The march to zero
The cover story is that cutting taxes on the rich will cause an explosion of prosperity and profits and productive investment that will almost instantly flood down to the workers and make them rich and happy and patriotic.
That, of course, is just the cover story. The real reason for cutting taxes on the rich is that it diverts more money to rich people, making them even richer. The end. That’s the goal, that’s the glorious project, that’s what they want – ever-richer rich people, period.
Meanwhile, Kansas offers a snapshot of what actually happens when Republicans slash taxes on the rich.
After a failed economic experiment meant to boost economic growth blew a hole in the Kansas budget as big as a prairie sky (a $350m deficit in the current fiscal year and nearly $600m in the next) state jobs and services have been slashed.
Prisons are badly overcrowded and understaffed.
Next year, the state faces a school shutdown after the supreme court found its educational spending was unconstitutionally low. Some of those schools have already had to shorten the school year in order to save cash.
To make ends meet, money that was earmarked for roads has been diverted to the general fund. A state that used to maintain 1,200 miles of road a year is now repairing 200 miles a year. Even in the capital, Topeka, potholes are everywhere.
The crisis follows the 2012 passage of a tax plan by Kansas governor Sam Brownback that he dubbed “the march to zero”.
He said it would give a big healthy jolt to the economy, but the jolt turned out to be the sickly kind.
Instead, the state’s revenues collapsed. Rich people who had been paying high taxes became “pass-through entities”. The state’s coffers emptied and the promised economic miracle failed to materialize.
Lisa Ochs, president of the American Federation of Teachers-Kansas, said Brownback’s plan is a scale model of Trump’s plans. He, too, intends to cut taxes for businesses and give big breaks to the rich in a plan he says will provide “rocket fuel” for the American economy.
“There never was a shot of adrenaline. If anything, that shot put the state on life support,” she said. “It’s the same thing that Trump is saying: there’s going to be tremendous job growth. Well, that didn’t happen either. It’s going to take an entire generation to undo this damage.”
Whatever; the point is, rich people will be richer! That’s the goal; that’s what matters.
Sarah LaFrenz Falk, president of the Kansas Organization of State Employees ,who recently spoke to Congress about her fears about the Republican tax plan, said she sees an agenda in the Brownback plan – one that is mirrored in Trump’s plan: give huge tax breaks to super-rich donors [the rightwing, union-bashing Koch brothers are Kansas’s richest residents], then hand them a second win by cutting services, waiting for those services to buckle under the strain and then argue the private sector can do it better.
More profits! More $$$ for rich people! More badly-paid jobs for poor people! More poverty, more crime, more for-profit prisons, more $$$ for rich people. Utopia here we come.
“Uh oh, the poorest of this nation are getting poorer. What do we do to stop this?”
“Deprive them of even more money. It’s just got to work!”
“Genius!”
I don’t know how many times I have heard friends, even liberal friends, talking about how unfair it is that the rich have to pay more taxes than the poor, and telling some tired anecdote about a friend losing 50% of his income every year to the federal government, then more to state and local. First, if you can’t live on 50% of several million dollars, then you are indeed sad. Most people live on so much less it’s pathetic.
Second, our highest tax bracket is not 50%, and most rich people have enough deductions that they can put their incomes way below the top bracket by a lot of dodgy maneuvering. In many cases, they pay a much smaller percent than people like myself.
If only the voters understood two things: (1) making the rich richer makes everyone else poorer; and (2) they are not going to rise up to be in the richest 1%; that is even rarer than a college football player making the majors (which is a tiny percentage, in spite of the fact that most of them bank their entire college career on the day they make big bucks in the majors).
I’m not convinced that the plutocracy really believes in the ” trickle down effect” or that tax cuts will simulate national economies, they really don’t care.
iknklast,
I agree with your comments. I’m also very sceptical about rich people anywhere on the planet actually paying 50% of their incomes in tax, or indeed, paying their fair share of tax. So, when the rich receive tax cuts, the effect on their incomes is far less than with an equitable tax system. The real damage, of course, is caused by spending reductions. Your ‘liberal’ friends seem rather right wing, certainly by social democratic standards, they seem to have little understanding of the value of public goods.
My nephew mentioned that when he was in the US years ago, the number of ‘shuttered’ items of infrastructure, schools and other public buildings. The local council or state government had more of less become bankrupt. Just the beginning perhaps.
I’m a retired accountant, btw.
Many of them have been bombarded for years with information about how awful the government is, both from left and right, that they haven’t figured out the reality. That’s the thing that astounds me about this country is the way the left has bought into the ‘government bad’ meme. Sure, there have been epic failures – FEMA and Katrina come to mind. And everyone is always going on about the road workers leaning on their shovels, and assume that is why so many road jobs go over budget and experience delays. Never mind that these workers are working sometimes in 90 degree temperature (that’s 90 F for those of you who are on Celsius, just so you don’t think they’re more steamed than they really are), working on their feet all day, and that there are times when someone else is doing what needs to be done before they can step in again. Never mind that every one of my friends, enemies, and family who point out this “shovel-leaning” all work in nice air-conditioned offices, that they have regular breaks, and probably spend some of their non-break time surfing the net, the sight of one government worker taking a brief break by leaning against his shovel overwhelms the sight of all the other workers surrounding him working their asses off.
In addition, the media has been singing the ‘government bad’ and ‘taxes too high’ song for a long time.
I wish I could make everyone of them sit down and make a list of the ways in which the government impacts their life every single minute of every single day. It would begin the very first moment of the day when you turn on that light to find matching socks…but actually, it would be before that. If you are warm and cozy in your bedroom, feel relatively safe, and have just had a dinner (subsidized so you pay less) before you went to bed, the very digestion you are doing while you sleep is government sponsored.
I wish I understood how everyone I know bought into the libertarian economic and government silliness….
RJW, you may be right now, but I know that Sweden had very high tax rates a few decades ago. I think I still have somewhere a lapel pin discretely campaigning for less than 50% total tax, in the shape of a halved coin (minature). That was counting all taxes: direct income tax, “fee” on employment, VAT and point taxes on alcohol, tobacco etc.
Since then the burden on Swedish tax payers has varied up and down, but it is probably not very far from 50%. In fact, for not exceptionally high levels of income the direct income tax delta is about 55% (with some important deductions to complicate calculation) because the state tax kicks in on top of local and regional tax.
I totally agree on your other points (and iknklast’s). Waste is bad; waste of public funds is extra bad. Efficiency is important — but it needs to be correctly defined and targeted.
Rrr,
Yes, I understand about Sweden’s high tax rates. My comment referred to the 1-2% of the income earners– the plutocracy. Historically high taxation didn’t stifle enterprise, particularly in hi-tech industries. Sweden’s economic success has always make liars of neoliberal, small government ideologues. The other example is the rise of the East Asian economies, no ‘small government’ nonsense in China, Japan or South Korea. Of course the government assumed a different role than in Western social democracies
RJW @ 3 – No of course the plutocracy doesn’t really believe in the ” trickle down effect” or that tax cuts will stimulate national economies, that’s why I twice called it a cover story and then said what the real reason is.
iknklast,
Yes, I think that the propaganda supporting neoliberal, small government’s policies is particularly virulent in English-speaking countries. What else can we expect when most of the media is in the hands of billionaire oligarchs and their paid parrots? One particularly toxic myth here in Australia is that the country is high tax, it isn’t, however it’s not easy to convince the average voter.
Another factor is the assault on trade unions which has eroded health and safety standards and caused real wages to stagnate. It seems that the US has a weaker social democratic tradition than other Western countries, I doubt that Trump would make much progress in most other OECD nations. I’ll provide an example. Here in Australia, 3 years ago a right wing government started to undermine our ‘socialized medical system’, the Senate refused to pass the required legislation and there was a voter backlash. The PM eventually lost his job and the Treasurer is now ambassador to the US. No, I’m not being complacent either, the forces of darkness are relentless.
They ‘bought in’ because, many members of the Middle Class are selfish blinkered bastards, neoliberalism is a very useful ‘justification’ for their narcissistic attitudes. They probably will never change unless/until there’s a major recession which usually affects the Middle Class they most severely.
‘And everyone is always going on about the road workers leaning on their shovels’ I used to be one of those road workers, and used to periodically engage in versions of the following conversation:
‘What are you doing, watching the asphalt dry?’
‘Why yes, that is in fact exactly what I’m doing. Because if I weren’t doing it idiots like you would drive on it, despite all the cones, signs and flashing lights we so carefully put out to make sure you don’t.’