Cut Everything

Snake oil salesmen are no longer tarred, feathered and run out of town on a rail. Now they become Republican congressmen or presidential candidates. Their present-day scam is tax cuts, a miracle cure-all.

Tax cuts. Oh, it sounds so good. But, is it? The seductive, siren call was injected into the recent vice presidential debate. If you are in the top 2% of earners, they seem god-given rewards for being good Christians, greedy and ignorant. For the rest of us, it’s a lump of coal in our Christmas stocking.

Class Warfare?

Yes, Virginia, there really is class warfare. One side has waged it so adroitly, with such cunning that most of those on the losing side are left unaware of its existence. They have been sufficiently gullible to support the side of their antagonists.

It’s reminiscent of 1917 Russia. The minority attracted many to them by calling themselves the majority, Bolsheviks. It is now even more cynical. Tax cuts are sold as a universal balm. The hoi polloi buy it. It is a banquet for the plutocrats but a toxin for the rest. The rest of us pay for it, primarily by destruction of the economy, the whittling away of the middle class et alia.

Tax Cuts Are Regressive

You and I bear the brunt of all tax cuts. There is no such animal as a cost-free tax cut. Someone has to pay. Someone does pay – you. Look at the following graph.

Only those represented by the two bars on the right outpaced inflation. Surprised? You pay for it in other ways, as well. The costs of higher unemployment, more foreclosures, greater reliance on MedicAid and the ER. Don’t worry, that”s not the entire list. There are other costs.

Few of us are fond of potholes. Those of us that prefer healthy food and drugs realize we should be paying for them. Everyone, particularly Paul Ryan, is upset about the deaths of our people in Libya. Paul was so upset that he forgot he voted to reduce funding for their security while touting the need for more tax cuts for his employers.

Tax Cuts Will Spur Growth?

Really? We are told that we need to rev up the economy to get out of this economic mess. The only way to do that is through tax cuts, they say. Is that true? Well, they say it, so it must be true. My problems are first, I know they are liars and, second, the numbers prove it.

Average yearly, top-end tax rates in America, by decade:

1950s:  90.54%
1960s:  80.33%
1970s:  70.18%
1980s:  48.45%
1990s:  36.72%
2000s:  36.23%
2010s:  35.00%

Annualized, real, per-capita GDP growth in America, by decade:

1950s:  2.76%
1960s:  3.01%
1970s:  1.68%
1980s:  1.56%
1990s:  1.57%
2000s:  0.35%
2010s:  0.60%

Source:  IRS, Bureau of Economic Analysis

Was I too harsh in calling them liars?

Tax Cuts vs Revenue

It was difficult ranking all of the lies Paul Ryan spewed during the debate. Actually, it was hard to count that high or remember that many. Let’s look at one of the bigger ones. Paul tells us that tax cuts increase revenue. The vice president said no. He even went so far as to say. “Never.” Paul persisted. So did Joe. While Paul benefited from the appeal of that fantasy, Joe was burdened by the facts.

Higher Taxes Create Unemployment?

Okay. So tax cuts don’t increase revenues. But, higher taxes cause higher unemployment. So, we need tax cuts to create jobs. There’s just one little problem with that. The facts say otherwise. My apologies for bursting anyone’s bubble and for dredging up these next two charts from another article I posted last year.

Whence Cometh The Debt?

One can be forgiven for placing the blame for all of our debt at the feet of Obama. There certainly are more than enough strident, shrill voices accusing him of responsibility. Still, there are a few sane people, though most without as large a megaphone as the ones severely affected by the phases of the moon. Notice that the projected costs continue to grow after the fact. We still have forces in Iraq and will continue to have forces in Afghanistan and that area. Also, interest payments will continue to accrue. That same holds true for other costs. Most of the debt not otherwise designated result from earlier tax cuts and interest payments. Interest is presently at an atypical, temporarily low rate close to zero. It will return to historically more normal rates.

More Than Taxes

Eliminating the Bush tax cuts is not a cure-all. It will slow the bleeding. Romney brags that he will build the navy 15 new ships a year, including 3 submarines. Mitt knows how to appear to share a misguided patriotism with a fair number of  those living in FantasyAmerica. Patriotism is a bit more complex than shoveling money to the military-industrial complex that President Eisenhower warned us of. The military isn’t asking for what Mitt wants to force upon them. We could cut our outlays for the military by half and still spend one of every three dollars spent on military on this planet. That would be only a little more than three times as much as China, the number two spendthrift. Mitt is just another in a long line of draft-dodging politicians that feel the need to prove themselves patriotic. Ike wasn’t one of those.

Wanting to pay less in taxes is understandable. At odd moments I consider what treats and toys I could afford, were it not for those pesky impositions. Think how much fun I could have for what I spend on my mortgage. But, sad to say, I am an adult. I am expected to live up to my responsibilities. The bank needs to be reimbursed. So does the government. It ain’t free. There are a few that try to avoid paying their monthly bills. There are many more that don’t want to pay their share of government. We have a large number of people in this country that are, or want to be freeloaders. There are enough of them to induce some politicians to sing that siren’s song. There are enough of them to give us the international reputation of being a country of freeloaders. That isn’t completely true but it’s true enough to put into question the outcome of the coming election.

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