Archive for November 1st, 2010

Well, here we are on a Monday sandwiched between the two scariest days of this year, Halloween and Election Day.  In the run uo to the elections there has been a constant drumbeat  from candidates all uttering the words Tax Cuts as though they were some magical incantation used to bewitch voters.  And maybe they are.  A good portion of the American public pays little attention and responds to catchphrases and sloganeering without questioning the validity of the argument.

On last night’s 60 Minutes there was an interesting segment that featured David Stockman, who was the wunderkind behind the  Reaganomics/ supply side economic policy of the early 1980’s.   I felt a great sense of vindication when I heard him speak about the failings of this policy and how it has led to the great wealth inequality that bedevils our nation.  I knew that when I first heard of the policy 30 years ago when I was nothing more than a high-school graduate working in a factory.  It didn’t take a brain surgeon to see where those policies would eventually take us.

He was on the show primarily to say that this constant mantra of Tax Cuts is killing us as a nation and is not practically sustainable.  He calls for the Bush Tax Cuts to end for all income levels.

The story also concerned itself with the state of Washington and its ballot iniative to establish a state income tax of 5% that would start after $400,000 of income per year.  Washington currently has no state income tax and, like most states, is in a fiscal bind.  This measure’s largest supporter William Gates, Sr., father of Microsoft founder and bazillionaire Bill Gates, who also supports the bill.  The story didn’t mention that besides establishing a state income tax on the wealthiest 3% of Washington  residents, this bill would also lower the property tax statewide by 20%.  This is for everyone, including the wealthiest citizens.

Of course, it showed the typical scare tactics employed by the wealthy when faced with even the most modest of taxes– we’ll leave and take our jobs with us.  They featured a younger entrepreneur who runs an internet company selling novelty items who had already moved his business from Oregon to Washington to avoid state income taxes in Oregon.  He claimed this would make him pack up and take his prosperous firm elsewhere.  According to the story, under the new tax in Washington, it would cost this guy $50,000 a year in state taxes.  I know, that sounds like a huge number.  But using simple arithmetic, this means he is making a net income, after all expenses and deductions, of $10 million.  Actually, 10.4 million– the first 400,000 is not taxed. 

This man claims that this 50K would be enough to make him pack up and relocate his entire operation, which must be substantial in order for a guy to turn a 10M profit selling crap novelties online.  He also said that this 50K would prevent him from hiring any new employees.  The typical clarion call of business owners faced with taxes of any sort.  No, actually it is a threat and a ludicrous one, at that, made by greedy, greedy people.  I understand him wanting  to not pay more taxes but when they make these threats about taking their ball and going home – well, to some home somewhere in one of the 6 or 7 states that don’t have state income tax– well, it just irks me that they are so willing to play that fear card on the public.  This guy was a prime example of why Reaganomics/ supply side economics were doomed to failure: they could only succeed dependent upon the assumption that these folks were not filled with greed. 

Actually, Stockman, who was one of the main salesmen for these policies, admitted that  the trickle down effect was concocted only  to sell tax cuts for the rich to the middle and lower classes.

So, when you hear the nattering chant of Tax Cuts! without any reason answer as to how they can be paid for, recognize that you are being pandered to.  Recognize that you are being assumed to have a lack of intelligence and a lack of attention.  And question what other things they may be trying to pull over on you.

Think!  Then vote.

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