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The Tax History Conservatives Want Us to Forget
Grover Norquist is regularly billed as one of the leading intellectual lights of the conservative movement - and I think you will agree that the arguments he made in a debate with me over taxes this morning on CNBC highlight not merely the shocking intellectual bankruptcy of the movement he leads, but just how out of touch Republicans in Washington really are.
The debate revolved around President-elect Obama's potential plans to put off raising taxes on the very wealthy. Norquist begins the debate with the claim - I kid you not - that "the economy is in the present state because when the Democrats took the House and Senate in 2006 you knew those tax increases were going to come in 2010." He insisted that, "The stock market began to collapse as soon as you recognize that those old tax rates were coming back." Yes, because under "those old tax rates" - ie. Clinton-era tax rates - the economy was so much worse than it is today.
As you'll see, the CNBC reporters start laughing at Norquist, having trouble taking him seriously. And I must say, I really wasn't sure he was being serious - but, of course, he was. I went on to make the point that I've often made in the past - the point that conservatives simply want everyone to forget: Namely, that President Clinton faced down a recession in 1993 by raising taxes on the wealthy in order to finance an economic stimulus package, and the economy subsequently boomed.
That simple, undeniable bit of history undermines the entire structure of conservatives claim that raising taxes on the super-rich will hurt the economy. And as you'll see from Norquist's response, they simply cannot deal with that truth. Indeed, Norquist actually goes all the way back to the 1920s as his example that raising taxes on the wealthy impedes economic growth - somehow ignoring the history from 15 years ago. He then goes on to claim with a straight face that Franklin Roosevelt created the Great Depression (this, along with the "center-right nation" propaganda, seems to be the right's new talking point).
The question now is whether the Obama administration buys into Norquist's fact-free nonsense, or whether it musters the same courage President Clinton mustered in prudently raising taxes on the super-rich to responsibly finance an economic stimulus package. Sure, temporary deficits are acceptable right now - there's no arguing that. But doing what's necessary to minimize those deficits is also important.
In terms of policy, if, as Congressional Quarterly reports, Obama wants to enforce budget discipline on a necessarily large economic stimulus package, it will require generating additional revenue from the wealthy. In terms of raw politics, if Clinton's 43 percent of the vote gave him enough political capital to come into office during an economic downturn and do that, I'd say Obama and his 53 percent gives him enough political capital to do the same today. And I would argue that if Obama backs off his promise to raise taxes on the wealthy, he will effectively validate the false conservative frame that claims tax increases on the wealthy endangers an economy.
While I certainly agree with the CNBC reporter that the 2008 is different than the 1990s, it isn't different when it comes to taxes - we have very recent history that proves raising taxes on the wealthy in order to raise revenues for economic stimulus, if done prudently, helps an economy recover. That is the argument that nobody during this debate was able to undermine - and it is the argument conservatives fear most, because they know it is accurate.
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This morning on c-span some reporter from dow jones was answering the callers questions regarding the wisdom to keep or not keep the Bush '01 & 03' tax cuts. One caller wanted to know why we need taxes anyway. The reporter responded that we need taxes to pay for infrastructure, medicaid and othe social programs. Never did he mentioned the elephant taking the biggest bite out of the budget - THE DEFENSE SPENDING.
Republican World, where the past has been revised, the present is spun into irrelevance, the future is being rigged, and The Truth has been redacted.
grover is the symbol of how we are going under. Put him and the greedy turkeys in jail.
Well-done, David. A simple history lesson, worth reiterating again and again.
In fact we learned across the last eight years that cutting taxes on the very rich and on corporations is harmful to the economy.
You ask why is that?
As it happens wealthy people already have more money than they know what to do with so having more actually removes that money from the economy. It just sits someplace collecting dust. Corporations just piss it away on bonuses for top executives. If the government takes it, it gets spent for sure.
Or it gets "spent" in the stock market where it is used mostly to line the pockets of the very people "spending" it there!
Before 1913, America didn't have an income tax, and the government survived on the alcohol tax, excise, and so on. Incidentally, FDR pushed the repeal of Prohibition through because he needed that tax revenue.
(Well, there was a temporary income tax from Abe Lincoln, but it did end.)
The 16th amendment was added in Feb., 1913 ... only it was never properly ratified by a sufficient amount of states. One could conclude all such taxation since was illegal. However, the main point about it at the time, was sold to the people as, "Don't worry about it, it's only modest and applies onto to high incomes."
So, 'soak the rich' was the basis and they've been fighting back ever since. IIRC, the top income tax had grown to 94%..
First, one could NOT conclude that all taxation was illegal. One could possibly conclude that the FEDERAL INCOME TAX is illegal.
Second, the 16th amendment WAS passed by the necessary number of states:
According to the United States Government Printing Office, the following states ratified the amendment:[20]
1. Alabama (August 10, 1909)
2. Kentucky (February 8, 1910)
3. South Carolina (February 19, 1910)
4. Illinois (March 1, 1910)
5. Mississippi (March 7, 1910)
6. Oklahoma (March 10, 1910)
7. Maryland (April 8, 1910)
8. Georgia (August 3, 1910)
9. Texas (August 16, 1910)
10. Ohio (January 19, 1911)
11. Idaho (January 20, 1911)
12. Oregon (January 23, 1911)
13. Washington (January 26, 1911)
14. Montana (January 27, 1911)
15. Indiana (January 30, 1911)
16. California (January 31, 1911)
17. Nevada (January 31, 1911)
18. South Dakota (February 1, 1911)
19. Nebraska (February 9, 1911)
20. North Carolina (February 11, 1911)
21. Colorado (February 15, 1911)
22. North Dakota (February 17, 1911)
23. Michigan (February 23, 1911)
24. Iowa (February 24, 1911)
25. Kansas (March 2, 1911)
26. Missouri (March 16, 1911)
27. Maine (March 31, 1911)
28. Tennessee (April 7, 1911)
29. Arkansas (April 22, 1911), after having previously rejected the amendment
30. Wisconsin (May 16, 1911)
31. New York (July 12, 1911)
32. Arizona (April 3, 1912)
33. Minnesota (June 11, 1912)
34. Louisiana (June 28, 1912)
35. West Virginia (January 31, 1913)
36. New Mexico (February 3, 1913)
The great myth of the Bush administration is that cutting taxes for the rich created jobs. It did...in China. The rich will take their money to wherever the best returns are. If that is in Asia, then there it will go.
Economc growth will go wherever there is opportunity. The real question is not how do we tax the rich less but how do we make opportunities for them to take advantage of here. And the best choice is a thriving middle class.
Right NOW the rich control a greater percentage of wealth than they have since the Gilded Age.
So where are the jobs?
And why should they build business and hire people when the middle class has no disposable income to spend?
You're missing the fact that their greed is why there's no disposable income for the middle class, and not reinvesting the income they stole back into the US economy is perpetuating middle class income deprivation.
The only way to pry this wealth back out of their greedy grubs and put it back into the hands of the middle class, is to tax wealth heavily.
The balance was broken with successive tax cuts for the rich. now it must be rebalanced.
The Left's talking point should be this, if raising taxes during a recession is the worse thing to do, then laying people off in a consumer driven economy is a very close second.
Why so much love for taxes?
The IRS likes to say the "tax system depends upon voluntary compliance.” But any fool knows what happens if you don’t voluntary file your taxes. If taxes are good, why are citizens coerced to pay them?
Just look at this chart
http://www.warresisters.org/pages/piechart.htm
Most of the Federal budget is money wasted. Many of its functions would be better performed at a local level. My view is the less money the government has the less harm it could do. Right now, “the U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday.”
http://www.bloomberg.com/apps/news?pid=20601110&sid=aDqw8_eMzrhU
Insane. This is rewarding incompetence and corruption. Is this how you want your taxes to be spent?
Wake up.
"Most of the Federal budget is money wasted."
Top 5 items on the Fed Budget:
1- Social Security - paid for by its own tax, currently in surplus. For a large percentage of the elderly, it is their only or primary source of income.
2- Defense.
3- The INTEREST (only) of the National Debt. About $500 bil/ year.
4. - Medicare also paid for by its own tax.
5. - Medicaid.
Civilized societies take care of its people.
As for Citigroup, AIG and the like, the bailouts are poorly constructed, to be sure.
However, failure of the financial system would be catastrophic.
"Civilized societies take care of its people."
Your underlying assumption; that we are indeed a civilized society, has yet to be proven.
Most of the budget goes for current and past military spending. Current spending includes the Iraq and Afghanistan War. It also includes military welfare or having a vast amount of military bases overseas from The Netherlands to Japan. We have no idea the exact amount of the clandestine budget. Most of this budget has little or nothing to do with defending our shores. It is mostly for our 'national interests.' Paint this term to suit yourself.
If 'Civilized societies take care of its people,' - what is so civil about forcing me to do so?
"bailouts are poorly constructed, to be sure. However, failure of the financial system would be catastrophic."
No, it would not. You are mistaking a few large financial firms as the total system. They are but part. If McDonalds, Wendys and Burger King failed, does this mean you would not be able to buy a burger>
So are you claiming that you would like to remove the biggest piece of waste in our govt? The US military???? Cause if so you are about the only person who denigrates taxes while ALSO not being in love with the very idea of military!
They are trying to get this "revisionist" crap into the public record so that, in the future some time, they can do a Lexus Nexus search and then write new articles quoting the old articles and making it seem as if that was the consensus "back then". It has to be rebutted and rebutted hard.
Got that right.
Every time a Republican says: Obama is going to raise taxes, it should be denounced as a lie. This statement implies raising all taxes for everyone. It is not true, Obama's plan represents net decrease in tax burden. It increases the rate only for the top 5% of people or so. Having said that, I personally am not convinced that raising corporate taxes will be good. Maybe that is something than shouldn't be done in a recession. Businesses are struggling and need relief in my mind.
Someone, somewhere, at some time needs to call him out on this and point out that HIS taxes are the only taxes anyone is talking about raising. He's a capitalist anarchist.
Free Lunch indicates that 1 businesses defer taxes interest free (how much is out there in deferred taxes, I have no idea) 2 businesses get Secret Letters from the IRS and avoid paying taxes that way.
Over 50% of businesses pay no taxes anyway... Remember those business expenses and depreciation, they effectively offset the income taxes and the pensions and the corporate jets...back in the 20s nobody but the top 10% paid taxes...and the rate was much higher
Effective tax on business (those that actually do pay tax) is something like 4%.
How would you like to pay 4% in taxes on YOUR income. Keep in mind "taxes on YOUR income" includes sales tax, Social Security and Medicare tax, state and local property tax, as well as the Federal Income Tax. 4% sounds good to me.
Hard to tell at the moment what the new administration will do but it will be a period of one party rule so it will get to do what it wants.
Many of the comparisons of the economy under Democratic or Republican Presidents omit two things.
First, that an economy doesn't turn on a dime (unfortunately at the moment for us all). Changes in tax code, investment credits, government sponsorship, education funding etc. all take time to work. If you looked at the economy four to six years after an administration you would have a better view of the impact of the policies.
Second, that you have to take the make up of the Congress into account. A split government (the last six years of Democrat Clinton with a Republican Congress) often does better than a united one (the first 6 years of Republican Bush with a Republican Congress). They can't get away with as much.
wrong- the ecconomy certianly can turn on a dime- look at where it was 8 months ago- lots of banks that have went under since were profitable only a few months earlier
also the idea that a split government does better than a unified one is in no way based in reality
of course a split government is much better than a unified REPUBLICAN govt, but the same claim cannot be made against a unified democratic one
First, I am happy that we've got a unified Democratic govt AT THIS TIME. I don't know if I want one very often.
Second, the economy didn't turn on a dime. The MARKETS turned on a dime, but the economy itself was already in the toilet, it just became more obvious to everyone 8 months or so ago!
A true believer like Norquist will stick to his ideology in the face any and all evidence to the contrary. He just KNOWS this stuff has to work.
It's his religion.
Some other history for you- during the US's greatest ecconomic expansion -the 50's and 60's the highest tax rate was 40+%
During the 50s it was in excess of 90%. That was brought down in the 60s to around 70%......
thanks for the correction
Paying off WW II?
One point that is being consistently overlooked here is one made by the woman joining Sirota and Norquist...not the host. She pointed out that Obama's plan is not a tax increase that it is a net tax decrease but a redistribution of who pays what percentage of those taxes. In my mind, this makes any discussion about the benefits or problems with raising taxes during a recession moot.
Oh, and Norquist is a ridiculous human being. Laughable doesn't begin to describe his assertion about the 2006 election.
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