Monday, October 28, 2013

Raising Taxes: Why It's Unthinkable

The "Artificial Image" of Higher Tax Revenue

American voters have not heard proposals to increase taxes for years.  Instead, they have heard a continuous stream of Stalinist horror stories vomited forth from right wing think tanks and public opinion "image managers."  Because of this, any sort of normal political discussion of the idea has been inundated long ago in a grisly soup of "job creators," "job killers," "global markets" and so forth.

Even the briefest dalliance with any consideration whatsoever dealing with increasing tax rates and revenue is dispatched as irrelevant folly thanks to this massive shield of talking points and propaganda.  There are no "water fountain" conversations meandering through policy question on this subject -- the equivalent of an "Emmy Award" for so thoroughly and successfully discharging even such a possibility from the minds of American tax voters.

Oh sure, it wasn't easy, but with billions of dollars and an intimidated, obedient net work media the propaganda onslaught has worked fairly well -- so far.

 The Strange History of Low Taxes on High Incomes

Ironically, around the same time that President Ronald Reagan was raising middle class taxes in the country nine times, the Republican Party somehow surgically implanted the idea that taxes must never be raised under any possible conditions, and by "never" this surgically implanted artificial policy "appliance" meant "not ever."  This, at least conceptually, left tax increase policy to the Democrats.

This began an era.  Reagan's Cadillac driving "welfare queens" and the already road weary Party maxim of "tax and spend Democrats" became the new metric for the obedient voters on the GOP side.  And, in fact, especially after LBJ's largess, some of the criticism had a certain kind of temporary traction.

But, MeanMesa emphasizes the term: "temporary."  

However, while this new "party line" left tax increase policy to the Democrats, it did not leave "debt increase" policy to the Democrats.  The following string of Republican administrations, after modifying the old Reagan phrase from "tax and spend" to "borrow and spend," went right to work exploding deficits and, consequently,  the accumulating the current atmospheric National Debt.

For visitors who have been to this site before, MeanMesa always looks for opportunities to present the following graph again.

[Data from Dept. of Treasury, office of National Debt]
If you have ever wondered just how the United States wound up with a $16 Tn National Debt, simply add up the red bars and blue bars and look at the total.  The chart's data ends in 2006, but the deficit totals, of course, continued to increase right through until today.  We haven't been paying back any of the borrowed money, and we have done absolutely nothing to mitigate the necessity to borrow even more.

However, there is "borrowing" and then there is "borrowing."  When the annual  "borrowing" is in $100's of billions, problems arise.  The first problem is that such "borrowing" is evidence of either drastic misfortune or infamously horrible governance. Because nothing particularly drastic kept occurring year after year during the administrations of Republican Presidents, that is, a country threatening drastic event such as a giant volcano, a sudden invasion across every border, a thermonuclear attack, a nationwide plague or so on, our national debt problem rests squarely amid the cash crazed clouds of the "infamously horrible governance" side of things.

Rich in a river of debt. (image)
After all, part of governing is collecting the money you are spending, and if not that, at least having something spectacular to show for all the borrowing and debt it took to get it.  There was nothing spectacular about the Bush W. tax cuts -- then or now.  They created nothing beyond the current huge federal debt and a new crop of nasty right wing billionaires.

If nothing spectacular has been purchased, the spending causing all that government debt can be, perhaps over-generously, characterized as simply day to day spending to pay the routine expenses of keeping the country running.  We know now that pretty much the only "spectacular thing" we purchased with the proceeds of all that "borrowing" is a "spectacular crop" of even fatter billionaires with equally fattened appetites for -- wait for it -- even more tax cuts.

We even know their names.

We also know that this "spectacular crop" of billionaires just keeps getting richer and richer every year because they don't pay taxes -- at least, they don't pay taxes at an actual rate anything similar to the rest of us.  With this conclusion, we will be almost immediately confronted by the wing nut talking point about tax rates.

"US tax rates are already some of the highest in the world -- that's what is keeping the economy on its knees even after we finished with the looting."

Well, at around 35%, the theoretical top US tax rate would in fact, be one of the highest -- if billionaires actually paid taxes at that rate.  They don't.  The IRS tax code contains that 35% figure for the "top marginal rate," but when you have 8,766 pages of deductions, tax expenditures, off shore profits, subsidies and other tax code gizmos on your tax return, the actual rate is much closer to zero.

Last year one of the most profitable corporations on the planet, EXXON/Mobile, actually got money back instead of paying taxes.  The corporation's tax rate wasn't just zero, it was negative. ["For all corporations, about two-thirds, or about 1.2 million, paid no federal income taxes in 2005. But many of those firms are quite small -- an owner and a couple of employees. For large U.S.-controlled corporations, those with at least $250 million in assets or $50 million in gross receipts, one out of four paid no taxes, as Sanders said. The total revenues for those large companies was about $1.08 trillion." source article]

The protestation is that "it simply isn't this simple."  MeanMesa agrees.  For every dime of taxes paid and also every dime of deductions deducted these boys can produce a platoon of salivating tax attorneys, more than enough to guarantee that, after a few days of 12 hour testimony,  nothing will be simple at all -- especially not the amicus brief filed with the Federal Court case.

Still, all Republican deficits in the that "National Debt" chart [above] came from somewhere.  With the dilapidated US infrastructure sitting with a $2.75 Tn repair bill, we certainly haven't been "over spending" on roads, bridges and schools. ["A report this week from the American Society of Civil Engineers shows just how bad the state of infrastructure in the United States is and how much spending is needed in the next decade to get it back up to par. According to the report, $2.75 trillion needs to be invested in America's infrastructure by 2020. The ASCE believes that the spending shortfall in this period will come to $1.1 trillion, and will have dire consequences: some $3.1 trillion in lost gross domestic product; about $3,100 annually lost in disposable income per household; some $1.1 trillion lost in total trade; about $2.4 trillion lost in consumer spending; and, worst of all, a loss of about 3.5 million jobs." marketwatch article here ]

We haven't been doing the US economy much good by this penny pinching, either.  The ASCE was addressing the failing infrastructure, but when MeanMesa adds some serious climate change mitigation expenses to that $2.75 Tn total, the "load" could easily grow from their $2-3 Tn to triple digits. [MeanMesa's post: Managing Global Warming Solutions has climate change mitigation cost estimates in the range  of $100's of Trillions -- moving Manhattan 100 miles inland isn't cheap...]

That leaves us with the immediate problems of both a country literally falling apart before our eyes and the worse, far larger, longer range problem of a planet doing essentially the same thing.  As a nation it is clear that we don't have anything close to the money required to solve the second part of that -- probably not even for ourselves.

All we have to work with is all this debt and all these billionaires we created.

Illegitimate Majority House Republicans
Gird for Battle to Defend the Castle

Republican House Speaker Boehner is an excellent example of gradually exposed loyalty to the oligarch's electoral "highest priority."  In 2010 Mr. Boehner could not so much as clear his throat without mouthing something about jobs, "Jobs, jobs, jobs."

However, the man's miraculous "transformation" into an austerity promoting talk-a-thon -- no doubt under direct orders from above -- changed the topic of his daily ranting to "Debt, debt, debt."

The big spending, big borrowing John Boehner of the Bush W. years was raising his hand for every piece of the autocrat's gigantic deficits.  The maudlin "totally concerned with high unemployment" John Boehner was fixated on a Democratic President's inability to suddenly replace the millions of US jobs lost as the house of cards collapsed in 2008.

But, of course, the miraculous "transformation" didn't end there.  With the unruly bigots of the gerrymandered tea party at his back, a reinvigorated John Boehner adopted the "blind hatchet job" of Republican austerity as his latest Holy Grail. 

Republican austerity's focus on cutting spending is only a cosmetic apparition.  At its heart, the austerity serves the oligarchs in charge as a means to further cut federal spending in order to protect the tax free billionaires now firmly in command of the US House of Representatives.  Given the $100's of millions it cost the oligarchs to take charge of the House, Boehner's orders from above fastidiously exclude any reference to the fact that his control of the House is founded on a minority of House votes in the 2010 election.
Okay, Where Do We Surrender?
Just wait by the tree where they tied up the noose.

Surrender might make sense if there were anyone to whom we could surrender.  There isn't, so we can't.

Those dismal prophecies above are painting a picture of a problem which won't be solved by a few "tweeks" to the US tax code, a tome already as large as a WWII battle wagon.   Yet, we have to face facts.  To "sustain" the incredibly low tax revenue as an on-going pattern for governance, we will need to drastically degrade the standard of living with which we have become accustomed here.

We will need a country which spends roughly what it takes in as revenue.  If the revenue is to remain in its current low level, the US will need to, well, adjust.  We are living in a country which is budgeting its expenditures based on a far greater tax revenue than it is currently able to collect.

"Able to collect?"

Yes, with the US tax code in its present condition, all the incredibly rich billionaires and corporations are not particularly breaking any laws when they dodge most or all of what their taxes might reasonably have been if they hadn't re-written the tax code.  They also have absolutely no interest in any "new form" of the tax code which might vary measurably from their very comfortable version.

The monied classes have patiently invested millions in the gradual development of this current code so suitable to their liking, but they have never quit complaining that even this dysfunctional, modern train wreck remains intolerably unfair to them.  These interests have never been frugal with their purchases of legislators to author additional travesties to the tax code year by year, but regardless of the latest authorship, they are still not quite satisfied.

After the impact of the 2009 Citizens United decision this flow of right wing dollars sky rocketed as the prospect of Republican "constituent loyalty" cratered.  The GOP Congressmen and Senators elected in this wave of corporate and billionaire money went to Washington with a single, highest priority: protect the tax law to keep it exactly as it is or worse.

The various media constructions since then have been a craven scheme to keep the uninformed masses angry enough to perpetuate the Republican base in the Party's very expensive, locally gerrymandered election districts.  Those district boundaries are considered to be "more or less stable" until the 2020 census possibly exposes them to more rational patterns.

This is not simply a "happy coincidence."  The right wing owners of the US tax code have paid plenty for this outcome.  The "return on their investment" has also been more than generous enough to entice them to continue at even higher  rates of cash for political interference.

Keep Your Dial Set At MeanMesa

Since "talking about" higher tax revenue is essentially a "forbidden zone," MeanMesa intends to rush right into the fray to post a series on this topic.  It's a long past due discussion.  We need to talk about national alternatives and national necessities -- what choices we have and what happens if we don't.

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