Wednesday, November 17, 2010

I get all socialist

Something's been bothering me.  It's my neck.  I hurt it a  while ago, and I keep reinjuring it.  It's lame when you have a neck injury because if somebody's like "Hey do you want to fight?" you have to be like "Well, I do, man, I really do, but..."  So it really cramps my style.

This looks so good because I used a Wacom board.
Another thing that really bothers me is politics.  American politics is like being a bee in a hive and watching two teams of Japanese hornets descending on you that then start to fight over which team gets to kill you and your family and you notice that one team is lamer than the other so you hope they win because they won't be as effective at slaughtering your hive but then they lose and you know you're fucked.

Our most recent election has been widely said to have been a referendum on the performance of our president.  I want to make a couple of quick statements about that and then talk about taxes, because I know that's mainly what kids are interested in nowadays.

First off, I'm not sure if you've ever heard of a Blue Dog Democrat before, but those guys are "fiscally (and
Vote for me and I'll kill you last.
often socially) conservative," generally hawks in terms of military activity, and half of them in congress that just got voted out in the last election.  They were running as democrat incumbents, and they were all replaced by Republicans.  That's a pretty ambiguous result, but I think that a factor in their tremendous defeat is that democrats didn't want to vote for them because they're basically Republicans, and Republicans didn't want to vote for them because they're technically not Republicans. 

The blue dogs hold as a common point of view the notion that lower tax rates for the wealthy lead to higher tax revenues for the government due to economic stimulation, and that a higher percentage of the tax revenue comes from the wealthy.  Now let's just take a tiny peek at that idea for a second.  If the rich are being taxed at a lower rate AND bearing more of the tax burden, it can only be because they're the only ones who have any fucking money.  You'll note that taxes for the poor (which is to say, all the actual people in the country, more or less) don't have to go down in order for the above two circumstances to be true. It does mean that the poor aren't earning more either. This would indicate that most people would see no significant financial improvement from the upturn in the economy, and that's even taking into account that unemployment would be predicted to drop under these circumstances.   

What this indicates, is that the wealthy get wealthier when they are taxed less, and the poor do not proportionally do so.  By the conservative argument, therefore, lowering taxes for the rich increases the inequality between rich and poor.  It should also be pointed out that our political system has been completely arranged, now more than ever, to allow elections to be influenced by money.  So wealth inequality equates directly with political inequality.  

This is actually perfectly in sync with the philosophy of certain founding fathers, such as John Jay:
The people who own the country ought to govern it.
...But it is clearly a major obstacle to democracy, which is why Aristotle said things like:
Thus it is manifest that the best political community is formed by citizens of the middle class, and that those states are likely to be well-administered in which the middle class is large, and stronger if possible than both the other classes, or at any rate than either singly; for the addition of the middle class turns the scale, and prevents either of the extremes from being dominant. Great then is the good fortune of a state in which the citizens have a moderate and sufficient property; for where some possess much, and the others nothing, there may arise an extreme democracy, or a pure oligarchy; or a tyranny may grow out of either extreme - either out of the most rampant democracy, or out of an oligarchy; but it is not so likely to arise out of the middle constitutions and those akin to them.

But let's just ignore the inequality issue for a moment.  Let's just look at the argument that lower taxes is for the economic greater good.  Here's a little history of tax cuts in America, which is adapted from an essay put out by the Heritage Foundation.  I don't make a habit of quoting the Heritage Foundation, because they're wrong about everything, but I did want to point out the glaring and selective bits of information they put into their essay in support of tax cuts for the rich.  I'll put the Heritage essay in regular text and my brief additions in red, to indicate that it should be read in the voice of Satan, The Accuser. 
The tax cuts of the 1920s
Tax rates were slashed dramatically during the 1920s, dropping from over 70 percent to less than 25 percent. What happened? Personal income tax revenues increased substantially during the 1920s, despite the reduction in rates. Revenues rose from $719 million in 1921 to $1164 million in 1928, an increase of more than 61 percent. Then there was the great depression in 1929, which plunged most of the world into a decade of abject misery while increased taxes and social spending slowly fixed shit up again.
 The Kennedy tax cuts
President Hoover dramatically increased tax rates in the 1930s and President Roosevelt compounded the damage by pushing marginal tax rates to more than 90 percent. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).  Then there was a recession in 1969.  The maximum tax rate was reduced by 20% earlier in the year and appeared to do nothing to prevent the recession
The Reagan tax cuts
Thanks to "bracket creep," the inflation of the 1970s pushed millions of taxpayers into higher tax brackets even though their inflation-adjusted incomes were not rising. To help offset this tax increase and also to improve incentives to work, save, and invest, President Reagan proposed sweeping tax rate reductions during the 1980s. What happened? Total tax revenues climbed by 99.4 percent during the 1980s, and the results are even more impressive when looking at what happened to personal income tax revenues. Once the economy received an unambiguous tax cut in January 1983, income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting for inflation).   Which helped hide the fact that a (world record) recession began in 1987, which continued on into the first Bush presidency, crippling it.  He raised taxes for the rich in 1990, and the recession ended around '91.

So basically, the tax reduction argument is bullshit.  It clearly destroys the economy in time, because most people run out of money.  I think it would be more reasonable to suggest that the periodic lowering of taxes is a kind of culling of excess capital from the general public to the rich, but that it clearly can't go on indefinitely.

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