Thursday, July 19, 2012
Capital and Tax Cuts for the Wealthy
A concept that Republicans push and have done so for the past 35 years, is the idea that targeted tax cuts for the wealthy will trickle down and affect the economy in positive ways, through business expansion, job creation, etc. This idea is hinged on the fact that those in higher tax brackets put a higher percentage of their earnings into investment than those with more modest incomes. This hypothesis is certainly true, particularly at the low end of the income range, where every dime goes to pay for food, housing, healthcare, etc. Where this hypothesis runs into trouble is with the fact that investment capital is highly mobile. Investments may not take place in ways that help the country that instituted the tax cuts. The tax savings could just as easily go to swiss bank accounts, or to Bahama based equity firms, which in turn funnel money to companies that employ workers in Taiwan, China or Indonesia. Even individuals with their 401K such as myself, may have some money tied up in overseas international funds. The point I would like to make, is that as a national tax policy for generating jobs or revenue, there simply is too much leakage of the money that was meant for investment in American jobs from tax cuts provided for the very wealthy. It should come as no surprise, that the economic crisis that we are clawing our way out of occurred after several years of significant cuts to the highest marginal rate for federal income tax, as well as a reduction in the capital gains tax. If the Republican hypothesis for national economic growth is true, our unemployment rate should be at an all-time low. The fact that it isn’t belies the fact that the simple solution of tax cuts for the wealthy does nothing for economic growth, but everything for explaining the growing disparity in our country between the well off and those who are struggling. It also explains the shrinking middle class. This is why I suspect that Mitt Romney does not want to release his tax returns. Like many businessmen who took advantage of the favorable tax treatment they received from the George W. Bush administration, I think you will find that Governor Romney’s money trickled down, but not to U.S. taxpayers. I suspect, it made its way to tax safe havens and from there invested in jobs overseas. If this is the case, and I am Mitt Romney, I wouldn’t want to release my tax returns either. I think that Mitt Romney will use every excuse and every diversionary tactic that he can to not release his taxes, because beyond Mitt Romney’s own personal finance, it would expose the fallacy of Republican economic policy. It would show how many jobs that Mitt and his millions shipped away from our shores, to Communist China of all places. The ironies of such a reality would expose what Republicanism is all about in our common era, a move to an autocratic State controlled by the few. The Republicans have their own propaganda network, their own funding mechanism and a trainload of divisive social issues to work with. It has worked very effectively for many years. At what point will the pain, humiliation and economic decline of the masses be enough to make them see that they’ve been duped? I have no good answer for that one.