Let's Hear Some More About Those "Job Killing Taxes"
"Facts are stupid things." -Ronald Wilson Reagan, GOP Nat'l Convention 1988
The response to my prior post about those "job killing taxes" and other GOP myths, coming from all the right-wing GOPSYMP ideologues that check in here occasionally, was all too predictable. Despite the utter economic debacle caused by the Bush tax cuts combined with aggressive "free market" deregulation of Wall Street, these poor benighted souls just cannot seem to let go of their knee-jerk small-government ideology. So they simply deny both history and rational analysis and lash out ad hominem at anyone who looks at our actual economic history to draw reasonable conclusions based on the facts which, as so often happens, contradict the most cherished delusions of the American right.
In this case it's the simpleminded myth recently espoused by GOP "leaders" such as McConnell, Boehner, Ryan, et al. that higher taxes "kill jobs." I thoroughly debunked that one in that prior column based on actual economic data. I wrote out that analysis in narrative form, starting with the Truman administration and continuing through Eisenhower, Kennedy, LBJ, Nixon, Carter, Reagan, G.H.W. Bush, Clinton and G.W. Bush. That narrative recapped the clearly documented case that there is no correlation between lower taxes and higher employment. In fact, if there is any causal relation between taxes and employment -if there is any cause and effect, the data supports just the opposite conclusion -where higher employment more often correlates with higher taxes than with lower taxes.
I was attacked personally for daring to contradict that hallowed GOP shibboleth about "job killing taxes" and, so typical of today's right-wing ideologues, one GOPSYMP misstated my premise in order to "refute" it. Thus, I was accused of claiming that higher taxes "must" cause higher employment, when I never said that, and it was clearly not the premise of the post. Again, I did note that there was a historic correlation between higher top tax brackets and higher employment, but that was not the point of the post. The point, rather, was that the data simply do not support the tax-hating, small government ideologues' mantra about "job killing taxes," where there is no consistent correlation over the long term between lower taxes and higher employment.
Recognizing, however, that so many true believers in today's post-Reagan GOP have difficulty comprehending any kind of narrative economic analysis more complex than a simpleminded shibboleth such as "job killing taxes," I offer the following Table 1. This table analyzes our actual economic experience over the past sixty-some years, correlating unemployment rates, highest marginal tax rates, deficit spending after it became entrenched during the tax-cutting Nixon years, and the percentage growth in GDP during each Presidential administration.
The data was gathered from a variety of sources available on line, including the U.S. Department of Labor and publications issued by the U.S. Govt. Printing Office. Unlike the mindless rhetoric of GOP hacks like McConnel and Boehner, these figures reflect factual reality, i.e. what actually has happened to our national economy over the past sixty years or so, as opposed to the ideologically driven nonsense we get from Republicans about how higher taxes "kill jobs."
Although it was surely a Freudian slip, the Great GOP Gypster Himself, Ronald Wilson Reagan, once intoned that "Facts are stupid things." He was apparently trying to repeat the hackneyed phrase that facts are stubborn things, but he flubbed his lines and said what he so petulantly believed. That is that the facts, i.e. actual data based on experience, are "stupid" because they so frequently get in the way of the most dearly held tenets of the right wing's tax-hating, small government ideology.
There is no causal relation between simply lowering taxes and increasing employment, or GDP, or median household income, and it is clear that the rising tide of stock prices and corporate profits we've seen lately is not floating all ships here in America. There is no "invisible hand," as imagined by Adam Smith, that guides the "free market" to produce the best possible outcome for everyone in society as the post-Reagan GOP ideologues believe. That is nothing but magical thinking put in service of economic policy.
There is, however, something that Congress can do -and must do, to create a causal nexus between tax policy and creating both full employment and a healthier economy generally. That is to use the power of taxation to "promote the General Welfare," as expressly provided in the Constitution, Art. I, Sect 8, acting as "Big Government" to steer the corporate class into employment and investment practices that benefit all Americans, i.e. "We the People." The current policies Obama inherited from Bush, lower taxes and gutted regulatory agencies, promote only corporate welfare as seen by the billions of excess corporate profits and rising stock values, while unemployment still hovers around 9 percent.
While there is no causal relationship between just cutting taxes and increasing employment, as the Bush administration tax cuts have proven so clearly -especially in contrast with the higher levels of both taxation and employment during the Clinton years, Congress can adopt tax policies that create such a causal nexus. Let's start with implementing a higher corporate tax, a higher capital gains tax and a higher top marginal tax on personal income.
The Bush tax cuts didn't influence major corporations to act in socially responsible ways to increase jobs as the "small government" mythmakers would have you believe, but Congress can impose higher corporate taxes and then tie tax credits to creating jobs here in America. Congress can also disallow deductions for wages and salaries paid to workers overseas while increasing deductions and/or credits for wages paid to American workers so as to neutralize any increased profits realized by companies who ship jobs offshore.
The same can be done with the capital gains tax and the personal income tax. Capital gains, the moneys "earned" from investing money instead of doing any actual work, are currently taxed at a flat fifteen percent, down from 35 percent in the 1980s. In theory, lowering taxes on investment income should benefit society as a whole by creating jobs and economic growth. That's the right-wing theory of the post-Reagan GOP, and it has proven to be nothing but pure . . . bunkum. Again, however, a tax policy that expressly ties a lower capital gains tax to creating jobs here in America, while penalizing investments in companies that ship jobs overseas, would in fact make the theory work.
A higher top tax on personal income, at least back up to the 40 percent level of the Clinton years, would help reduce the deficit again, and allow for more stimulus spending targeted on industries that create jobs here at home as well. Now, inevitably, the folks who like things as they are -thank you very much, while clipping their coupons and paying their 15 percent tax, will holler "protectionism" and "socialism" and worse. But what we're doing now with the present tax structure is protecting the corporate elite by socializing the costs of their doing business overseas, while their exorbitant profits after reduced taxes remain privatized with no benefit to the average wage-earner, i.e. "We the people" of America.
The corporations and the investor class are not in fact creating the jobs here in America that the Bush administration promised when the tax cuts were enacted almost a decade ago, and when the capital gains tax was reduced to 15 percent during the Reagan administration. It's broke now, obviously, so let's fix it and tax those parasitic SOBs into helping Congress do its job of promoting the General Welfare -as intended by the tax clause, Art. I, Sect. 8, of the Constitution of the United States.