Thursday, January 15, 2009
Taxes are good for you (all of us)
Many folks in Florida are beginning to come to the same conclusion. Florida, the government being run by rich Republicans, has been busy lowering taxes and now we're paying the piper; the pain is palpable. All of a sudden there is not enough money to do much of anything: pay for our schools, hire sufficient law enforcement personnel, repair our infrastructure, retain needed social services, etc.
All of a sudden, the same people who voted for lowering taxes are showing up at school board meetings crying mightily when schools are closed, teachers are let go, and popular programs are abandoned because of insufficient revenues.
Beinhart says that "US economic growth has been strongest when our taxes have been high. During World War II, then under Trumen, Eisenhower, and Kennedy, our upper marginal tax rates were between 88-92%. ... Those were our strongest growth years."
Beinhart is referring only to income taxes and only on the "very richest" in our society.
All of this, of course, flies in the face of conventional "conservative" (read Republican) economic theory which maintains that "tax cuts lead to economic growth." NOT TRUE!
"Moderate tax cuts lead to a flat economy. ...
"Large tax cuts are followed by a boom in the financial sector, a bubble, and a crash. Then a recession or depression with massive bank failures. This has happened three times, in the 1920s, under Reagan, and under George W. Bush."
Do we never learn?
Tax hikes, says Beinhart, bring strong economic growth because they "usually correspond to higher government spending.
"Government spends money on things that the private sector does not spend money on: physical infrastructure, social infrastructure, market infrastructure, and defense.
"Those are the things that create a world in which doing business in possible. The worse those things are, the worse business is. The better they are, the better business is."
Furthermore, we can have increased government spending only with tax hikes.
But, nobody likes to raise taxes. "Nobody likes to give up their personal money for the common good.
"People with a lot of money have, over the past fifty years, spent a fortune on exploiting that instinct and pandering to that feeling. Eventually, with nobody willing to say publicly that taxes are good, they took over the dialogue. It is now routine to hear tax cuts as refered to as 'pro-growth' policies, even though, in fact, that's not true. It is routine to hear tax hikes called 'anti-growth' policies, when that's not true.
"The rich, the Republicans, and the Right, have lost this last election, but they still own the mythology."
Read the entire article here.