(Update: It was pointed out to me that I probably should have titled this Op/Ed:
Corporations: “Reinvest those profits or we’ll tax them!”
Because the real problem are Corporations paying NO taxes vs. CEO’s whose priority is Corporate Profits over their own. I apologize for any confusion. – Mugsy)
While some may question my sanity, every Sunday my routine begins with three straight hours of political roundtable talkshows: Fox “news” Sunday, Meet the Press, and ABC’s “This Week” (occasionally flipping between MtP and CBS’s “Face the Nation”, which are on opposite each other) listening for the latest talking points or spotting any real whoppers being passed for the Gods-honest-truth by Republicans. And lately, their argument has been that “we need to extend the Bush Tax cuts” for the “top 2%” (no less than three times on three different stations did I hear Republicans blame “uncertainty” over extending the Bush Tax Cuts for the economic crisis. Check out last weeks column for what I had to say about that.) Forget about the fact they have NO way to pay for the tax cut; forget about the fact that we must borrow the money from China to pay for them; and forget about the fact I have YET to hear anyone explain even in the slightest how “tax cuts” create jobs. You just can’t get there from here. I’ve reached a point now where every time I hear a pundit link “tax cuts” to “job growth”, my ears perk up, because one has little-to-nothing to do with the other. “Taxes” are a simple buzzword for the ill-informed voter. Everyone pays taxes (yes Republicans, “everyone”. They may not all pay “income” taxes, but there are “sales”, “payroll”, “energy”, “sin” and “property” taxes), so it is easy for people to connect “taxes” to an economic issue like “the economy”. By the Republicans’ reasoning, if we didn’t pay any taxes at all, the government would be awash in revenue.
The failure of Conservatism is this: High tax rates actually have a function. I’ve written extensively about Tax Policy as a tool to steer the economy, but the latest annual report by The Institute for Policy Studies shows in striking detail what happens when Corporate CEO’s are given NO incentive to reinvest their profits back into the company… TAX-FREE. And if they don’t need to hire more people, they can reinvest that money by giving everyone raises or benefits! If you cut their taxes, not only do they NOT use the savings to create jobs, they slash jobs and don’t reinvest in new equipment/infrastructure (which create still more jobs) so they can instead reap the profits. If you would rather give yourself a huge multi-million dollar bonus rather than build up your company… fine! But expect to pay a heavy tax for your greed. According to that “Policy Studies” report, CEO’s of the “top 50 corporations with the most layoffs” received nearly $600 Million dollars in bonuses. Meanwhile, they are sitting on $1.8Trillion in profits with NO incentive to reinvest that money back into the company because their taxes have been slashed to the bone.
You have to give props to the Republicans for their masterful work convincing people: “all taxes are ‘income taxes’”, “Democrats want to tax you to death (and beyond)”, “cutting taxes creates jobs” (despite a complete and total lack of evidence), and a belief that high tax rates like (for example) a 70% tax rate in 1935 would cost a millionaire $700,000 (10 TIMES the actual amount).
In YET ANOTHER stark example of how far “The Party of Lincoln” has strayed from the beliefs of their founder:
“Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits.”
- Lincoln’s first State of the Union Address (3 December 1861)
Lincoln recognized the fact that without employees, there would be no capital (both tangible & intangible assets). And everything corporations earn is a result of that labor. But today’s GOP found a loophole: outsourcing. Just ship the job overseas to someplace where workers earn a tiny fraction of what they earn here. But the only way this scheme can work is if we don’t levy import taxes on the stuff they ship back in. So “free-trade” is the third leg of that stool (the other two being slashing taxes on corporations and removing all incentive to reinvest in their companies). If you oppose “free trade”, you aren’t a true Amer’cun. You probably support “unions” too! Those “good-old-days” that Republicans always seem to long for? Those would be the days of “a 70% top tax rate on millionaires” (there were no “billionaires”) and “25% union membership”. A one-income family could achieve “The American Dream” of raising a family in a nice house in the suburbs, nice new American car in the driveway, and still have enough money left over to send the kids to college. Republicans have controlled at least 50% of the Federal government for 26 of the last 29 years. Where’s your “American Dream” now, pinko?
WE’VE SEEN what the Republican theory of taxation has had on the economy and jobs. Under George W. Bush, we had both the lowest tax rate for the super-rich AND the worst annual job creation record of ANY president, because corporations have LESS INCENTIVE now than ever before to re-invest their profits back into their corporations.
And while we are on the subject of history, as I pointed out in “Who’s Better at Running The Economy? A look at the numbers” last May, unemployment was still up over 9.5% this same point in Ronald Reagan’s first term in office, yet Republicans still sing his praises today.
If I’ve made you rethink the issue of taxes and the need for them, please let everyone know in the Comments section below.
This weeks list of reasons to keep Republicans from regaining power:
- Nobel Prize winning economist Paul Krugman reminds us what happened the last time a Republican Congress took control under a Democratic President: A six year non-stop partisan witch hunt that spent millions investigating the President – “they subjected the Clinton administration to unrelenting harassment — at one point taking 140 hours of sworn testimony over accusations that the White House had misused its Christmas card list.”
- Alaska GOP Senate Candidate Joe Miller Suggests Medicare And Social Security Are Unconstitutional. (Note: On Fox “news” Sunday yesterday, John McCain claimed Democrats were out to “destroy Medicare and Social Security”, suggesting Republicans were the TRUE stewards you should trust to protect those programs.)
- Steve King (R-IA), when asked by his Democratic opponent why he won’t debate him, true to his name, “King” tells his opponent he “hasn’t earned the right to debate him”. In his eight years in office, his majesty has not once agreed to debate an opponent.
- Former health care executive Rick Scott, who is now the GOP nominee for governor of Florida, is campaigning on issues he’d have NO power to affect (eg: extending the Bush tax cuts) if elected.
- The Taliban revealed that they are using Conservative protests against “the Ground Zero Mosque” as a recruiting tool.
- Is anyone surprised by this? Another “Family Values” teabag candidate is arrested, this time for “unlawful conduct” with a minor.
- Delaware’s Tea Party backed candidate for Senate, Christine O’Donnell, who claimed to have graduated from college in 1993, in fact, received her diploma only last week.
- Scott Tipton, the Republican candidate for Colorado’s 3rd Congressional District, rather than join his fellow Republicans in vowing to “repeal & replace” the Democrats health care reform, instead is vowing to “choke off funding” for health care reform and replace it with nothing.
- When asked, “What NEW ideas will Republicans bring with them if they regain control of Congress next November?”, disgraced/indicted former Congressman Tom Delay advices his fellow Republicans to campaign on the idea, “healthcare reform is destroying the economy and it will destroy it even more if it is allowed to go into effect“. So let me get this straight. It’s not even in effect yet AND it is “destroying our economy”? Really? This is all they got folks.
- Both John McCain on Fox “news” Sunday, and his buddy Lindsey Graham on “Meet the Press”, both argued that we must extend the Bush Tax cuts “to protect small businesses and family farms”. One, “family farms” are already exempt from the Estate Tax (what they call the “Death” tax because it sounds more sinister), and two, can you really call yourself a “small business” if it is raking in more than a quarter-million dollars in net profit each year?
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