Wednesday, July 13, 2011

On The Fantasy That "Taxing Job Creators Is Wrong " (And Why, Poor Things, We Should Not Raise Taxes on Them)

The key to achieving success, motivational speakers and business leaders will tell you, is being able to envision the future you want to achieve for yourself. Everybody can start a successful company and contribute to the success of others by creating jobs and opportunities for them. All you have to do is dream big, think bigger, and pursue your goal with a singularity of intent. Such is the power of the myth of America, the land of opportunity, and so is born the myth of the "small-business job-creator" that Republicans mythicize. Perhaps it is so. Perhaps, and I don't for one believe it--Ayn Rand was right in dividing individuals into the equivalent of superhuman achievers, forces of nature that cannot and should not be messed with on the one hand and leeches on the other. But--and I don't know about you--I am starting to get beyond annoyed at hearing this little nugget of conservative PR: "This is the exactly the wrong time to raise taxes on 'job creators'."

The logic of this insidious, fallacious, and dishonest argument goes more or less like this: the economy is in deep trouble, unemployment is high, people need jobs, and raising taxes on those who are in a position to create jobs is plain dumb." Even at first blush there are so many things wrong with this mendacious line of thinking that one does not know where to begin rebutting it. But I'll try.

We'll start with 9/11. When 9/11 hit, the economy was already in a recession, or so Bush-friendly economists liked to point out. To be fair, it is not just Bush-friendly economists who agree with the basic idea that the economy was already in a period of downturn when Bush inherited the presidency, from Clinton and from the Supreme Court. So be it. So, enter George Dumbya. He almost immediately lowered taxes. On everyone, sure, but much more for the benefit of the wealthiest Americans. From here on, we'll refer to these wealthy Americans as "job creators", both to please conservatives and because living in a fantasy is sometime a necessary refuge from everyday life (particularly the type of live engineered by conservatives). It was supposed to be a temporary thing to help the country recover after 9/11, but you know how things go. Nothing in life is as permanent as the supposedly temporary.

Anyway, at the end of George Dumbya's eight years at 1600 Pennsylvania Avenue the net job creation (1st term in office vs. last term in office) amounted to 3 million, give or take a few heads. That's meager, particularly at a time when taxes were the lowest since Ronald Reagan's last year in office. Compare that figure with the 23 million jobs created under 8 years of Bill Clinton. Now add to that the fact that during the same time that jobs grew by 3 million (or +2.3% in term of payroll expansion) the population grew by 22 million, or 7.7%, and you will see that job creation did even remotely keep up with population expansion. (Under Clinton the population grew more rapidly, by 25.2 million or 8.9%, but roughly one job was created for each new arrival).

When George Dumbya left office, he left Obama a country in shambles. (Be it known that I think President Obama did a horrid job during the first 2.5 years in office.) Taxes under the new president remained untouched for the first 2.5 years, and yet joblessness continued to grow, from 7.8% when he came into office, to the current 9.2%.

To recap: taxes have remained at their lowest than at any time since Reagan's last year in office for the last 10 years or so, but the unemployment rate has continued to rise--from 4.2% when Bush came into office to 9.2% under Obama at present. Aside from the not tiny but conveniently overlooked fact (by conservatives) that most of this rise in unemployment came under George Dumbya (4.2% when he arrived, 7.8% when he left eight years later = +3.6%), where are the jobs that the job creators should have created under the most favorable tax treatment of them in 30 years? It seems that the correlation between low individual tax rates and job creation is dogmatic at best.

But, you will say, the economy is not doing well, so Obama should actually lower taxes. Really? How low is low enough for jobs to magically start appearing? There is only one thing that's worse than making the same mistake over and over again and expecting different results: doubling up on the same mistake.

But, you might also add in a desperate attempt to save the conservative day, corporate income taxes are very high. You would say that because you probably heard that corporate taxes in the United States are among the highest in the industrialized world. Of course, the fact that you heard it does not means that it is true; it is simply a consequence of the existence of Fox News, Rush Limbaugh and the Republican party. Simply hearing/saying it though doeth not truth make.

Consider, if you will, the fact that Citizens for Tax Justice estimated that only Icelandic companies pay lower income taxes than U.S. companies [pdf reader required] (for the 28 OECD countries for which data are available). Also, check out this list of 15 tax escape artists, compiled by The Daily Beast. Only the U.S. Chamber of Commerce, Republican congressmen/women, and Joe the Plumber could say with a straight face that taxes are killing American jobs.

What in fact is killing good American jobs is the fact that the policies promoted by Congress after Congress make it easy, even rewarding, for American companies to export capital, and the jobs that go with it, overseas. What is killing good American jobs is the fact that conservatives have been waging an all-out war on unions and the middle-class ever since Ronald Reagan took office and that there is no countervailing force to the power of corporations. The United States have by and large stopped making added-value products, and they are no longer competitive against the rising competition of places like China and India, to name but two where labor is a slave-based commodity. The one thing that is not killing jobs is the effective tax rate that corporations pay, thanks to the loopholes that they themselves have written into the tax code only to cheat us out of what we should reasonably be able to expect from in return for all the legally-sanctioned tax breaks they have already been granted.

So what could a good government do to reverse the death spiral in which the American economy and labor market seem trapped?

To begin with, the last thing it should do is listen to the deficit hawks who say that we should cut spending and have balanced budgets without raising taxes. The exact opposite is true. Sure, in a strong economy we could in theory leave all in the hands of the so-called free-market (another expression as void of practical meaning as job creators). But what about the economy we currently "enjoy", as opposed to the economy we are asked to fantasize about? The economy we have is one in which everyone knows someone who is unemployed, as opposed to the fictional economy where Joe the Plumber, the plumber without a plumbing license, can talk about the business he is trying to protect from Obama's socialism as if it existed anywhere in the real world instead of being a figment of his closed, ignorant, and fevered mind?

In an economic situation such as our present one, you should learn to recognize the government as the buyer of last resort. When no one wants to buy or spend money, when corporations have more incentive in investing outside of the United States, the government could and should stimulate the economy by thinking big, by building big things, renewing infrastructure, public education, transportation routes and systems, that sort of thing. Instead, the power to think big has been squeezed out of the minds of our leaders to such an extent that they are incapable of simply following the successful steps laid out by their predecessors in the successful New Deal and Great Society eras.

The government could and should also disincentivize the pernicious but consolidated practice of American companies that follow profits anywhere profits can be pursued, regardless of the methods used and the damage requisite in reaping them. It could also raise taxes a bit and--yes--redistribute it (!) to those who could pump it back into the economy by simply purchasing life's necessities that they currently cannot afford.

A fair government could also punish, instead of rewarding them, those who gamble with other people's money because they know that when their Ponzi scheme comes to light they can can get away with a slap on the wrists and a bailout. It could, in my dream world at least, bolster the middle-class confidence by decreasing the eligibility age for Medicare, instead of increasing it; that move alone might help people to leave a job they are currently hanging on to only because they need to make it to age 65, opening job opportunities for those who are currently relying on public money to outlast the doldrums. It could, ideally, assure the nation that no changes are going to be made to the benefit structure of Social Security until the last wasted penny has been cut from the D.O.D., or until the last cent has been recovered from the tax cheats that game the system to pay no income tax on epochal profits.

That, and not the mythical faculties of job creators, is something worth fantasizing about. Why, if you can dream about it, you might even be able to make it come true.

No comments:

Copyright 2004-2012