With 4 weeks to go until election day the air waves (should this now be cable waves?) are full of accusations back and forth about taxes. “I’ll cut your taxes”, “My opponent voted 318 times to raise your taxes”, Tax cuts create jobs”, and on and on and on. It is bad enough that we are force fed this diet of gibberish but worse it so infantile. "My tax cut's bigger than your's is, na na na na na na!”
And yet we keep electing these bozo’s. I think I remember that Bozo was pissed that people used his name as synonymous with fool. Rather than besmirch his good name or clowns in general let’s just call them snake oil salespersons.
Every time these politicians get Tax cut fever the economy gets sick but the workers feel the real pain.
WAKE UP AMERICA ANED SMELL THE COFFEE!! Oops, sorry if your Starbucks closed, a sign of the economic times.
The American worker who takes home a paycheck is not suffering because the taxes are too high. We are suffering because those paychecks have just not kept up with our expenses. Tax cuts for workers will never make up for the increases in cost of living. We need real increases in salaries. Yet all of the politicians, from presidential races to local races, are only selling tax cuts as the panacea to all our problems. And the voters but this garbage? No one is offering solutions to the real problem: stagnant wages.
Sometimes I think we have been so brain-washed (ask Mitt Romney’s father George about that) that the voters would rather have a 10% tax cut rather that a 10% increase in wages! If you still think your taxes are too high here’s the ultimate solution: You’re Fired! Now you can’t complain about high taxes. All too sadly, more and more Americans are losing their jobs, while others must work two jobs just to make ends meet.
And what is so ironic about tax cuts at the national level is that this is one of the major reasons why our wages haven’t kept pace with expenses.
But first the lies about tax cuts.
You will have more spending cash as tax burdens are reduced.
Every time I hear the tax cut mantra I am reminded of that great song by Tennessee Ernie Ford. Actually, the only one he did that I remember. That’s right! “Sixteen Tons.”
No, not the lyrics that go “…and what do ya get? Another day older and a deeper in debt!” No, although so appropriate for today’s troubles, I’m talking about the lyrics that go something like this:
If you see me comin', better step aside
A lotta men didn't, a lotta men died
One fist of iron, the other of steel
If the right one don't getcha, then the left one will.
Yea that’s it. If the right one don’t getcha the left one will. Tax reduction by one level of government somehow sneaks into raises at a different level. See what happened in New Jersey when they caught tax cut fever and elected Governor Christie Todd Whitman. That’s right property taxes soared. (even more than 100% for some). Too bad she left behind such a stinking mess, but I guess she did the same at EPA.
If you think that is an aberration look what mayor Mike is planning for New York City. You guessed it! As income tax from Wall Street dwindles he proposes a property tax increase of 7%. And sometime back Long Islanders were complaining about a 4% proposed property tax increase. Of course we New Jerseyites scoff at such puny increases, what a bunch of pikers, or to borrow Phil Gramm’s words “Whiners.” If your property taxes increase by 50 -100% or more than you can complain.
Tax cuts create jobs!
Yes, and I am confident that the workers of China, India, and other countries appreciate those jobs. Unless you are a tax attorney/housekeeper/landscaper for the rich or you like flippen burgers at Mickey D’s, you have not benefitted from tax cuts. Politicians even have the gall to call tax cuts job creation legislation such as “American Jobs Creation Act of 2004.” Or how about “Economic stimulus Act of 2008” a $152 billion tax cut in the form of a rebate.
Let’s see. How many jobs have resulted from this economic stimulus package? UH OH! The latest figures show 159,000 jobs LOST in one month! In fact we have been losing jobs every month for the past 9 months. And job creation throughout the Bush administration’s tax cut fever has been abysmal. to make it worse, we have lost the type of jobs that support a family and traded them for Baristas. Moreover we have lost jobs that provide benefits and have more workers without health or pension plans.
If 2/3 of American companies don’t pay taxes at all, how will a tax reduction cause them to create jobs?
Let’s face it job creation by tax cuts has been a complete failure. Unfortunately the American worker has experienced the misery. Since Ronald Reagan introduced his tax cuts nationally, American workers have fallen behind in the cost of living. The only thing Reagan’s trickle-down economics did was insure that the rich got richer and American workers got the shaft and footed the bill.
I did enjoy Don Monkerud’s post ‘Tax Cuts and Job Creation’ about the 1 year search by FBI that discovered a job created by Bush cuts (http://www.counterpunch.org/monkerud05222003.html)
Are Tax cuts even real for the American worker?
Looking back at the tax cuts enacted in my lifetime (well at least in my memory), none have truly been as advertized. I would call them tax avoidance schemes. Recent cuts help the wealthy now but postpone the tax bills that come due in the future paid for by workers. And the politicians get to completely avoid responsibility for screwing up the economy for future generations. Look what has happened to the national debt every time we elect a tax-cutter. Reagan practically tripled the debt, with George Herbert Walker Bush continued the trend. Together these two increased the debt 6 times greater than all the previous presidents combined! I do wonder if Bush senior actually showed symtoms of tax-cut fever, after all he did vomit on the Japanese Prime Minister. The only productive thing that came out of this man’s mouth, that is besides “Voodoo economics.”
Of course George W is the worst, taking a $6 trillion national debt and increasing it to a whopping $10 trillion, and this before the bailout costs are added in!
I am sorry, but these are not tax reductions. It is borrowing from the future to pay off the rich now and sticking the future workers with the tab and paying the vig (over $225 billion/year in interest payments on this debt) on top! This is criminal, yet we keep electing them.
How did we ever catch tax cut fever?
Where else? California of course, with passage of proposition 13. Is it me or just a coincidence that governor Arnold just announced that the current credit crunch could cause California to run out of cash and might need a $7 billion bailout of its own? And there is no guarantee he won’t be back.
Tax cut fever went National when Ronnie Reagan was elected and he introduced huge tax cuts. The Reagan cuts were not meant as an economic stimulus but rather his hidden agenda was to dismantle the social programs developed in the great society. Even Reagan was not stupid enough to just eliminate these programs. So he and his budget director henchman, David Stockman, decided to starve the beast by stiffle government spending through massive tax reductions. Stockman got into trouble when he fessed up that they made up the supply side economic numbers as they went. It’s true. Just ask him. Well maybe not such a good idea as Stockman was indicted last year for defrauding investors and banks during his stewardship of a Michigan auto-parts maker. Even he couldn’t reduce spending anywhere near as fast as the historic tax cuts. And the unavoidable result was that deficit spending took off faster than anything Reagan could dream up in his star wars plan.
Ronnie was determined to cut spending in every government program except the military of course which could never be given too much money to suit him. The military certainly needed a lot to buy all of those $400 hammers we heard about. Golly, I never thought about it before, but now I wonder if Haliburton was around back then making hammers? Their own press says they were involved in “introducing breakthrough technologies.” Sure sounds like hammers to me. But I digress. Reagan went so far as to try to eliminate the department of education. When he ran into opposition he simply destroyed its effectiveness by placing Terrel Bell in charge followed by Bennett. I would conclude Reagan wanted “smart bombs” but dumb people.
But Reagan’s legacy has become entrenched in American economic policy, at least the republican party’s economic goals. Every subsequent republican president has been infected with tax cut fever by the great communicator. As with Reagan each has introduced more tax cuts but none have been able to reign in spending, or more precisely to stimulate the economy to increase tax revenues enough, to cover their loss of revenue from tax reductions.
The latest and worst has been George W at least in raw numbers. He inherited a yearly budget surplus that was actually reducing the total national debt and in a snap of his fingers created a huge annual deficit funded by increasing the national debt from around $6 trillion to over $10 trillion and sure to go much higher and soon. It is so bad that the national debt clock doesn’t have enough digits to read 10 trillion!
In the last year alone we have increased the debt by over $2,42 billion/day. That’s right PER DAY! We (taxpayers) now pay over $225 billion/year in interest on this debt. I shudder to think what would happen if Japan, China, and other countries who own over 2 trillion in treasury securities want their money back.
And now John McCain claims Reagan as his hero and wants to be just like him. You mean like tripling the national debt John? John promises to cut taxes and government waste to pay for it. I think it is just as reasonable that he could get the money he needs from the tooth fairy. What about the $225 billion/year cost to pay interest on the debt John? If ever there was a waste of taxpayers money wouldn’t this be it?
If McCain is elected and follows his republican predecessors we may see Reagan’s agenda realized after all. The entire budget would be eaten up by massive outlays for interest on the debt and the military. We will have a great and powerful military but nothing left of American ideals worth protecting.
How could tax cuts curtail wage increases?
American workers need relief, not in the form of miniscule tax cuts, but rather in real improvements on the wage side. Yet as long as we suffer from tax cut fever this cannot happen. The fact is that employers simply can’t afford to provide real wage increases. Not because we overtax them but because they are saddled by high costs of employment expenses. I am talking specifically about the cost of health insurance. The cost of health insurance for a family of 4 is about $12,000/year, and increasing faster than you can read this blog. Even with employees picking up more and more employers are stuck with nearly $10,000/worker. Need I mention that the workers share of health care expenses has increased far faster than any tax breaks can cover?
Doesn’t anyone remember that when Ford and GM ran into trouble about a year ago, each was paying health insurance costs to the tune of $1,300 - $1,400 for every vehicle sold? Frankly, I don’t understand how the auto industry or any American companies even manage to stay competitive in a global economy when in every other industrialized country health care is paid by the government.
Non-profits and state and local governments are equally affected. For example, if you look at the first round of union contract negotiations under Mayor Mike in New York City, the choice was to keep benefits but no real wage increases (all were below inflation rate) or offset wage increases by loss of benefits. And this was when the city had a budget surplus! The American worker drives this economy and if they hurt the economy is in trouble. In contrast if workers realize real wage increases, the economy will grow.
But wages can’t increase while maintaining benefits because no employer, public or private, can afford both. Until we acknowledge that fact, this economy will be stuck in the ever deepening quagmire.
So what does this have to do with tax cuts you ask? The answer is that no institution can afford or control the spiraling costs of health care other than the federal government. And as long as our mental capacity is clouded by tax cut fever we never will.
Didn’t I just argue that deficit spending was taboo and wouldn’t a government takeover send the deficit skyrocketing? No. The government is already paying for health care costs. Not just medicaid and medicare program but also for employer-based insurance. What?? Remember those 2/3 of companies not paying taxes? If they were really not profitable how long do you think they would stay in business? They can stay in business without paying taxes because they write off expenses against taxes. And at $9-12k a pop for health insurance, that’s a lot of taxes not paid. So yes the government is already indirectly paying for health care at least for private industry.
What will happen if industries don’t pay for health care, and don’t get the tax write-offs? Could it be? Could it really be that fewer would get off tax free and others that are already paying taxes would pay much more? Perhaps, but that is not the major goal or benefit of relieving health care costs. Industry could reinvest the windfall profits resulting from eliminating health care costs to improve global competitiveness. This can be through hiring (oh my god, we could sell this as Jobs creation!) and/or increasing wages to existing workers. Whether either or both occur the government will realize increased tax revenues without even raising tax rates! As far as the public sector, can you imagine what Mayor Mike might do if relieved of the health insurance costs of the entire NY City workforce? Why, he might even be able to roll back those proposed property taxes!
If we learned anything in the last 25 years since tax cut fever infected our politicians, it is that huge cut taxes didn’t stimulate economic growth but rather added incredible amounts to the national debt that will be a drag on future economic growth. Until we acknowledge the incredible burden that health insurance costs are on employers now and will become even worse in the future we just won’t see worker wage and job growth needed to sustain the American economy.
Unfortunately Tennessee Ernie was right. All we’ll get is deeper in debt!
