This is part two of a series of articles challenging the Republican establishment to defend their representation of Conservative interests and to challenge current Republican talking points with common sense.
Today's topic: Taxation
Every single Republican running for federal elected office is asked (rather heavy handedly) to sign Grover Norquist's pledge to never raise, or cause to be raised, any income tax for corporations or individuals or to reduce any deduction available that in effect raises those taxes. The effects of this pledge and the mentality behind it saturate the Republican political landscape these days and was plainly visible in the debt ceiling debate earlier this month. The suggestion of raising revenues caused Cantor to storm out of a critical meeting and was a hard line in the sand drawn by all Republican leadership in both the Senate and the House. The opposition to tax increases was so vehement that the Republican party passed up two trillion in additional spending cuts over the final deal in order to avoid any tax increase whatsoever.
So Republican practical politics has given a resounding 'No!' to tax increases of any kind.
This position is irrational - even for conservatives.
Taxation is really the only way the government makes the money it needs to perform its duties. In fact it is the only way conservatives would want the government to fund itself. Remember that in the United States, conservatives take a very dim view of the government stepping into profitable enterprise in order to raise revenue. That's called socialism with the same hiss on the first S that you might use if you were trying to spit. According to conservative thought, any enterprise that could be done for profit generally should done for profit by private industry leaving the government the task of of doing things that either are not profitable or which require a large amount of loss to get moving. Examples include projects such as national defense, the highway system, the legal system, large scale infrastructure such as the Hoover dam, or public good projects like the telephone land lines running to people's houses. So if these expensive, low or no profit projects are the ones we consign to government, then the only way to fund it is with taxation of enterprise that actually does make money.
Where do taxes come from?
The quick answer is: Success.
No way! It's un-American to punish the successful.
It is not that we tax success to punish the successful, it is that we are supporting a set of core conservative value. America is all about individual initiative, personal responsibility and fiscal independence. We want people at the bottom - who are just starting out - to have the lowest barriers to entry into markets and business opportunities so we grant them significant tax breaks or we don't tax them at all. We also don't want to be driving our poor into destitution, so we do not tax the poor. The idea is that payment for the 'American Way' should come from people who have actually benefited from it. So once your income rises above a certain level or your business becomes successful, you begin to chip in for all those resources you took for granted and were exempt from paying for while you made minimum wage working for McDonalds or your business was struggling through some loss heavy years.
Our system of government – even at its bare bones – costs a lot of money. We're administering the infrastructure for 150 million people. Our entire American Way as defined by the rags to riches narrative that has no chance to succeed if the poor or the struggling are paying an equal share of our infrastructural costs. The conservative position of individual initiative and personal responsibility instead requires that the government collect on its costs of its operations from those who have gained traction in the economy so those who haven't have constant opportunity to join that group and pay back their share. So long as the poor are being taxed, in theory, they can blame the government for holding them back. With only the successful paying taxes, the responsibility for success is once again individualized. Nobody's holding them back, in theory, but them.
Therefore, the growing Republican protectionism for corporate luxury, subsidy, and loopholes should be incomprehensible even to conservatives. When congressional Republicans oppose closing loopholes for private jet fuel, stopping oil subsidies on companies making more profits than any corporation in the history of America, and battling to the death over a few percentage points of additional taxes on the top 2% of income earners, we have to wonder where the whole personal responsibility part of being Republican has gone. Where are we holding the very successful responsible for their success? The Republican party has even risked political suicide by suggesting dismantling medicaid and medicare rather than adjusting the tax code to appropriately draw from the most profitable US corporations.
For perspective, remember nobody's talking about asking these companies to pay painfully high taxes, we're talking about asking them to pay SOME taxes. GE and Exxon didn't pay a dime this last year, and still Paul Ryan risks his future to try to cut valued government programs instead of asking them to participate in the American tax system.
But the Rich already pay 80% of taxes in the US
This talking point shows how easily you can deceive people with with a true statement and perhaps how unwilling Americans are to do math. Let me break down why this claim isn't really saying anything.
Let's assume, for argument, that $10,000 dollars are collected in taxes in a year from OurAmerica, the fictional country of just you and me. I make $1,000,000 a year, and pay $8,000 in taxes. You make 10,000 a year, and pay $2,000 in taxes. Now, I paid 80% of the taxes in this country this year, while you only paid 20%. I must be overtaxed!
But wait: I paid .8% of my income in taxes, and you paid 20% of yours.
Measuring tax contribution by examining the percent of the total dollars collected is a meaningless analysis. The important figure for fair taxation is as a percentage paid of total income. Again, the more you make the more you should contribute to the society that allowed you to get that far. Republicans who claim this talking point are speaking nonsense. As we discussed earlier, the tax system deliberately draws fund from success in order to facilitate conservative values of individual initiative and to foster private enterprise. The question is never how much of the tax pool you paid, it's what real percentage of your income after deductions and exclusions you actually pay.
We shouldn't burden the job creators.
What causes a private industry to stop hiring? Well we can talk about market instability, poor consumer activity, and a pile of other factors, but there are positive achievements that discourage jobs too. What positive occurrence might motivate a company to stop creating jobs? The answer is massive profits. If a company finds a sweet spot where their operations can be sustained as-is and massive profits are the result without additional expenditures, they will hold steady.
Employees are expensive, arguably the largest expense any company has. Adding employees is done when the company is hungry for more profits and sees an opportunity that outweighs the risk of taking on the new costs. But when profits are pouring in as they are now, there is no reason to rock the boat, and any financial risk might well be passed over in favor of rolling around in the metaphoric swimming pool of cash wall street has been swimming in. What this means it that there are arguably times when higher taxation, or taxation on inactivity might drive business to expand by disturbing the complacency of of the corporate market.
I'm not arguing that raising taxes stimulates business. I'm arguing that taxation is one factor in business behavior and can both encourage an discourage expansion. Raising a tax on the rich does not discourage them. Raising a tax on corporations does not discourage them either. Only raising taxes as a default and repeated policy has the risk of impacting hiring. But there is a great deal of distance between adjusting the method by which taxes are gathered such as closing loopholes and adjusting top brackets, and entering into a tax policy of continued increases on those able to hire. Republicans are simply wrong about the bright-line effect of taxes on the rich when it comes to hiring and business growth: The times of our greatest economic growth have been under tax rates much higher than they are even now.
Taxes just lead to bigger government
They can, sure, but taxation has also kept government small. Prior to Ronald Reagan's massive tax reform, taxes were the vehicle used to build America. The tax code contained brackets that were much much higher than they are today, the top brackets sitting as high a 90%. The idea back then was as simple as it was elegant. The people of the country would decide in government what they wanted to do to build America. Then, instead of using tax dollars to expand government to build the infrastructure and industry the nation needed, they would adjust the tax code to provide massive incentives to private companies that would do the work. In this way, government could steer private enterprise to engage projects the nation needed without getting directly involved or taking direct control. This process of raising and lowering taxes to encourage private industry allowed the government to remain smaller than it otherwise would. It also had the secondary effect of leveraging the greatest strengths of private industry. The government wasn't paying people to do projects, they were offering tax relief to innovators who could do it well. The private entrepreneurs were working for themselves, for profit, and were doing something the government wanted on their own volition and in their own self interest.
This might sound like the tax cuts you hear today, but there's a critical difference. After Ronald Reagan, the tax brackets were slashed so low that the real driving incentive provided by government was lost. Seeking tax cuts was just a way to pad margins, and corporations could give or take them. These days, the effect of tax cuts on anything positive is difficult to measure.
Conclusion - The Republican tax position is not conservative
Current Republican tax policy is irrational. It defines taxation – a tool in the toolbox – as inherently evil and destructive, ignoring mountains of evidence that balanced and thoughtful taxation combined with informed and careful cuts creates the best results. Republicans seem so caught up in catering to the tea party ignorance of how taxes work and what tax policy can do that they have even hamstrung their own ability to get what they want. It is telling to me that a 4 trillion dollar cut deal that included cuts to programs no Democrat would ever have allowed in history was passed over by house Republicans because it contained additional taxes. This isn't just stunning to me: the National Review had conservative authors sitting dumbstruck at their own party's failure to grab the opportunity.
So go ahead Republican Party - explain to conservatives why you're crushing their values under a bright line taboo that only makes sense to the most radical and least informed members of your constituency.
Today's topic: Taxation
Every single Republican running for federal elected office is asked (rather heavy handedly) to sign Grover Norquist's pledge to never raise, or cause to be raised, any income tax for corporations or individuals or to reduce any deduction available that in effect raises those taxes. The effects of this pledge and the mentality behind it saturate the Republican political landscape these days and was plainly visible in the debt ceiling debate earlier this month. The suggestion of raising revenues caused Cantor to storm out of a critical meeting and was a hard line in the sand drawn by all Republican leadership in both the Senate and the House. The opposition to tax increases was so vehement that the Republican party passed up two trillion in additional spending cuts over the final deal in order to avoid any tax increase whatsoever.
So Republican practical politics has given a resounding 'No!' to tax increases of any kind.
This position is irrational - even for conservatives.
Taxation is really the only way the government makes the money it needs to perform its duties. In fact it is the only way conservatives would want the government to fund itself. Remember that in the United States, conservatives take a very dim view of the government stepping into profitable enterprise in order to raise revenue. That's called socialism with the same hiss on the first S that you might use if you were trying to spit. According to conservative thought, any enterprise that could be done for profit generally should done for profit by private industry leaving the government the task of of doing things that either are not profitable or which require a large amount of loss to get moving. Examples include projects such as national defense, the highway system, the legal system, large scale infrastructure such as the Hoover dam, or public good projects like the telephone land lines running to people's houses. So if these expensive, low or no profit projects are the ones we consign to government, then the only way to fund it is with taxation of enterprise that actually does make money.
Where do taxes come from?
The quick answer is: Success.
No way! It's un-American to punish the successful.
It is not that we tax success to punish the successful, it is that we are supporting a set of core conservative value. America is all about individual initiative, personal responsibility and fiscal independence. We want people at the bottom - who are just starting out - to have the lowest barriers to entry into markets and business opportunities so we grant them significant tax breaks or we don't tax them at all. We also don't want to be driving our poor into destitution, so we do not tax the poor. The idea is that payment for the 'American Way' should come from people who have actually benefited from it. So once your income rises above a certain level or your business becomes successful, you begin to chip in for all those resources you took for granted and were exempt from paying for while you made minimum wage working for McDonalds or your business was struggling through some loss heavy years.
Our system of government – even at its bare bones – costs a lot of money. We're administering the infrastructure for 150 million people. Our entire American Way as defined by the rags to riches narrative that has no chance to succeed if the poor or the struggling are paying an equal share of our infrastructural costs. The conservative position of individual initiative and personal responsibility instead requires that the government collect on its costs of its operations from those who have gained traction in the economy so those who haven't have constant opportunity to join that group and pay back their share. So long as the poor are being taxed, in theory, they can blame the government for holding them back. With only the successful paying taxes, the responsibility for success is once again individualized. Nobody's holding them back, in theory, but them.
Therefore, the growing Republican protectionism for corporate luxury, subsidy, and loopholes should be incomprehensible even to conservatives. When congressional Republicans oppose closing loopholes for private jet fuel, stopping oil subsidies on companies making more profits than any corporation in the history of America, and battling to the death over a few percentage points of additional taxes on the top 2% of income earners, we have to wonder where the whole personal responsibility part of being Republican has gone. Where are we holding the very successful responsible for their success? The Republican party has even risked political suicide by suggesting dismantling medicaid and medicare rather than adjusting the tax code to appropriately draw from the most profitable US corporations.
For perspective, remember nobody's talking about asking these companies to pay painfully high taxes, we're talking about asking them to pay SOME taxes. GE and Exxon didn't pay a dime this last year, and still Paul Ryan risks his future to try to cut valued government programs instead of asking them to participate in the American tax system.
But the Rich already pay 80% of taxes in the US
This talking point shows how easily you can deceive people with with a true statement and perhaps how unwilling Americans are to do math. Let me break down why this claim isn't really saying anything.
Let's assume, for argument, that $10,000 dollars are collected in taxes in a year from OurAmerica, the fictional country of just you and me. I make $1,000,000 a year, and pay $8,000 in taxes. You make 10,000 a year, and pay $2,000 in taxes. Now, I paid 80% of the taxes in this country this year, while you only paid 20%. I must be overtaxed!
But wait: I paid .8% of my income in taxes, and you paid 20% of yours.
Measuring tax contribution by examining the percent of the total dollars collected is a meaningless analysis. The important figure for fair taxation is as a percentage paid of total income. Again, the more you make the more you should contribute to the society that allowed you to get that far. Republicans who claim this talking point are speaking nonsense. As we discussed earlier, the tax system deliberately draws fund from success in order to facilitate conservative values of individual initiative and to foster private enterprise. The question is never how much of the tax pool you paid, it's what real percentage of your income after deductions and exclusions you actually pay.
We shouldn't burden the job creators.
What causes a private industry to stop hiring? Well we can talk about market instability, poor consumer activity, and a pile of other factors, but there are positive achievements that discourage jobs too. What positive occurrence might motivate a company to stop creating jobs? The answer is massive profits. If a company finds a sweet spot where their operations can be sustained as-is and massive profits are the result without additional expenditures, they will hold steady.
Employees are expensive, arguably the largest expense any company has. Adding employees is done when the company is hungry for more profits and sees an opportunity that outweighs the risk of taking on the new costs. But when profits are pouring in as they are now, there is no reason to rock the boat, and any financial risk might well be passed over in favor of rolling around in the metaphoric swimming pool of cash wall street has been swimming in. What this means it that there are arguably times when higher taxation, or taxation on inactivity might drive business to expand by disturbing the complacency of of the corporate market.
I'm not arguing that raising taxes stimulates business. I'm arguing that taxation is one factor in business behavior and can both encourage an discourage expansion. Raising a tax on the rich does not discourage them. Raising a tax on corporations does not discourage them either. Only raising taxes as a default and repeated policy has the risk of impacting hiring. But there is a great deal of distance between adjusting the method by which taxes are gathered such as closing loopholes and adjusting top brackets, and entering into a tax policy of continued increases on those able to hire. Republicans are simply wrong about the bright-line effect of taxes on the rich when it comes to hiring and business growth: The times of our greatest economic growth have been under tax rates much higher than they are even now.
Taxes just lead to bigger government
They can, sure, but taxation has also kept government small. Prior to Ronald Reagan's massive tax reform, taxes were the vehicle used to build America. The tax code contained brackets that were much much higher than they are today, the top brackets sitting as high a 90%. The idea back then was as simple as it was elegant. The people of the country would decide in government what they wanted to do to build America. Then, instead of using tax dollars to expand government to build the infrastructure and industry the nation needed, they would adjust the tax code to provide massive incentives to private companies that would do the work. In this way, government could steer private enterprise to engage projects the nation needed without getting directly involved or taking direct control. This process of raising and lowering taxes to encourage private industry allowed the government to remain smaller than it otherwise would. It also had the secondary effect of leveraging the greatest strengths of private industry. The government wasn't paying people to do projects, they were offering tax relief to innovators who could do it well. The private entrepreneurs were working for themselves, for profit, and were doing something the government wanted on their own volition and in their own self interest.
This might sound like the tax cuts you hear today, but there's a critical difference. After Ronald Reagan, the tax brackets were slashed so low that the real driving incentive provided by government was lost. Seeking tax cuts was just a way to pad margins, and corporations could give or take them. These days, the effect of tax cuts on anything positive is difficult to measure.
Conclusion - The Republican tax position is not conservative
Current Republican tax policy is irrational. It defines taxation – a tool in the toolbox – as inherently evil and destructive, ignoring mountains of evidence that balanced and thoughtful taxation combined with informed and careful cuts creates the best results. Republicans seem so caught up in catering to the tea party ignorance of how taxes work and what tax policy can do that they have even hamstrung their own ability to get what they want. It is telling to me that a 4 trillion dollar cut deal that included cuts to programs no Democrat would ever have allowed in history was passed over by house Republicans because it contained additional taxes. This isn't just stunning to me: the National Review had conservative authors sitting dumbstruck at their own party's failure to grab the opportunity.
So go ahead Republican Party - explain to conservatives why you're crushing their values under a bright line taboo that only makes sense to the most radical and least informed members of your constituency.
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