The Great Tax Con Job

[Joanne98]

Republicans are using the T-word - taxes - to attack the Obama healthcare program. It's a strategy based in a lie.

A very small niche of America's uber-wealthy have pulled off what may well be the biggest con job in the history of our republic, and they did it in a startlingly brief 30 or so years. True, they spent over three billion dollars to make it happen, but the reward to them was in the hundreds of billions - and will continue to be.

As my friend and colleague Cenk Uygur of The Young Turks pointed out in a Daily Kos blog recently <1>, billionaire Rupert Murdoch loses $50 million a year on the NY Post, billionaire Richard Mellon Scaife loses $2 to $3 million a year on the Pittsburgh Tribune-Review, billionaire Philip Anschutz loses around $5 million a year on The Weekly Standard, and billionaire Sun Myung Moon has lost $2 to $3 billion on The Washington Times.

Why are these guys willing to lose so much money funding "conservative" media? Why do they bulk-buy every right-wing book that comes out to throw it to the top of the NY Times Bestseller list and then give away the copies to "subscribers" to their websites and publications? Why do they fund to the tune of hundreds of millions of dollars a year money-hole "think tanks" like Heritage and Cato?


The answer is pretty straightforward. They do it because it buys them respectability, and gets their con job out there. Even though William Kristol's publication is a money-losing joke (with only 85,000 subscribers!), his association with the Standard was enough to get him on TV talk shows whenever he wants, and a column with The New York Times. The Washington Times catapulted Tony Blankley to stardom.

"Fellowships" and other forms of indirect sponsorship of right-wing talk show hosts have made otherwise-marginal shows and their hosts ubiquitous, and such sponsorships of groups like Norquist's anti-tax "Americans for Tax Reform" regularly get people like him front-and-center in any debate on taxation in the United States.

All so they could run a tax con on the American people, thus keeping Moon and Murdoch and Scaife and Anschutz (and others) richer than you or I could ever even imagine.

continued>>>
http://www.opednews.com/articles/The-Great-Tax-Con-Job-by-Thom-Hartmann-090721-79.html

[ihavenobias]

1. Big K & R.

Who doesn't love Hartmann? And it's a nice shout-out to Cenk as well.

[izzybeans]

2. Can someone explain how when taxes go up, wages also rise?

[bemildred]

3. When profits are taxed at high rates, and you have lots of "excess revenue"

you have two choices:

1.) Give it to the government (i.e. take it as profit anyway)
2.) Reinvest it in your business, then it becomes "expenses" and is not taxed (to you anyway).

Guess what, employee's compensation is all "expenses", so one of the things that happens in high-tax regimes is that successful businesses hire lots of employees with their excess revenue. All big-shots like to have lots of minions if they cannot keep the money themselves.

The present slash-and-burn disaster capitalist economics we have is based on our low tax regime, and a return to a uniform high progressive tax regime is the one thing that would quickly put an end to it.

[izzybeans]

4. I can see that.

However that's not how Hartmann seemed to link the two. Unless I misread.

He was saying higher taxes on workers lead to higher wages, not on the businesses.

Higher taxes on businesses, in terms of "wages as expenses", would make sense should a business owner/corporate manager think in those terms. They could increase frivolous purchasing in lieu of wage increases just as easily.

[bemildred]

8. True. His piece is very good BTW.

The fellow below explains your question better than I did. I just get annoyed at the idea that higher taxes means fewer jobs, which is bullshit. The OP explains that too, but I have a bug up my ass about because it is so stupid and contrary to simple observation.

[izzybeans]

11. me too i'm just trying to come up with the why and the how so I can articulate this

better to a friend of mine who has recently fallen down the libertarian rabbit hole.

[ihavenobias]

5. I think his point is

If the market 'says' the average wage for (fill in the blank) after taxes should be $20, businesses adjust wages over time up or down to that level based on taxes and other factors. Of course there is some lag time in which the average person does benefit financially in the short run, but eventually it levels off. For example, maybe employers lower the starting salary slightly for new hires after a tax cut, because they know the after tax earnings will remain the same and that people will work for that salary.

I could be wrong but that's my general understanding of his main argument.

[unblock]

6. the real "price" of labor is based on inflation-adjusted after-tax pay

if taxes are lowered so that you're taking home more for the same work, your employer will cut pay or freeze raises until inflation reduces your inflation-adjusted after-tax pay to back where it was.

if taxes are raised so that you're taking home less for the same work, you'll insist on a raise to get back to where you were, or you'll switch to a higher-paying job. you won't be content to see your inflation-adjusted after-tax pay decrease so you'll push harder for more pay.

all of this is correct for the majority of jobs, though it does neglect that there are a few marginal jobs that would simply go away if taxes were raised too much (because the difference between what the employer pays vs. what the employee gets is too large to make the job worthwhile). conversely, there are a few marginal jobs that would be created if taxes were lowered enough. note that we're talking about taxes on the worker's income (typically the LOWER tax brackets) not the taxes on the employer (typically the HIGHER tax brackets).

[izzybeans]

12. Thanks!

[JohnWxy]

7. I can't , why? it's bullshit!

Look, wages rise when there are at least two conditions present:


1) Healthy demand for employers' products.

2) Healthy demand (and therefor, competition) for workers.

The healthy demand for the employers' products means they can make more money by increasing production. To increase production, beyond what they can accomplish through productivity improvements (some ways of doing this take time, other approaches are quicker such as increasing overtime - this is costly however and not a long term solution) the employer needs to add new workers.

With the demand for workers to make product - if the workers are mobile (those with more than 15 yrs of service are less mobile as they have benefits built up which they will lose if they quit and move to another employer) this puts upward pressure on wages - the price paid for your work. THe employers are forced to increase wages/salaries to keep workers from being taken by competing potential employers.

NOw, when taxes go up, if the demand for the employers' products is not there and there is not therefor so much competition among employers for workers (because they are not inclined to be increasing production - if there is not a healthy demand for their products) wages are not going to go up - just because the workers taxes increased (note the worker is NOT going to decrease his tax burden by quitting and going to another employer). IF there is no incentive for the employer to increase production then he is not inclined to increase wages because there is not that much competition between employers for needed workers.

NOw what an increase in taxes DOES DO is REDUCE take home pay. This DOES lead to a reduction in spending by the worker. A reduction in spending by all workers (since they all got the tax increase) means a reduction in demand for goods and services supplied by - you guessed it - THE EMPLOYERS. Wit reduced demand to his products he wants to sell the employer is not likely to be increasing production - rather he might be considering lightening up on production. At any rate this is not going to be and atmosphere of competition for workers but rahter one of wanting to keep coss down. NOT a very likely situation to see increasing wages.

NOw a reduction in taxes has just the opposite effect - an increase in take-home pay. Increased take home pay leads to increased spending. This means increaased demand for goods and services supplied by the producers - that is the employers. IF the increase in demand is big enough and sustained it will lead to increased production and increased demand for workers and this produces an upward pressure on wages.

>
>
>>>> Now, the change in taxes for the rich doesn't have that much effect. They are making far more than they consume. So they are investing more of their income than the guy who is making just a bit more than the amount he needs to live on (the rich have more disposable income). So an increase in taxes for the rich doesn't make that much difference in terms of their consumption but it does mean they will be investing less. But, if they are invested in the right businesses an increase in taxes to them and a relative lightening of the tax load on the "working people" will lead to an increase in spending for goods and services (by the "working people") causeing well managed businesses (in the right line of business - producing those goods which are sought after) to grow and if they are well managed make more profits. IF the rich are invested in the right places, a relative increase in taxes to them with a decrease in tax burden to the "Working people" will mean the rich guys investments will go up in value and he may end up richer than he was before (even with the increase in taxes).

This is what happened through the 1950's and 60's. Unions increased incomes of working people (and not just those who were in unions). They went out and spent most of the increase in income they enjoyed and businesses grew like gangbusters. And those who were invested in the right sectors and businesses got wealthier than they probably ever dreamed of becoming.

That's how the economy grows.

[bemildred]

9. Do you remember the Dot.Com bubble?

There were boatloads of very good jobs for IT workers. Very few of those companies ever made a dime. Most of them never had an actual product. They were mostly pump-and-dump stock speculations.

Your argument has some validity for manufacturing jobs, but we have moved most of that work elsewhere, and are working hard to finish off the rest.

Every time we cut taxes in this country, we start to bleed jobs. The record is quite clear.

[JohnWxy]

15. Naw, the moon causes it when it moves in front of the sun god.

[bemildred]

16. So essentially, it's a religious dogma with you?

I'm just wasting my time pointing out the historical facts?
:rofl:

[JohnWxy]

17. Sorry if the facts displease you.

sorry if you don't like the facts. do you care to explain how lowering taxes causes job losses.. and like maybe provide some facts to back up your statement. I'd love to see this.

[bemildred]

18. You present no facts, you present economic dogma.

Your entire argument depends on the notion that raising taxes means raising taxes on workers with no disposable income, a subject the the OP addresses very well. The OPs point is that if you raise taxes on people with lots of disposable income, it has no depressive effect on the consumer market, all it does is raise the issues that I discussed. If you are Joe Blow worker and the government taxes the shit out of the "profits" of Donald Trump or Warren Buffet or ADM it has NO pernicious effect on your budget, and a very beneficial effect on government budgets, employment, and corrupt political practices.

[Uncle Joe]

10. Kicked and recommended.

Thanks for the thread, Joanne.

[Wednesdays]

13. K&R

:kick:

[hay rick]

14. K & R