Wednesday, June 1, 2011

Republican Myths

Myth: The Republicans (and all the talking heads on Fox News) say that if you raise taxes on the rich and major corporations, it will stymie the economy and job growth.

Fact: Long before the Bush tax cuts of 10 years ago the economy and government budgets were in much better shape than they are today, and there was much more domestic job growth.

Bud Meyers: "If you raise taxes on wealthy CEOs, hedge fund managers, investment bankers, and multi-national corporations, they're not going to quit their jobs and close their businesses...they will do whatever they can to make more money - that's the only reason why they even exist. But all they're doing now is hoarding the money supply."

The New York times just reported that federal taxes are at their lowest level in more than 60 years. Fact.

Yet if one listens to the Republican myth, one would think that taxes have never been higher, that an excessive tax burden is the most important constraint holding back economic growth and that a big tax cut is exactly what the economy needs to get growing again.

Just last week, House Republicans released a new jobs plan to reduce unemployment; but the GOP's plan, boiled down to its essence, is rather retro: Roll back regulation, lower taxes, pass free trade agreements, shrink the U.S. debt by cutting Medicare and Social Security, and boost energy production for oil companies because they can profit more when oil is over   $100.....$102....$103....$104....$105....$106....$107....$108....$109....Holy shit! The oil companies are getting rich!....    a barrel. 

In other words,  the GOP's overall agenda for the past three decades. There's nothing in this plan that is specific regarding the current jobs crisis, nothing to address such key issues as long-term unemployment, skyrocketing youth unemployment, the war on unemployment benefits in the states (PDF), the use and efficacy of job retraining for laid-off workers, or the polarization of the American work force. It's empty rhetoric, recycled talking points, and campaign slogans.

The principal provision in the Republicans "jobs plan" is really to reduce the top statutory income tax rate on businesses and individuals to 25 percent from 35 percent. No evidence was offered for the Republican argument that cutting taxes for the well-to-do and big corporations would reduce unemployment; it was simply asserted as self-evident.

The United States actually has the lowest corporate tax burden of any of the member nations of the Organization for Economic Cooperation and Development (OECD) when ignoring the "statutory tax rate" as to what the actually pay. One would not know this from the Republican document that corporate taxes are expected to raise just 1.3 percent of G.D.P. in revenue this year, about a third of what it was in the 1950s.

If taxes are low historically and in comparison with our global competitors, how are Republicans able to maintain that taxes are excessively high? They do so by ignoring the effective tax rate and concentrating solely on the statutory tax rate, which is often manipulated to make it appear that rates are much higher than they really are. You've heard of the tax dodgers such Exxon-Mobil, GE, Boeing, etc. The tax rate could be 100%, but that doesn't mean these corporations will every pay a single dime.

One almost never hears that total revenues are at their lowest level in two or three generations as a share of G.D.P. or that corporate tax revenues as a share of G.D.P. are the lowest among all major countries. One hears only that the statutory corporate tax rate in the United States is high compared with other countries, which is true but not necessarily relevant.

The economic importance of statutory tax rates is blown far out of proportion by Republicans looking for ways to make taxes look high when they are quite low. And they almost never note that the statutory tax rate applies only to the last dollar earned or that the effective tax rate is substantially lower even for the richest taxpayers and largest corporations because of tax exclusions, deductions, credits and the 15 percent top rate on dividends and capital gains.

The truth of the matter is that federal taxes in the United States are very low. There is no reason to believe that reducing them further will do anything to stimulate growth or reduce unemployment. Don't believe the GOP myths...they don't care about working people or small business owners, just wealthy people and large multi-national corporations. 

People like Sarah Palin, Newt Gingrich, and Glenn Beck who help perpetuate these myths just don't want to pay higher taxes on their book sales. When will average working people who vote for these Republican hypocrites (who use phony patriotism just to enrich themselves) stop voting against their own best interests?

Tip of the Day:

Our country's number one concern should be debt, and because of that, the U.S. dollar might no longer be pegged to the price of oil (so our currency will no longer be the world's reserve currency of choice). If this happens, the value of the U.S. dollar will drop dramatically (and very quickly), causing massive hyper-inflation. Holding assets outside of the U.S. and owning silver, such as shares of the Canadian company Silver Wheaton (SLW) could help you safeguard your savings. Make sure your broker allows you to cash out your SLW stock and exchange its value in another currency (other than the USD, i.e. such as Euros, etc). You may need to open a Forex account whereas you can transfer funds from your broker (i.e. Charles Schwab) to that account. Maybe open a bank account in Mexico or Canada, and have a debit card that withdrawals cash (in your preferred currency) outside the borders of the U.S. - then make sure you have enough water and gasoline to get you out of the country before all hell breaks loose.

If the Bush tax cuts had never been implemented in the first place, and we didn't start two three wars (but instead, had cut military spending), and we eliminated the corporate corruption in Medicare, we might not be where we are today. But noooooooooooooo...corporations wanted to open up "emerging markets" - and use our military as their private police force to protect their assets.

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