IT IS A SEMINAL FOUNDATION OF the Republican political bible that taxes are too high and that without tax relief the business community is being crippled and the economy stalled. The nation is indebted to Grover Norquist and his Americans for Tax Reform for “The Pledge” that backed this conviction: In 2011 and 2012, all but six of the 242 House GOP members (together with a large majority of sitting Republicans in the Senate) had vowed to oppose any tax increase of any kind. This is matched by similar pledges in the various state houses and by campaigns mounted against apostates and non-signers. That this has crippled governance has been noted by a number of analysts. That this would deter Norquist is problematic, inasmuch as he has expressed a desire to see government cut down to the size that it could be “drowned in a bathtub.”
The very mention of higher taxes on the wealthy creates panic and hysteria amongst Republicans. In allowing the small Bush “temporary” rate cuts on the wealthy to expire this year, Republicans believe they have already ventured deep into extraordinarily dangerous territory. (As I have noted previously, that action was followed shortly by an inexplicable — to the GOP — 1,500-point gain in the Dow Jones!) The simple and compelling reality according to the GOP (supported, of course, by the Pledge) is that lower taxes are critical to any sustained recovery and that specifically raising taxes on the wealthy is a suicidal course for the U.S.
Below I highlight some realities concerning taxes, the relationship between tax rates and economic health, and modern American tax history.
First, it is clearly a core principle of GOP economics that economic growth is negatively related to tax rates (i.e., high rates equals low growth).
A Forbes article from last November, “Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory-GOP Suppresses Study,” by Rick Ungar, strikes directly at the heart of this hallowed Republican myth. And elicits an appropriate GOP response!
This research report of the Congressional Research Service, the completely nonpartisan arm of the Library of Congress, found “absolutely no correlation between the top tax rates and economic growth, thereby destroying a key tenet of conservative economic theory.
“Initially released on September 14, 2012, the study — authored by Thomas Hungerford, who is a specialist in public finance at the C.R.S. — correlated the historical fluctuations of the highest income tax rates and tax rates on capital gains dating back to World War II with the economic growth (or lack of the same) that followed.”
The conclusion?
“Lowering the tax rates on the wealthy and top earners in America does not appear to have any impact on the nation’s economic growth.”
This paragraph from the report, as Ungar notes, says it all:
“The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”
Ungar writes, “These three sentences do nothing less than blow apart the central tenet of modern conservative economic theory, confirming that lowering tax rates on the wealthy does nothing to grow the economy while doing a great deal to concentrate more wealth in the pockets of those at the very top of the income chain.” And, I would add, blow up the deficit!
“That under pressure from Republican senators and against the advice of the economics division of the Library, the study was pulled is remarkable if unsurprising.” I would suggest a more apt, and dramatic, term for this maneuver: the study was torn, shredded, burned, stomped and its ashes buried!
Nefarious Democrats, however, preserved and republished a copy, along with a blistering blast at this bizarre interference with the fact-finding function of the Congressional Research Service.
Ungar urges all to read the report and suggests that everyone “might consider the importance of forming economic policy based on real data rather than political expediency. …
“Of course, if you still want to root for lower taxes for the wealthiest Americans — knowing that the research clearly shows that it does nothing to grow our economy — then do so with the understanding that the economic health of the nation is not what is driving your philosophy, and that pretending otherwise is of no benefit to anyone. At least that will be a far more honest response …”
For another dose of reality, we turn to Ernest Dumas, “Old Myths and New Realities,” in the Arkansas Times edition of Oct. 17, 2012.
“For three decades, Republicans have just been better at mythmaking than Democrats, and they keep perfecting it. It began in the Reagan era, although Reagan was not always the originator and reality sometimes dawned on him, as it did when he learned quickly that huge tax cuts for the well-to-do and corporations would enlarge, not close, budget deficits.
“Who can identify all the reasons that Republicans as a class prove to be better at selling fiction over fact than are Democrats, who individually try from time to time and fail? Republicans everywhere tend to read from the same playbook, which helps.”
Two of the big myths that Dumas notes have shaped recent elections, down to the precinct:
“Taxes just keep going up, and Democrats are responsible. Reality: Federal tax rates have been going down, not up, pretty steadily for 60 years, except for a couple of blips for higher-income people in 1990 and 1993 … Middle-income Americans now pay federal income taxes at the lowest levels since before World War II, thanks partly to tax cuts by President Obama and the Democratic Congress in 2009. All taxes combined — federal, state and local — consumed 9.2 percent of all personal income in 2009, the lowest rate since 1950, according to the U.S. Bureau of Economic Analysis, and the percentage is declining. …
“Corporate taxes are so high in the United States that we can’t compete with other countries and they are costing jobs. Reality: The nominal top tax rate is relatively high but the effective tax rate paid by U.S. corporations is less than half that, and many of the most profitable companies pay no income taxes. U.S. corporations bear a smaller total tax burden than businesses in Western Europe and most other industrialized countries.”
But facts are for statisticians. They bore the voter and have no place in modern politics.
And what about the hallowed Ronald Reagan and his antipathy to taxes as compared with the spendthrift Obama? From a June 1 piece by Pat Garofalo in Think Progress:
“Republicans attending a White House meeting on Wednesday didn’t take kindly to President Obama telling them tax rates were higher during the Reagan administration. GOP members engaged in a lot of ‘eye-rolling,’ according to a member who was on hand.
“That House Republicans find this preposterous is symptomatic of the hold Reagan mythology has over them” (and reality!). “In six of Reagan’s years, it was 50 percent or more.”
To put it simply and directly: Taxes are at this point historically low for the postwar period. We had boom times following the war when rates were substantially higher — including the Reagan years!
In short, the GOP is in the big leagues in the creation of economic mythology; crippled public policy languishes behind reality; and a gerrymandered Republican House, elected by a minority, guarantees an endless battle against that reality.
We are in trouble . …
Jerome Page is a Benicia resident.
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Thank you, jerome, I am so tired of Republican myths and Norquist and the fictions of Reagan remembered…Pogo said it best: “I have seen the enemy, and he is us.” –pb
Excellent article for the most part.
First, there is much discussion about Republicans vs. Democrats. There is no difference! They are all corrupt. They ALL take bribes from lobbyist representing BIG-PHARMA, BIG-AGRI-BUSINESS, BIG MEDICINE, BIG-OIL, BIG POLLUTERS, BIG-everything to the tune of some FIVE BILLION DOLLARS PER YEAR! They ALL want to get reelected and need the money and backing to do so. Unless Americans are willing to kick in a few dollars to pay for elections, corporate billionaires will give money to elected officials to ensure they get reelected and to ensure they get what they want from the government so they can get MORE billions.
These billionaires are what are known as PSYCHOPATHS that have NO LIMIT on the amount of power and money they want. The politicians are psychopaths who also want power (unlimited if available). Until we fix the problem with bribes from lobbyists, our country cannot progress. We are giving TRILLIONS to the military-industrial complex for NO REASON. We DON’T NEED the military that we are now feeding. Here to, we have many psychopathic personalities who want money and power without interference from the government.
I love America and the freedoms we use to have. We have the ungodly “Patriot Act” and others that bring America right back to where we were in the late 1700s when we decided to break away from England and the Psychopathic King who, again, wanted more money and power.
We need to stop talking about differences between the Republican and Democratic parties and focus on the real issues at hand. Psychopaths that want unlimited power and money and are willing to bribe members of BOTH parties to get what they want; and, members of BOTH PARTIES are willing to take it to get what THEY want,
It’s a sad state of affairs in America! Our entire political system has been corrupted by the billionaires that hire lobbyists (some 18,000 in Washington DC) to hand out bribes to whoever wants them. It’s a shame that our elected officials, president, and supreme court DON’T WORK for the American people. They work for corporations and their owners.
Total and complete hogwash. This article is a massive justification for the unjustifiable. The case made, apparently, is that government taking capital from the private sector in mass quantities is good for economic growth.
There is not one quantitative piece of proof anywhere in modern economic history that proves that point. Not one!! Every major expansion in economic growth in the last 150 years has followed a reduction in tax rate burden on the private sector.
This whole article is a massive justification for the indefensible in terms of economic policy. Total ignorance of reality.
Reading comprehension fail.
Matter, I hope you’re wearing your flak jacket today. I see the bombing has already started.
Matter you are correct. I love big business and all it brings to the USA.
You mean all the corruption that big business brings to the USA!
Big business vs. Big Government. Who is more corrupt? Answer: Big Government.
I trust big business more in terms of ethics, economic growth, safety, responsibility, and overall prevention of corruption. With recent events, how can anyone trust government?
agree
Money from Big Business corrupts Big Government so Big Business can corrupt without punishment from Big Goverment. And, which party gets the most money from Big Business? DDL and Livesay might even know the answer to this one.
I do believe the unions in Detroit are very big Dem donors.
i suggest you look at all the unions combined including gov unions plus Oracle, google and microsoft. Those folks give all their money to the dems. So I guess I could say that the government depends on unions and the dems to try and run the country. At present the dems do not seem to being doing a very good job. By the way businersas is coming back to the USA for one reason and one reason only. Cost of energy.
Again, there is no difference between Republicans and Democrats. They are all corrupt — corrupted by lobbyist for Big Business. BOTH parties take the bribes because members of BOTH parties want to get reelected! Doesn’t anybody understand this? What are you guys reading that I’m missing?
I believe that NONE of these companies mentioned pay ANY income taxes to the United States. Thanks to Nixon, they have a mailbox in Bermuda where they assign all, or nearly all of their profits, thereby avoiding income taxes. I, alone, paid more taxes than Bank of America who made BILLIONS in profits and received BILLIONS, if not TRILLIONS in bailout money! Again, America is one of the most repressive and corrupt governments in the world. It’s not going to improve until we get rid of the 18,000 or so lobbyist lurking in Washington DC handing out BILLIONS to Republicans AND Democrats who are more than willing to take it so they can get reelected. Look it up!
JFErnst: If you keep that up, you’re gonna get the conservatives all cranky and fog up their “patriotic” rose-colored glasses. Everything in America is just peachy keen when you’re a Repub conservative obstructing that “bad guy” Obama in the White House…So Vote for the Keystone Pipeline too because Global Warming is just a myth, it’ll bring jobs to Texas oil refineries who’ll sell their oil offshore having nothing to do with reducing US dependence on foreign oil…that’s what Cheney’s Fraking is for, so what if it’s not under jurisdiction by the EPA and the Clean Water Act, Cheney can pump anything he wants into the Earth, he’s a Repub, and above the law…Ya gotta get with the program, man…Don’t sweat the details, if it makes money, it’s good!–pb
Peter my only suggestion is you do a liite economic research. It could open up some ideas that maybe you are not aware of. Just a thought. By the way just were is the oil industry selling their oil overseas and to who if that is what you were implying. Maybe you were not. Just A QUESTION. Demand is a very interesting concept. What say you Peter..
It was well stated in a news report weeks ago that the Keystone pipeline bringing oil to Texas was NOT for US consumption but was headed for India and China…not to mention the high cost to our global environment—I don’t have idle time to sit around and debate all this nonsense, my efforts go into local home repairs and improvements of life locally…when I fall off my horse and retire then I’ll go into overdrive with my “WAR on Crohn’s Disease” which takes lives daily, my daughter Cathy, 44 just last year…don’t fall for “Big Pharma’s” “auto-immune” BS either, the immune system is NOT our adversary as much as the money mongers in Big Medicine would like us to believe that—This species far too often has car wax for brains–pb
By the way we are producing more cars today than we have since the late 60’s. They are just not being produced in Detroit. Would you or the unions deny employment for the folks in other states. I sure hope not.
Counterfactual as usual.
I wonder how many “American” cars are being assembled by non-union employees in Canada and Mexico? Hundreds of thousands, if not millions, I’m sure!
All’s fair in love, war, manufacturing and making a buck according to the Right Wing credo, right? Let’s call them non-American Made American cars—who needs high-priced union help? Maybe US children could be trained for same?—The all-American buck!–pb
find out
Where have you been? Big Business with the help of our government funded World War II. Wall Street corporate owners, and others such as Ford, General Motors, IBM, etc., gave MILLIONS to Hitler and the Nazi Party with the governments complacency which allowed them to build their military and start the war. These same corporations made billions in profits by selling supplies, guns, ammunition, trucks, tanks, gas, and much more to BOTH sides of the war effort. They duped the American Public into fighting a war that caused MILLIONS of deaths and continued the depression that should have ended a decade earlier.
I recommend you do a little reading before making such a ridiculous comment.
Big Business is still duping the American public. 9/11 was clearly an inside job that killed several thousand in New York, thousands of American soldiers FOR NO REASON, and murdered and displaced millions in Iraq, Afghanistan, and soon in Iran. They planned 9/11 to get the American public up in arms over Muslims in the SAME WAY as Pearl Harbor. These are known as “False Flag” events of which there have been many. The American public are sheeple when it comes to false flags. Big Business and government likes orchestrating them because they work!
JFErnst:
Thank you, thank you, thank you. “False flags” are a major pain in the arse…Study all the details of 9-11, nothing falls at nearly “free-fall” speed except a controlled demolition…And WTC7 was not hit by a jet! Go figure—Who are the pawns and who are the planners!…the pawns are us, now follow the Money Trail to the perpetrators—Nor was JFK taken out by a single bullet that travelled like a circus performer and then ended up in his gurney unscathed—How dumb do they think the public is?—This species is full of snow cone mentality—pb
Rick and Petr I am not a conspiracy person. So it would not surprise you that I do no agree with you two Conspiracy theroist. Petr just what is the Livesay level. Patriot, hard work, family, love my country, love my flag. tolerate and enjoy all people, do not atre about same sex marriage or who anyone marries, abortion is a womens right to chose. Is that the Livesay level your talking about Petr. If so it does appear you a big problem with most folks. Petr I am tired of your cheap political shots at me.
I love this country too, Bob, and all the freedoms we use to have. The patriot act and other fantastic legislation created by Bush and his cohorts and approved by nearly all Republicans and Democrats, take away the freedoms that we gained more than 200 years ago from the King of England. We’re practically back to where we started. A prime example is the fact that English soldiers could write their own search warrants and search anybody’s house they wanted without a judges approval. Guess what? With the “Patriot” Act, the FBI and other government agents now have the right to do EXACTLY the same thing. If you approve of this, you are nuts!
Rick I believe you love this country. You have hit on some interesting points. “Patriot Act” and the “9/11 set up”. Combining the two in a Forum Article could get some very interesting comments. I do believe most of the readers would be very interested in your points and would love to comment. Looking forward to you writing that article. Thanks.
Actually, Bob, I have written an article and submitted it to Marc Ethier last year I believe. He hasn’t published it as yet!
Try again
Again Petr personal attacks. I could make some personal attacks on you but I will not. You show your true colors all the time. Petr I do not mind your constant whining. But just once in a while a nice positive statement about the article/writer that you seem to hate so much would help you a lot. On tropic=I do not agree with the writer at all. But I am not going to personally attack him with name calling. I will make my comment and watch the rest of the comments.
Rick, Thanks for the interesting observations!
You may want to look into this group, as I believe you may have some common interests.
DDL: That’s the most buffooned text you’ve ever written. You’ve just sunk to the Livesay Level. Unbelieveable but maybe not.–pb
I was just trying to help. I am sure you and Harvey are charter members.
DDL: Every once in awhile you show real merit as a writer and communicator of sone human cause or insight. Then I follow your written path until it becomes just another anti-Obama/right-wing rant that further demeans anyone who counters your stand on any issue. If you think you’re traveling below the radar of this editorial publication site, you’re not. You slit your credibility every time you turn from real communicator to opposing juvenile. I suspect you’re capable of greater things. Let your greater light shine. People need to be led, not laughed at. The “Killing Fields” bury the unitentionally dead daily.–pb
I agree, Mr. Bray! We don’t need any “tin foil hats”. Although, if they would help avoid the corruption perpetrated by Big Business owners, perhaps we should insist that everybody in America wear them. Other than that, the website is pretty asinine.
Watch out, Bob. The next advertisement may very well be, ‘COMING TO AMERICA! HITLER! FASCISM! ANTI-SEMITISM! ANTI-MUSLIMS! BROUGHT TO YOU BY YOUR FRIENDS IN BIG BUSINESS! WE FUNDED HITLER, WE CAN DO THE SAME FOR AMERICA. WE RECOMMEND THAT YOU LEARN GERMAN OR CHINESE SO WE CAN HIRE YOU TO WORK FOR US AT $3.00 PER HOUR WITH NO BENEFITS!”
Quoting from the referenced report: correlated the historical fluctuations of the highest income tax rates and tax rates on capital gains dating back to World War II with the economic growth
Studying “tax rates” without considering the actual taxes paid (as a result of changes in the deductions allowed), is only telling a portion of the story.
https://www.facebook.com/photo.php?fbid=560480107348978&set=a.532337980163191.1073741833.152157788181214&type=1&theater
See Detroit on liberal policies. Democrats controlled for decades and ran it into the ground. Chicago is next.
The current state of Detroit is mostly due to trade deals that have destroyed the manufacturing base in this country. And, take a look at Detroit…the lack of adequate schools, emergency response teams, police, firefighters, etc. It’s a GOP mecca…the result of what happens without tax revenue.
Highlighting some bipartisan concerns—
A deeper more penetrating look at the ‘myths and realities’ of our economic demise for the community to ponder…
“Anyone who believes the US economy is about to enjoy a sustained recovery had better think again and look to the real details, and not the hype, about the US economy by media and politicians. They had better prepare for a deeper attack on social security, medicare, and education spending in the coming months. They had better resurrect the fight for ‘medicare for all’ as the only solution as Obamacare continues to unravel by 2016, or else accept the inevitability of Republican radicals’ drive for full privatization of healthcare, vouchers, and health services rationing for all but the wealthy. They had better make up their minds if they want a ‘new normal’ economy with only part time and temp low paid jobs and declining real incomes for the vast majority of households, while the wealthy continue to reap ever higher incomes from continuing record gains in stocks, bonds, and other financial investments. ”
http://www.zcommunications.org/obama-s-speaking-tour-more-talk-the-talk-again-by-jack-rasmus
Once, again! The American government is owned by Big Business and corporate billionaires who want nothing more than more power and money. They don’t care who they kill. They don’t care how many Americans they impoverish. They have decimated the middle class. America has a education system that is the worst in the modern world because Big Business wants to dumb down America. They want Americans to be able to read and run the cash register at McDonalds, but, beyond that, they don’t want a workforce capable of critical thinking. They need to get rid of all those that have a decent education and they are succeeding with the help of Big Pharma who is poisoning the American population with their stupid untested drugs.
Good point!