jon said...

Yes, Romney is able to pay the lower capital gains rate which is what allows him to pay less than the 487 combined families.

You can say he's taxed twice on that if you like. I don't think that's fair, but I'll grant it for the sake of discussion. The reason I don't accept that is because Romney doesn't do anything. He owns companies. The workers generate the revenue. The workers get supplies, design the products, run the production lines, manage the revenue, pay Uncle Sam, pay wages, then they send Romney what's left. That's profit. You can say that Romney paid Uncle Sam, but remember that Romney as a capitalist doesn't do anything. The workers made it all happen. I'd say the workers pay Uncle Sam because they create the money and the value that makes it all happen.

But let's set that aside and say that Romney paid those taxes. Even that is not a lot of money. Maybe with that he gets over the hump and pays more than the 487 families. But if you look at people that make a bit more than median wages, say for instance 216 families that make $100K/yr, which totals the income Romney got, they would probably still pay more than him.

My point is, don't pretend the poor don't pay. Proportionally the rich don't pay, and that's what's really ridiculous. A couple of hundred families that must share the total income Romney gets will pay more than him. That's not fair.

Your future is dictated by an educated work force, firefighters that keep costly things from burning down, infrastructure, and a host of other issues. It's not like teachers aren't providing you with a service by educating your children, as if it's your gift to them. You are taxed and you get something in return. An educated child.

In the US the nominal corporate rates are high, but the effective rates are very low, which is why we have extremely low tax revenue as a % of GDP as compared to other industrialized countries (countries doing "better" than us belong to what is called the third world). Take a look here to see how corporate taxes have been declining through the years. Again, not the nominal rate but the actual amount paid.

If your theory was right (low corporate tax rates and high corporate profits lead to high employment) this would be the best employment climate are country has ever experienced. It's closer to the worst.

Examinator said...

I think that to some degree Chad is right, in that simply taxing the super rich more would actually solve the USA's fiscal problems on their own. Yes Chad, it's WAY more complex than that.

The USA's biggest problems can be demonstrated to stem from the EXCESS of corporate greed and it's various consequences over all.
I accept that some companies play it relatively straight but I would posit that the damage of 'the bad' out weights the good. There is good evidence to show that there is more tax avoided (by dubious means) than ever paid.
I think a bank exec whose bank was exposed as being a banker for Iran, Cuba Mexican Drug Cartels' money Laundering said it best “ we focused too much on compliance as opposed to the best Practice”
Translation : we found ways AROUND the law.
e.g. Grand daddy Bush was part of a Bank that was the Banker for the 3rd Reich. He got to keep his (ill gotten) money by the same strategy. It is shown how this money was the basis the Bush dynasty power.

Many large corporations use their wealth to distort...weaken laws so they CAN indulge in dubious actions. Wall street and the Car companies are clear examples of that.
It was pressure from those who benefited and a belief in the theoretical that created Savings 7 loans, Dot com bubble and the GFC. History shows that people can't be trusted to do the right thing even most of the time.
BTW There were several US banks and corporations who have done similar things.
Haliburton comes to mind . Recent Government Audit reports show that there was MASSIVE (Contractor/ Private industry) waste, fraud, profiteering, gouging, incompetence racking up to tens of Billions of Tax payer money in Bush's Iraq wars 1&2. Afghanistan is the same..
Even food aid is stitched up by 3 corporations who control 70% of the aid based on a US unique1950s statute ( that wouldn't stand up to the WTO …. 40% of every $ of aid actually goes to these corporations' profit . (corporate welfare?). Yet the same US companies/ multinationals will run off to the WTO and get the US Government to threaten if the same restrictions are used against them.
The statute dictates that agriculture aid must be sourced from US sources. Fine you say but these companies through their vertical marketing are gouging extraordinary profits.... They act as middlemen … the farmer doesn't get a bigger profit and the companies aren't efficient/ economic transporters. In fact compared with some other country NGOs they actually deliver up to 36% less (aid) bang for the buck. Oh yes the ships used aren't the cheapest or the most timely/efficient either. Well it's your money!

I have to agree with Jon that just because the tax take will be minor effect, doesn't mean it shouldn't be taken at all.
To me it should be a part of a larger crack down on those deliberate law breakers who force the good tax payers pay a disproportionate share.