The Fruits of Apostasy: Politcal Correctness

[_EAllusion]

1. Unless this is to be taken as a commission of the ad hominem circumstantial fallacy,

When you are expected to take information on trust, evaluating the credibility of a source by looking for conflict of interest biases, historical reliability, etc. is not ad hominem. Ad hominem is when you evaluate the truth of an argument in terms of its source. This is a common, though sophomoric misunderstanding of logical fallacies.

you would have to provide a reason to think that this consortium of petroleum companies was incompetent or untrustworthy regarding states of affairs as they stand among the industry in which they have expertise, and which you do not.

A lobbying front whose mission is to advocate for favorable policy to petroleum companies providing a talking points memo on whether petro companies are sufficiently taxed is not a reliable source. I guess in your world, all the assertions of all lobbying groups should be taken on faith unless one personally does the legwork to evaluate their unsourced claims. Like when tobacco lobbying groups were claiming there was insufficient evidence to believe smoking causes cancer at an elevated rate all the way into the 90's we should've believed 'em, because they are the cigarette experts after all. Good call there, and one I'm sure you'd apply to liberal lobbying front groups.

As the tax records of these companies are publicly available, it would appear that deception would be futile.

Yes, because lobbying groups have never provided deceptive arguments regarding publicly available information.

[_Kevin Graham]

Graham wants us to think, using this cherry picked Friedman quote, that Friedman was admitting that tax cuts don't stimulate economic growth or raise government revenue. What, however, did Friedman actually say?...Graham, in other words, is engaging in open prevarication and hoping you don't do your own homework by following his links and actually reading his sources. What Friedman is actually saying (not "admitting") is that some of the revenue enhancement in the Reagan years is probably explained by the tax increases that concomitantly took place. He then reiterates the essential point that tax cuts increase economic activity and hence, expand the tax base and raise government revenue. Graham's credibility? Any takers?

Ok, let's look at the full context:

John Hawkins: Do you think George Bush, with the economy being as it was, did the right thing by cutting taxes?

Milton Friedman: I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. The reason I am is because I believe the big problem is not taxes, the big problem is spending. The question is, "How do you hold down government spending?" Government spending now amounts to close to 40% of national income not counting indirect spending through regulation and the like. If you include that, you get up to roughly half. The real danger we face is that number will creep up and up and up. The only effective way I think to hold it down, is to hold down the amount of income the government has. The way to do that is to cut taxes.

At this point, Friedman's point is perfectly clear. His primary reason for supporting tax cuts is to starve the government of revenue. To him that is a tax-cut's greatest value to the country. And that is precisely what I said he said. But then Hawkins raises the point of economic growth, using the popular myth about Reagan's tax cuts boosting the economy; a myth propagated by none other than droopy himself. Pay attention closely, because Friedman actually takes a responsible appaorach to this, admitting, contrary to all the Reagan worshippers, that it isn't entirely clear what effect his tax cuts had on the economy because they were mingled with multiple tax increases. I previously pointed out to droopy that most economists attribute the economic boom of the 80's to the fed slashing interest rates, and not to Reagan's tax cuts:

John Hawkins: Now let me ask you about that. In the Reagan years, we cut taxes and it ended up leading to economic growth which increased the amount of revenue that came into the government.

Milton Friedman: Well, economic growth will inevitably increase the amount of revenue coming into the government. But so far as the Reagan years were concerned, we have to be careful there. There were initial cuts in 1981-1982 and then there was a very good income tax law in 1986. But in between that, there were increases in taxes as well. So it's not an entirely clear picture that you can attribute the growth in revenue entirely to the tax reductions. But it's a hard thing to disentangle the effects of several things happening at the same time. In particular, there's no doubt that growth is very favorable to government revenue.

So a few points from this:

1. Only after Hawkins puts him on the spot regarding the correlation between revenue and growth, does Friedman slow down and say that such growth and revenue will "inevitably" occur.

2. Friedman's use of "increase" is somewhat ambiguous since he doesn't explicitly state whether it will be an increase from pre-tax-cut legislation period, or simply an increase from the initial drop off in revenue which he already admitted would occur. For instance, if revenues are a trillion, and a tax-cut reduced that to $500 billion. "Inevitably," revenues might increase to $600, $700 and $800 billion, but never really reach the pre-tax-cut period of $1 trillion.

3. Droopy wants to interpret "increase" to mean "the government woulde inevitably have more revenues than they would have had without the tax cuts." But Friedman didn't say this.

4. Nothing Friedman says chaanges the fact that his primary reason for supporting tax cuts is to reduce revenues for the government. This should be clear for any grade schooler who understands context.

5. Friedman believes that tax cuts have an immediate effect of reducing government revenues, which naturally produces deficits.

6. And most importantly, Friedman validates what I have been saying to droopy all along about the effects of tax cuts on revenues. The reduce revenues, and that is his primary reason for supporting them! Nothing in the context changes this.

I'll respond to more of his nonsense later, but just wanted to quickly throw this in for now. Also, thanks to the rest of you for keeping the maniac in his straightjacket with the facts. EAllusion, that was a hilarious find! Using the talking points from a lobbyist front to make his case is classic Loran Blood. This is why he never presents sources unless we press him hard enough. It proves not only that he is relying on biased sources who get paid to produce subjective analyses, but also that he is a hypocrite for accusing me and others for relying strictly on left-leaning sources- and most of the time, I don't!

[_Jason Bourne]

I think you know about 47% of Americans pay no tax. This again is due to the lower rates from the Bush area, an expanded Earned Income Credit from Obama and the Work to Pay Credit from Obama.

Actually, this is false. This claim was spread around in Right Wing circles for a year before it was shown to be myth. It is myth to say 47% pay no income tax, and it is even more a myth that they pay "no tax" whatsoever. That number is really around 20% for working adults. As Solon.com noted last year,

Ok I stand correced.

it's also false to imply that households paying no income tax escape federal taxation altogether. Social Security and Medicare payroll deductions, for example, add up to a nonrefundable 15.3 percent -- a slightly higher rate than wealthy citizens pay on income from dividends and capital gains

This is a fair point. For many FICA and Medicare taxes are their highest tax. It was for me for many years.

Besides, didn't I just point out to you that Obama lowered payroll taxes on Social Security? Everyone who works pays into this, even illegal immigrants who never stand a chance of receiving those benefits.

Yep and I mentioned that in one of my posts somewhere as well. FICA is down 2% for everyone this year. Even for me!! Hooah! I usually make too much for all these other breaks.

[_Jason Bourne]

About corporate taxes, it should be noted that corporations very rarely pay 35% income taxes. Corporations have dozens or hundreds of tax attorneys working for them to manipulate and take advantage of every possible loophole and tax shelter available to them. This is why so many corporations today pay zero income taxes.

Kev I can only give anecdotal experience. I work with many businesses. Most are closely held and in the $1M to $100M in annual revenue. One though Corp client that I had for 10 year had up to a billion a year in revenue. This company paid tax at 35% every year. It was very profitable. Yes they took a credit for research. Yes they took legal deductions to the max. But they paid substantial tax every year.

Most my corporate clients do and they hit 35% very quickly. Some have losses but they are usually start up or due to a bad year or so on. But they do pay tax and most at the higher rates. Manufactures, contractors, farmers and food processors under current tax law do a get a break at 9% that can put there rate down to 26%.

Then there are the S Corps and Partnerships. Again taxed personally to the owners it does not take a large pass through profit to put their income into the higher brackets.

[_Kevin Graham]

As you will notice, Kevin cannot back up any of his arguments with any documentation or facts. All he can do, as is usual for him, is call names and flair his nostrils.

You want me to back up my claim that Obama didn't want to raise taxes on everyone? You seem to be confused about how burden of proof works. When you state emphatically that Obama wants to raise income taxes on "everyone," it is you, not I, who has the burden of proof. I've done everything I could do to educate you on this topic, by drawing your attention to one factchecking article after another and another that effectively debunks this myth. Even the Rupert Murdoch owned Wall Street Journal admits that Obama's plan would not raise taxes on anyone making less than $250k. So you're really left with nowhere else to run, unless you want to sit there with a straight face and accuse the nonpartisan factcheck and politifact along with the WSJ of being "liberal."

All of the facts I've mentioned in the above posts have been taken from leading think tanks who take their raw data from official government sources.

This is not true. You referenced ATR, which is little more than an arm of the Right Wing lobbyist front. It was used as a laundering machine by right wing lobbyist and convicted felon, Jack Abramoff. This article you shared with us merely regurgitated the best in Right Wing scare tactics mingled with unsupported claims. Now you said it was supported by "leading Think Tanks", but this is not true. It lists "three waves" of tax hikes that they said would take place under Obama in 2011. The first wave referenced a short piece published by the Joint Committee on Taxation, which essentially explains the list of tax provisions that were set to expire in 2011.

Amazingly, you decided to interpret this as "new legislation" written by Obama when it is nothing of the sort. The Bush Tax cuts were never set in stone as permanent. They were designed to expire in ten years, and yes, if they expired without any further legislation or modification, then and only then would it be true that taxes would rise "for everyone." But anyone who has spent any amount of time on planet earth these past few years, knows that Obama has strenuously advocated extending tax cuts for families with incomes under $250k. So not only is the JCT not a "leading think tank," but it doesn't support your claim anyway.

So let's move to the "second wave" of tax hikes mentioned in the ATR article. This section discusses the addition of six smaller taxes such as the Tanning tax, and taxes for purchasing name brand drugs. To think these affect "everyone" is silly, but it is also silly to say this is backed up by a "leading think tank" when the only reference provided, is a hyperlink that takes us to yet another hit piece written by the ATR. Again, droopy's sources are the finest at incestuous referencing. Factcheck addresses this "wave" of tax hikes the same way I responded:

The e-mail describes a "second wave" of tax increases that it says will take effect Jan. 1 under the new health care law. But this "wave" consists of three relatively minor tax changes that affect relatively few people...We don’t argue for or against any of these three tax increases. We simply point out that, even taken together, they amount to less than $2 billion per year and, therefore, don’t constitute anything close to a "wave" of historically large tax increases taking effect next year

But a true scare tactic wouldn't be the same without hyperbole.

Only when it discusses the "third wave" of tax increases, is there any mention of a "leading think tank." In this case, it references a piece by Tax Policy Center, discussing the impact of the Alternative Minimum Tax. To the ignorant, this might sound like something new and interesting. A new, nasty piece of tax legislation written by Obama that will definitely affect millions of Americans. Right?

Wrong.

However, this website is so dishonest that it pretends Tax Policy Center agrees with their conclusions. We know that it doesn't because the same think tank wrote this piece explaining why Obama's tax proposal will take care of this problem in ways Bush never bothered with. Factcheck.org addressed this specifically:

The Tax Policy Center calculates that next year 28.5 million taxpayers would have to pay higher taxes on their 2010 returns if the usual patch is not extended. But Obama’s stimulus bill extended the patch through 2009, holding down the number of taxpayers affected to just 4 million. And there’s no reason to think that Congress will fail to extend the patch for 2010 taxes. In fact, President Obama’s budget assumes that a permanent fix will be enacted, holding the AMT to levels in place for 2009. That’s something President Bush never proposed.

Droopy's usage of this article is flat out hilarious because this was essentially one of those spammed emails that went viral with the Right Wingers. It got so bad that factcheck.org was compelled to "fact check" it, and well, from the link above, you should be able to see how misleading, erroneous and stupid it really is. But that's to be expected by anything written by Grover Norquist and accepted by Droopy as "empirical"! LOL!

And while he likes to pretend his entire case was supported by a "leading think tank", the fact is his article referenced Tax Policy Center only once to make a case for AMT, but then ignored the same think tank when it disagreed with their conclusion! You just can't make this stuff up folks:

Since 2001, Congress has repeatedly increased the individual alternative minimum tax (AMT) exemption on a temporary basis to prevent too many taxpayers from being subject to the tax. The temporary legislation has also allowed taxpayers subject to the AMT to use personal nonrefundable tax credits, including credits for childcare and higher education, which the AMT normally disallows. Absent these stopgap measures, sometimes called "the patch," the AMT exemption would stay at the nominal levels established in 1993, and the AMT would affect almost a third of all taxpayers.

The stimulus bill ("American Recovery and Reinvestment Act of 2009") extended the patch through 2009, setting the exemption level at $46,700 for single and head of household filers, $70,950 for married people filing jointly and qualifying widows or widowers, and $35,475 for married people filing separately. The AMT has two tax rates: 26 percent on the first $175,000 of income above the exemption and 28 percent on incomes above that amount. The AMT exemption phases out at a 25 percent rate between $112,500 and $299,300 for singles and heads of household, between $150,000 and $433,800 for married couples filing jointly, and between $75,000 and $216,900 for married couples filing separately. The phaseout creates effective AMT tax rates of 32.5 percent—125 percent of 26 percent—and 35 percent—125 percent of 28 percent for affected taxpayers.

The president proposes to make permanent the 2009 AMT parameters—exemptions, rate brackets, and phaseout thresholds—and index them for inflation. That would remove a significant source of uncertainty about taxation and prevent inflation from pushing large numbers of taxpayers onto the AMT in future years. Most of the benefits of the change would go to taxpayers with relatively high incomes: about three-fourths of the tax cut in 2012 would go to households with income over $100,000. Over half of taxpayers with income between $200,000 and $500,000 would see their tax bills drop by an average of over $1,800, raising their after-tax income by more than 0.9 percent

So AMT never resulted in higher taxes in 2009 because Obama patched it, and he said he intended to patch it again in 2010, and yet ATR tries to use this as evidence that "28 million" will see their taxes rise in 2010. This is how far they have to go out of their way to deceive, in order to show Obama is increasing taxes on everyone? Un-friggin-believable!

This says more about droopy's naïvété and trustworthiness of his sources, than I could ever express in words. It is hardly surprising that ATR is just fodder for ignorant folks to create spam emails for further disinformation campaigning; folks not really serious about education or the hard facts. They want to be scared and have their ignorance reinforced and assured, and so it should be hardly surprising that this is droopy's primary source of information. This thread just keeps getting better and better.

As I've already mentioned umpteen times, the Obama tax increases are widespread and broad based. Income taxes are only a small tip of an iceberg encompassing much of the economy, and even when we are done looking at that, state, local, and a vast plethora of other federal taxes involving much of that which we consume, use, or rely upon in our daily lives, is all set to skyrocket.
Obamacare, if it survives the courts, will require massive tax increases (unless its paid for through inflation). The EPA's endangerment ruling, if allowed to see the light of day, will destroy the economy, period.

I should point out that Droopy is relying on economic predictions by his Right Wing bloggers. Heritage is notorious for this kind of thing. They plug in the raw data according to their own economic model, deleting all stuff they need to, in order to shape their predetermined conclusions; such as the effect tax reductions have on revenue, and then conjure up a scary economic forecast and let their silly followers like droopy call it "empirical." Suffice it to say, factcheck.org took droopy and his precious ATR to the woodshed over these claims. I wish I had come across it before I started writing my own refutation, it would have saved me a lot of time.

Roughly fifty percent of the cost of every gallon of gas purchased is tax

But if you knew how to pick your sources and read them properly, you'd see that only 18.6 cents from every gallon is federal tax, which is actually lower than it was in 1994. How is this proof that Obama is jacking up taxes on everyone? You've been reduced to listing all sorts of taxes that everyone has always had to pay. What you're not doing is demonstrating how this makes the overall tax burden higher for everyone, under President Obama. Like the grand wizard at OZ, you're still pulling levers, cranking gears and blowing smoke, trying to keep up the fantasy that you're actually proving your points and winning a debate for once. Well, keep dreaming.

[_Kevin Graham]

Droopy quotes me, asking him for proof that there is legislation proposing to increase taxes on everyone, and impressively, like the scarecrow without a brain, he provides the official 2011 budget which proves exactly the opposite!! He also hyperlinks the JCT publication which merely describes the tax provisions set to expire over the upcoming years. It is almost scary that he thinks this represents proof of proposed legislation!

My fault for having said that the legislation "exists." Obama proposed such legislation, and the Tax Relief Act of 2010, which modified his original proposals, did indeed become legislation.

So now you admit no legislation exists, but want to say it was proposed anyway? I've already provided documents dating back to 2008 describing Obama's tax proposals that have always included tax reductions for everyone except for families making $250k per year. So you're still left with the burden of proof. You're not going to be able to get away with merely asserting something is true, especially in the face of so much documentation to the contrary. And before you even start with this leftist nonsense, none of my sources are left wing, except Obama's statement that refutes your claim.

Its an empirical and historical fact, not to mention logically implied by the very nature of free market economics itself (human beings tend to respond to incentives in certain invariable and predictable ways given human nature and the surrounding economic and political environment).

Well, I've already provided dozens of credible sources that span across both ends of the political spectrum. All you've done is dismiss them out of hand and reference Right Wing lobby organizations - pretending they constsitute a "leading think tank." The fact is fewer and fewer economists are buying into this outdated doctrine from the old school supply-siders. The Bush Tax cuts is really all the evidence anyone needs to know it is a failed theory. Hell, even Milton Friedman admitted that the best thing about tax cuts is that it reduces revenues and starves the government, forcing deficits.

Of course they do...for the first year or so, and then the economy takes off, as it did in the 20s, the 60s after the Kennedy tax cuts, and in the eighties (the longest peace time economic expansion in history at the time).

That isn't what Friedman said, because if that is what he meant, then it completely negates his initial point about starving the government of revenue. Besides, you simply do not understand that revenues did not boom under Reagan because of Tax cuts. Didn't you listen to anything Friedman said? And you're wrong about the 20's and 60's as well.

Incredible! After years of fuming, ranting, and hair pulling tantrums, Graham finally lurches, like a blind squirrel finally coming upon a nut just as the first snowflakes of winter alight upon his nose, right into the truth of it. It took him a great deal of blood, sweat, and tears, but he finally stumbled upon the reality that the fundamental, overarching reason for cutting taxes, and cutting them substantially, is not to raise government revenue. No conservative has ever, indeed, made such an argument.

You mean the website http://www.taxcutsincreaserevenue.com/ is owned and operated by a Liberal!?

Was George Bush not a conservative? Is Sean Hannity? Is theWall Street Journal? Is the Heritage Foundation not conservative anymore? Is Republican Congressman John Campbell not conservative either? Did Freedomworks suddenly become anti-conservative? Is Rush Limbaugh no longer considered a conservative?

If you think Conservatives are going to the American public and pitching this notion that tax cuts are needed in order to create deficits and starve the same network that manages our social security, our medicare for the elderly, defends the nation by financing the most expensive and sophisticated military the world has ever seen, etc. If you think this is their sales pitch to the American people, then you really are out of touch with political reality. This would be political suicide and they know it, so they have to be more crafty, and invent new "benefits" from thin air that would supposedly come from reducing revenues, especially in this period of high deficits. Anyone who knows how to handle a budget knows that income is just as important as expenditures. It is the flip side of the same coin. Conservatives are idiots because they think cutting spending is a viable solution when in fact most of the spending is mandatory. Social Security is self-sustaining, so if you take that out of the equation defense is the largest expenditure, and it is discretionary, which means it can be reduced via immediate legislation. Right Wingers simply do not understand the deficit, and actually think it is based on welfare state. No. We have a deficit because we drastically REDUCED INCOME throughout the Bush Years. We lost $1 trillion on two idiotic wars, another $1.8 trillion in the Bush Tax cuts for the wealthy, and another $1.2 trillion for his ridiculous medical prescription plan. That right there is at most, $4 trillion and $3 trillion at least, thrown to the wind thanks to George Bush's spending spree which was all about making more money for his wealthy constituents. You cannot spend that kind of money and then REDUCE your income drastically via tax cuts, and then act surprised when a surplus is turned on its head and our deficit is so great that we're on the brink of a depression. This is simple math. And are you telling me George Bush's intention with the tax cuts was to starve the government? He was the one spending money like mad so what you're saying is that he created this recession on purpose. This was all by design.

Since the overwhelming problem with tax cuts is that they reduce revenues, the Right has been on this massive disinformation campaign, funding your media outlets and "think tanks" getting them to propagate this nonsense about how tax cuts are good for America because they actually INCREASE revenues and will REDUCE the deficit! You don't see a single Right Wing politician, whether it be Pawlenty, Paul, Cantor or Bachmann, conceding the point that their tax cut proposals (which range from 9% to 20% for the top bracket) would increase the deficit. Their logic is that they would reduce it because of the overwhelming flood of tax revenues that would ensue, due to corporations hiring Americans by the millions. Which of course, is just a scam that even the Conservative Bill Kristol admits, since corporations have never adjusted their hiring practices according to effective tax margins.

Anyone who is vaguely familiar with modern political debate knows this is a popular Right Wing selling point. Conservatives sing this tune to me on a daily basis, either at work, or on Facebook, or on debate forums. For them, tax cuts are needed because:

1. It boosts economy
2. It creates jobs
3. It boost revenues.

Of course we now know that all three are basically myths, with the exception of #1 in rare cases. Tax cuts can help boost the economy in period when taxes are extremely high, such as in the 70-90% range (as I previously had to educate you on the Laffer curve). But cutting them from 40% to 30% or from 30% to 25% isn't likely to produce any benefits in any of the three categories.

That the reasons for this escape you - but could easily be taught to a ten year old, is much more fascinating than the economic principles themselves.

Except I'm not the one living in a cave pretending the conservatives on TV are arguing for tax cuts while admitting they'll increase the deficit. The entire clan of Tea Party politicians have been making the deficit their #1 priority, and you're telling me they've been coming clean and letting the American public know they first intend to increase the deficit before they decrease it? Right, Droops. Keep dreaming.

Wrong. That was a later emendation.
http://www.atr.org/days-thebr-largest-t ... tory-a5370
http://www.heritage.org/Research/Report ... -Americans

And yet here he is again, referencing ATR instead of producing a single piece of evidence that Obama originally proposed to raise taxes on everyone. The amazing thing about his reference to Heritage, is that it can be thrown into the pile of right wing sources that actually refute his claim and prove my original statement. Yes folks, he is really this stupid. From the Heritage article above:

President Obama’s tax plan extends the 2001 and 2003 tax relief for all families that earn less than $250,000 a year ($200,000 a year for singles).

Hello, McFly? Now isn't that exactly what we've been trying to pound into droopy's head all this time? I pointed this out and so has Jason, but to no avail. And so it seems he is left to render Heritage as nothing more than a "leftist" source!

The Tax Relief Act of 2010 was passed in December of 2010. The details you see in the second source here reflect resistance to his original plan, as well as further tax increases retained in the compromise. The provisions of that act expire in 2013.

Uh huh, except you can't find a single reference anywhere documenting Obama's so-called "proposal" before he actually proposed it in 2008, and 2009, and 2010. Remember, I have already provided numerous documents proving his proposal as early as 2008, refused to increase taxes on any families making $250k. And the piece by Heritage pretty much summarizes the problem with your "facts." Virtually everything you call "empirical" is really just a bunch of economic forecasting by your favorite Right Wing sources. Economics is not an exact science, so referring to any forecasts as empirical tells me you do not understand economics. Heritage comes right out and admits this too. It first admits that Obama doesn't increase taxes on those making $250k, but then says they will pay more anyway because his policies will do all all sorts of nasty things to the economy that will make them pay more in the long run. You know, the usual talking points/scare tactics they always have to resort to; about increasing unemployment because corporations won't want to hire anyone because they're paying another 3% in tax, etc. But it is all admittedly just "predictions," and the usual nonsense which I seriously don't think even they believe to be true; they say it because it is their job to serve those who fund them.

In any event, more and more Right wingers are admitting the obvious fact that tax cuts do not translate to increased employment. Bush provided record tax cuts for a decade and it had zero effect on job production. Virtually all economists admit this is true now. The Bush administration had the slowest job growth in over 75 years, despite handing over nearly a trillion in tax breaks for the wealthy. Corporations are sitting on record profits, and the only people they want to hire are those living abroad. The five biggest recipients of corporate welfare used that money, not to hire new employees, but to fund political campaigns, trying to buy more politicians to reduce their taxes even further, no doubt.

Droopy asks for "CFR" that corporations rarely pay 35% in taxes.

The effective tax rate for corporations between 2003-2006 was 25% according to this study and it was as low as 18.1% in 2003. GE paid zero taxes, which was $11 billion less than what illegal immigrants paid! These ten corporations either paid zero taxes, or got a taxpayer funded refund!

If you adduced any fact, data, empirical evidence, or logical argument here, it might. You know, its funny, but the claim that "lower taxes is the way to go to spur investment, create jobs" is logically and conceptually self evident.

No Droops, economists stopped using this silly rhetoric and calling it "self-evident" many years ago. Only the those who are so far to the Right that they're almost Left, would entertain this nonsense. The Bush Tax cuts proved this false. And it is up to you to make excuses as to why the tax cuts didn't cause an economic boom and increase employment.

[_Kevin Graham]

In the face of this, I invite Kevin to elucidate what does spur investment and create jobs

It depends on the type of business, but the easy answer is consumer spending. When consumer spending is down, business is down, which means businesses are not inclined to hire more employees. I own an English school. I will hire more teachers when I get more students. I'm not going to hire more employees just because I got a tax cut! I will only get more students when prospective students have the money to spend on classes. If business is up, I'm not going to not hire more teachers, just because my tax rate went up a few points. That is a completely idiotic move for any business owner. Business owners will expand employment based on business levels, not tax levels. This has always been true, and there is absolutely ZERO evidence to support this wild theory that employment increases are caused by tax reductions. NONE. It is usually just silly argument folks like you like to call "self-evident", and usually from folks who have never owned a business, and never will.

, if not an environment that incentivizes productive economic activity (i.e., savings, risk, entreprenership, and letting those who create, work, and produce keep most of what they earn, and not punishing them when they save and invest it in other productive economic activities)?

We already know that tax cuts don't work. This is irrefutable. Bush tried it and it did nothing for employment. Reagan did it and also raised taxes a half dozen times, but economists generally agree that the economic boom under Reagan was a result of the Fed slashing interest rates. When Obama took office, taxes were already a ridiculously low levels and the interest rate was slashed to zero. The idea that cutting taxes further would pull us from the brink of a depression, is downright idiotic and there wasn't a single economist pushing for that line of attack. This is why I frequently ask the anti-Obama crowd what THEY think we should have done in 2008/2009 in the face of a possible depression. The silence is deafening. They have no answers. They say no bailouts, but they don't know how to respond to the majority of economists who said the fed really had no choice but to bail them out. As Government Sponsored Enterprises, they were legally obligated to do so, and you can't blame that on Obama. Since interest rates were at zero, there was nothing to slash. Reagan had the advantage of walking into office with extremely high interest rates. Cutting them is what saved his butt. Obama couldn't rely on that. Since taxes were already very low for nearly a decade with no improvement in employment, there was really no reasonable basis for insisting on further tax cuts, especially during a time of record deficits. So what else could he have done but implement Keynesian economic theory, which is essentially to kick start a dying economy by providing the consumers with more money? It is precisely what his economic advisers recommended. It is what got us out of the great depression, and it is what got our economy going after WWII. History is on the side of the Keynesians, but you don't understand this because well, you don't understand much of anything when it comes to history. I have to keep reminding myself that you're the guy who refuses to read the cutting edge in economics; modern works that have advanced our knowledge based on recent history. You're still reading obsolete theorists like Hayek and Mises over and over.

If tax rates can ever have a positive effect on employment, this can only come by increasing the tax rate, not decreasing it. Here is an effective explanation for this with real examples that also throws your "incentive" argument into a tailspin:

All Republican politicians, and many Democratic ones as well, make the claim that tax increases will prevent small business people from hiring. Indeed, it may force them to fire people.

Alright, we expect politicians to say loony things.

But we have a right to expect reporters to break out in hysterical laughter, economists to call their nearest media outlet to say how ridiculous that is, and competing politicians to explain why they're wrong.

That doesn't happen. And that's the weird part. Because it's pretty simple.

Let's do some basic economics. Real basic.

Taxes are not paid on revenue.

Taxes are paid on profits.

Profits are revenues minus costs.

Labor is a cost.

Let's imagine a small business.

For the sake of simplicity, let's say it's a personal business, not a corporation.

It has gross revenues of $10,000,000 a year.

It has one hundred employees. They each make about the median income, about $35,000 a year. So they have a payroll of $3,500,000.

All it's other expenses come to $5,000,000 a year. This includes all the things it buys to make whatever it sells, rent, utilities, shipping, legal, accounting, etc., etc., and so forth.

That leaves a profit of $1,500,000 a year.

Let's look at a very high tax situation.

Taxes on everything over a million dollars a years is 90%. (The rate from WWII until 1964)
So, on the final half million of my profits, I have to give the government $450,000, leaving just $50,000.

If I add ten employees at $35,000 each, that costs me $350,000. Those are costs, deducted from revenues, decreasing profits.

Do I want to do that?

I would only have kept $35,000 of that $350,000 anyway.

You bet I want to do it. I get to add ten employees at a cost - to me - of just $35,000. Or $3,500 per employee.

I get more production, more territories, more sales. My business grows.

Indeed, the whole community benefits.

Let's look at a much lower tax situation.

Say 30% (just 1% lower than what we have now.)

We'll assume the same business, same employees, same costs and profits.

Let's say I'm approached by a factory in China. For simplicity's sake, let's say that even with shipping and other ancillary costs, I can cut fifty jobs and walk away with half their salaries as profits.

Fifty employees cost me $1,750,000. Half of that is $875,000. After taxes (30%), I keep $612,000. That's worth doing.

I'm a bit tired of Chinese villains.

Let's say that by increasing hours, decreasing benefits, firing older workers, hiring new workers at a lower pay scale and a variety of other maneuvers, I can decrease my costs by the equivalent of ten employees. That's $350,000. At a 90% tax rate I only keep $35,000. Not chump change. But balanced against continuity, happiness, and efficiency in my company and the likelihood that it will grow my business, I'm likely to keep my people. At a 30% tax rate I keep $245,000. I'll jump on it.

In any debate on taxes and their effect on business, keep in mind that taxes are only paid on profits. Costs are counted against profits. High taxes are, therefore, an inducement to invest (create deductible costs). Labor is a cost. High taxes are, therefore, an inducement to higher people. Not, of course, at random, but people who will grow the business and increase the value of the business.

Low taxes are an inducement to reduce costs - at whatever cost - and take profits. We currently have low taxes. If the theoretical model above is correct, the result should be high unemployment and high corporate profits. Moreover, profits that are retained. That are not reinvested. Except to purchase other companies. Which is exactly what we have.

The main problem nowadays is that corporations have figured out ways to make profits without hiring people. So much of today's commerce has been handed over to technology. Most of the "investment" you applaud, is actually a killer as far as employment is concerned. E-Commerce has caught fire. Retail is dying as most purchases nowadays take place over the internet. All businesses are constantly trying to figure out ways to get rid of human workers. For example, I come back from Brazil after 6 years, and half of the registers at the grocery store are self-check out. Eventually they'll all be self-checkout. Renting a movie is now left to a machine. Fast food places rarely ever use the second window at drive-thru, because they've decided to make one person do twice as much work, which of course decreases customer service and food quality as the person taking my order and taking my money is usually the same person running back to the kitchen to make my food. Are any of these businesses going to hire more people, because they're tax rates have been cut? Of course not. Burger King will only hire more people when that their jack-of-all-trades employee becomes too overwhelmed by an increase in customers. Same with any business.

But customers won't buy unless they have money. So the best way to kick start the engine is to put money into the hands of potential consumers, and Obama did this in a way that would put money right back into the economy. The Right wants to throw money into the corporations and just trust them to start the economic engine from their end by increasing employment. We know this doesn't work now. They cannot be trusted with anything really. However, by putting money into the hands of the consumers, they really have no choice but to put that money right back into the economy.

employment -> money -> consumer-> consumer spending -> business sales -> increased employment -> increased wages (money) -> increased quantity of consumers -> increased consumer spending -> increased business -> increased employment, etc..

So when you folks complain about tax breaks for the poor who pay an effective tax rate of zero, it isn't like that money is just burned and wasted. That money immediately goes into the economy, buying diapers, gasoline, food, paying rent, utilities, etc. The real waste comes from corporate welfare, which never translates to anything benefiting the economy. All it does is translate to higher wages for the CEO, and that's it. It doesn't translate to increased employment, or wages, or investment, etc. The main problem with Obama's plan, according to many economists, was that he didn't do enough to shock the economy back to life. And of course, the psychological warfare initiated by the Right Wingers who did their best to reduce consumer spending. Scaring the hell out of people with idiots like Glenn Beck, telling folks armageddon was on its way, and that we shouldn't invest in anything except gold! Etc etc..

As you pointed out yourself, this is the real purpose and meaning of tax cuts - the starving of Big Brother.

Yes, which Conservative politicians do not have the integrity to admit. That was my only point.

Rare it is that someone checkmates himself

How on God's green earth is it a "checkmate" to point out the obvious fact that conservative politicians have been duplicitous for decades now? Please point to just one single example where, oh let's say George Bush, stated his intention to starve government, by reducing taxes. Just one example should suffice. But you know you cannot find a single example. yet I can point to probably two dozen examples where he raises the issue of tax cuts, and never once does he state "the real purpose and meaning" behind them. Instead, he assured us that they paid for themselves, because according to the theory, cuts increase business, which in turn increases employment, consumer spending, and ultimately higher taxes paid to the fed.

This, unfortunately for you, has empirical fact and economic history behind it

LOL! If this were true, then you'd be able to produce evidence instead of a sophomoric causation argument that economists recognize as a non sequitur. You'd also be able to produce modern authorities outside Right Wing lobbyist fronts and Heritage, and the outdated nonsense from Hayek, of course.

1. How many jobs are you willing to destroy or send overseas to legitimate your pop Marxist moral posturing?

Globalization is to blame for this, not tax ratesl Corporations move overseas because they can, not because they are forced to. Expecting American workers to compete with 15 cents an hour is absurd, but that is exactly what American corporations must expect, because they really don't care about anything except profits. They have no loyalty to God or country, only to their shareholders.

2. I've a better idea: let's scrap the entire United State tax code altogether and move to a fare, low, flat tax that taxes all income equally at the source, and which can be filled out on a postcard sized form.

Another dumb move. You must love deficits, or think like Cheney in that "deficits don't matter." Of course, since your main reason is to starve the government of funding, then it is hardly surprising you'd support this. Just remember it is the government that provides you with your way of life. It provides you with all the rights and privileges you have today, only you're too stupid to realize it because you've been gnawing with like-minded morons, for so long, at the hand that feed you. And if funding were dropped to even half as much as you'd like, there is no way we could fund the half trillion dollar per year military.

A talking points bulletin from the American Petroleum Institute? Heh. Heck of a source there Droopy.

That pretty much tells us all we need to know about Loran's seriousness. The only truth he has ever been interested in, is the "truth" shaped and paid for by right wing lobbyists.

[_Kevin Graham]

About corporate taxes, it should be noted that corporations very rarely pay 35% income taxes. Corporations have dozens or hundreds of tax attorneys working for them to manipulate and take advantage of every possible loophole and tax shelter available to them. This is why so many corporations today pay zero income taxes.

Kev I can only give anecdotal experience. I work with many businesses. Most are closely held and in the $1M to $100M in annual revenue. One though Corp client that I had for 10 year had up to a billion a year in revenue. This company paid tax at 35% every year. It was very profitable. Yes they took a credit for research. Yes they took legal deductions to the max. But they paid substantial tax every year.

Most my corporate clients do and they hit 35% very quickly. Some have losses but they are usually start up or due to a bad year or so on. But they do pay tax and most at the higher rates. Manufactures, contractors, farmers and food processors under current tax law do a get a break at 9% that can put there rate down to 26%.

Then there are the S Corps and Partnerships. Again taxed personally to the owners it does not take a large pass through profit to put their income into the higher brackets.

Hi Jason, I provided a link in the response to droopy, showing that the median corporate tax rate, effective rate, was around 25% in 2006 and was as low as 18% in 2003. Those corporations who manage to drop their rates to zero, or close to it, are generally the larger, more profitable corporations who do business overseas. Taxes are only on profits, not revenues, so for example, GE received a refund because they were able to moved their money and cook the books, saying they lost money doing business in the USA, even though they made $10 billion in profits elsewhere.

[_mikwut]

Hello all,

I have tried to read some of these political threads with Droopy and BCSpace, I must admit they are difficult to get through. My two cents on why many Mormon Apostates become liberal in their political thought and why so many Mormons are conservative is because of the materialism bounded in Mormon theology. It is certainly not the only reason. Mormons political thought and theology is an attempt at solving a problem that will continue with us after this life in a material existence, goods and services will continue to be a sustaining issue.

Once an apostate, whether secular or Christian, you no longer view the world that way. Secular no longer a Mormon types don't have an idealistic view of politics having an apex that will solve all the worlds problems even given their materialism, it is limited in nature and scope. Everyone pulling themselves up by their bootstraps and earning their just deserts is an eternal requirement for the Mormon currently being practiced and expected of others. Christians that are no longer Mormons believe we are fallen and the world is broken there is no hope in the arm of mans political flesh we just do our best. Both of these views lend themselves towards a social view and more democratic view regardless of their truth correspondences. The frustration of the Mormon conservative is that future glory of that apex is always a carrot in their view that masks hundreds of years of history that show its follies. The carrot will always be what resonates, the history just the climb.

my best, mikwut

[_Jason Bourne]

Who cares whether it is a cut in rate, a credit or a deduction as long as it reduces your over all taxes.The impact is the same.
A tax credit is no more funded by government revenue than a tax cut is unless as you noted you are receiving more tax than you actually paid in as is the case with only a few credits- the earned income credit and child credit being the primary ones-both of which have been in place longer than Obama has been president.

The impact is monumentally different. As I pointed out above, all of the Obama "tax cuts" aren't tax cuts at all, but wealth transfers.

The it pays to work credit was not a wealth transfer. It was essentially a tax cut. It was across the board if you are below a certain income level.

The long existing Earned Income Credit could be considered a wealth transfer especially for those who get a refundable credit. For others it is really a tax cut for the working poor. The same thing could be accomplished by cutting rates.

Tax credits that send you a check from the federal treasury are not productive as tax cuts (and they aren't tax "cuts" in any cogent sense at all, which should not be lost sight of) because they do not create wealth, across the entire economy.

Tax law has been used to target areas that the government deems is in it interest to assist. Are you opposed to deductions for charity, state income taxes, interest on a home? What is the difference really? The net tax one pays is based on a combination of income, deductions and credits as well as rate applied.

They may be a windfall for you, (if the government sent every man, woman, and child in the country a check for $1 million dollars, everyone would be far wealthier, but no wealth whatsoever would have been created (and the economy would implode) but the recession is national, and is not just hitting your household or your town.

Ok so you prefer just cutting over all rates and dropping the credits and letting the money go where the market directs. I am not totally opposed to that. When the big $750 billion of targeted government spending was going on I often said that they should just cut tax rates across the board and let the market take over.

Shifting wealth from one place to another is not wealth creation, even though it appears to have "created" wealth for you (you have money in your hands you didn't have before). One provision, a $500 per worker tax credit, cost the federal treasury $150 billion. A tax credit to assist you in buying a Prius or a Volt is taken out of the private economy and transferred to you. This appears to you as "wealth creation" (for you, as in individual) but represents a net loss to the economy.

It will stimulate that segment of the economy as much as a charitable deduction helps charity and the interest deduction for a mortgage helps the real estate industry.

The government thinks it is in our best interest to do this. You can oppose this by voting for people who don't want to use tax law in such a way.

All the other provisions, including the the $4,000 tax credit for college tuition, the 10% mortgage interest tax credit, the savings tax credit of 50% up to $1,000, the expanded earned-income tax credit, the child care credit, and the "clean car" credit, are government subsidies. They cost the American taxpayer money. They are wealth transfer programs like any other wealth transfer program. They do not create wealth, they do not incentivize work , and they have nothing to do with job creation and economic expansion. They are a net cost to the economy.

Droopy they cost no more than $ to the taxpayer than a tax cut does.

Does the deduction for equipment 100% up front rather than depreciating it over say a 7 year life create wealth?

Yes so what? And so what if there was a credit for purchases of hybrid cars (which was not allowed for AMT purposes). It is not a new thing for the government to provide certian incentives for behavior it wishes to encourage.

1. Calling it a "tax cut" is a bald deception.

Who called it a tax cut? But it did reduce over all taxes for those who were able to take advantage of it. Really you seem opposed to the government using tax law in a targeted sort of way. I understand that. It has never happened though and never will totally. Tax law is also an instrument of social policy as well as fiscal.

2. Such measures have nothing to do with job creation and economic expansion.

Well this is not totally true. The targeted credits are supposed to put money into people pocket that they may spend which in turn is supposed to stimulate the economy. No different than a rate cut other than it is more targeted and not across the board. Also targeted credits and deductions are designed to spur specific areas, for example once again we can look at the mortgage interest deduction.

3. By definition, if the state needs to subsidize a technology or industry, that industry is, ipso facto, economically unviable (save for certain industries that have no inherent or viable private market by their very nature, such as, for example, cruise missiles).

I am not opposed to government using its resources to spur certain segments of the economy. I know it does not always work well but at times it does. I am for the current R&D tax credit for businesses and believe it should be expanded and not limited by AMY which in effect disallows it for many small businesses that are pass through entities. I believe our country is lagging behind in the technology arena and that this is a good use of tax payers dollars. And guess what? All the nations we compete against invest in research and development, and China is at the lead and eating our breakfast,lunch and dinner.

4. It is none of the state's business to encourage or discourage what kind of car I drive.

Then don't use the credit.

There was also the Cash For Clunker under Bush if I recall. Were you unhappy with that one as well?

It was a major boondoggle. Not even worth mentioning.

A republican idea.

A cut is a cut whether in the over all tax rates or credits.

Dead wrong.

No it is not. It is what impact the bottom line. When CPAs compute a companies tax provision, which is part to the reporting on their financial statement, they compute what is called the "effective tax rate." Credits impact that rate and the component of the rate impacted by the credits are reported in the financial statement footnotes. You just don't like the fact that come credits are not a rate cut across the board.

Right now your FICA tax is down 2% this year. Is that not a tax cut for you? Does it not put overall more cash in you pocket? Does it not reduce the over all average tax rate you pay for all your taxes? A credit or deduction does EXACTLY the same thing. It lowers your tax bill and thus your overall average tax rate.

Why are you changing the subject?

This was not changing the subject. My point was there is another tax adjustment that is not and income tax rate cut that impacts your bottom line out of pocket taxes paid to the government.

Yep. And how about in NY where there is what is called a Qualified Emerging Technology Credit that is for businesses in targeted industries or that spend a certain % of their income on qualifying R&E activities. This is a refundable credit up to $250,000. Do you view this as an evil redistribution of wealth as well? Or is it a wise use of NYS taxpayers money to generate and attract companies into the state for economic development purposes?

I have no problem with it if it is a tax cut in the rates they will pay to relocate. If it is a transfer of wealth from the taxpayers to the company, then it is corporate welfare, which I am against.

It is not a tax rate cut. It is a credit. And a refundable credit. So a company that pays no tax can still get a payment back from NY. So you would be against a program that is proven to create jobs and attract businesses as well as foster their growth. And that just because it is not a tax rate cut?

Even a tax rate reduction is a federal expenditure because it reduced revenue.

Oh come on Jason, this is inside-the-beltwayspeak.

If I give a customer a break over last year on what I charge them it is a loss of revenue. If the government reduces my tax rate like it did this year for 2% of my FICA it is now out $2000 of revenue that is had last year. Of course it is my money but they now have less of it just like the money that I charged a customer last year was their money but because I give them a price break they have more of their money and I have less.

This is really quite simple.

Not having a certain amount of revenue does not "cost" the government any money, and forgive me for saying so, but this claim embroils one in the nakedest of sophistry. All it means is that they can only spend what they have. The hidden assumption of this argument, that the government has a preemptive claim on any quantity of your money it so desires, and is the actual owner of your paycheck until it decides what you shall be allowed to keep, is a bit...disturbing, don't your think?

No I do not think that at all. See above. Of course it is your money and mine. But if revenue is at a certain level due to specific rates and those rates are cut then there is less revenue. So I guess rather than say an expenditure it is a loss or reduction of revenue. Though in my business we will give price concessions at times to retain business and we view it as an expense. If billed already it is a write down. If not it is viewed as a cost of doing business even though it is not reflected that way in our financials.

As I've already shown, and as is acutely available all over the web, in intellectual reviews and other venues for anyone interested on both sides of a political issue, Obama was set to raise all marginal rates from the lowest to the highest to a substantial degree,

Not on incomes under $250k. This is indisputable.

Wrong. That was a later emendation.

So initially Obama wanted to let all the Bush tax cuts expire but then changed his mind? If I recall in his campaign he even said he was going to raise rates only on higher income taxpayers. I think the links are not accurate. In fact a few of the one line points are out right distortions.

The Tax Relief Act of 2010 was passed in December of 2010. The details you see in the second source here reflect resistance to his original plan, as well as further tax increases retained in the compromise. The provisions of that act expire in 2013.

I am aware of the expiration date.

Yes from 15% to 20%. Before the Bush cuts dividends were taxed at whatever your normal rate was

So, why should divident tax rates be raised? Why not lower, or abolish them?

I was simply pointing it out. One could argue that dividends should not be taxed at all since they really are part of the C Corp double taxation system we have.

How could the president increase real estate taxes? These are set locally.

No, the estate tax...the "death" tax.

Sorry I misunderstood. Yes I agree. He wanted to raise the estate tax which I am personally opposed to this tax in its entirety.