Unpacking Conservative Humor
It's sad when even an attempt at a joke reveals the state of intellectual decay and groupthink that dominates conservative economic views. Here's Andy McCarthy's suggestion for how the government can raise more revenue:
In other words, only complete crackpots believe that McCarthy's "Plan A" would increase revenue. Sadly, with respect to this issue, virtually all mainstream Republicans are now complete crackpots. Which goes a long way toward explaining why the Republican party's budget proposals make absolutely no sense. How can you craft a coherent budget when your only idea for raising revenue is to massively cut revenue? If you're working from that premise, why bother coming up with numbers at all?
Also, notice McCarthy's bizarre counterfactual claim that "it's clear that the President won't cut taxes (not even for '95 percent of Americans')." I'm not sure what's going on in McCarthy's alternate universe, but in this one, Obama just signed into law a stimulus bill containing $288 billion in tax cuts over the next two years, making it arguably the biggest tax cut of all time. Does that not count?
On a final note, though McCarthy's Plan B is clearly a joke, he seems to miss the serious implications of it. There's a simple explanation why so many of Obama's high-profile nominees have had tax issues. The reason is that, to a large extent, our tax system operates on the honor system. This is especially true of relatively wealthy people who have income streams from multiple sources (i.e. not just their weekly paychecks). The tax code is also so complicated that errors are easy to make. So when the tax filings of wealthy people are subjected to actual scrutiny--which rarely happens--it is often the case that they are found to owe money to the government.
But there's a much easier way to make these people pay up than nominating them to the cabinet. Just hire more tax auditors! And have them focus their efforts on the wealthy. Any decent auditor will more than offset his yearly salary by the amount of unpaid taxes and penalties he's able to collect. And the increased threat of an audit will motivate others to be more honest about reporting their income in the first place, thereby increasing government revenue. This is a no brainer from a policy standpoint.
UPDATE: The new GOP budget proposal would lower the top marginal tax rate from 35% to 25%, but would give taxpayers the option of paying the old, higher rate. And here's the truly hilarious part, apparently the projections included in the proposal assume that taxpayers will voluntarily pay the higher rate. If that's true, it's got to be the craziest budgetary gimmick I've ever heard of.
But here's the obvious follow up question (maybe Andy McCarthy can help me out with this): why even give people the option of paying the higher rate when "we all know" that paying the lower rate will actually result in increased revenue? How can Supply Side Jesus work his magic if people keep paying their money to the government at the higher rate?
We know that lowering marginal tax rates can increase federal revenue, but it's clear that the President won't cut taxes (not even for "95 percent of Americans"). So we need a Plan B. How about this: Let's give every American an Obama administration job requiring either Senate confirmation or the completion of financial disclosure forms. Even though he's only been in office for 70 days, President Obama has rich experience with this approach and has proved it works.What's unintentionally hilarious about this post is that McCarthy is absolutely serious about his "Plan A" for raising revenue, i.e., lowering marginal tax rates. He premises his joke by stating matter-of-factly that "we know that lowering marginal tax rates can increase federal revenue." And he's right, most people who write at or read the National Review probably do think that they "know" this. But of course it's demonstrably, empirically untrue. We've lowered marginal tax rates multiple times, and it never produces more revenue. Even the most ardent supply-side economists don't believe that tax cuts fully pay for themselves (they believe only a fraction of lost revenues are offset by supply-side effects).
In other words, only complete crackpots believe that McCarthy's "Plan A" would increase revenue. Sadly, with respect to this issue, virtually all mainstream Republicans are now complete crackpots. Which goes a long way toward explaining why the Republican party's budget proposals make absolutely no sense. How can you craft a coherent budget when your only idea for raising revenue is to massively cut revenue? If you're working from that premise, why bother coming up with numbers at all?
Also, notice McCarthy's bizarre counterfactual claim that "it's clear that the President won't cut taxes (not even for '95 percent of Americans')." I'm not sure what's going on in McCarthy's alternate universe, but in this one, Obama just signed into law a stimulus bill containing $288 billion in tax cuts over the next two years, making it arguably the biggest tax cut of all time. Does that not count?
On a final note, though McCarthy's Plan B is clearly a joke, he seems to miss the serious implications of it. There's a simple explanation why so many of Obama's high-profile nominees have had tax issues. The reason is that, to a large extent, our tax system operates on the honor system. This is especially true of relatively wealthy people who have income streams from multiple sources (i.e. not just their weekly paychecks). The tax code is also so complicated that errors are easy to make. So when the tax filings of wealthy people are subjected to actual scrutiny--which rarely happens--it is often the case that they are found to owe money to the government.
But there's a much easier way to make these people pay up than nominating them to the cabinet. Just hire more tax auditors! And have them focus their efforts on the wealthy. Any decent auditor will more than offset his yearly salary by the amount of unpaid taxes and penalties he's able to collect. And the increased threat of an audit will motivate others to be more honest about reporting their income in the first place, thereby increasing government revenue. This is a no brainer from a policy standpoint.
UPDATE: The new GOP budget proposal would lower the top marginal tax rate from 35% to 25%, but would give taxpayers the option of paying the old, higher rate. And here's the truly hilarious part, apparently the projections included in the proposal assume that taxpayers will voluntarily pay the higher rate. If that's true, it's got to be the craziest budgetary gimmick I've ever heard of.
But here's the obvious follow up question (maybe Andy McCarthy can help me out with this): why even give people the option of paying the higher rate when "we all know" that paying the lower rate will actually result in increased revenue? How can Supply Side Jesus work his magic if people keep paying their money to the government at the higher rate?
posted by A.L. at 12:31 PM
21 Comments:
Hey A.L.
All of the teachers in my school district got paid on Friday, and we all had more money than usual. The only change was with our witholding tax. When I checked with our business office it was because of changes brought on with the stimulus package. As one of the 95%ers, I've already seen my taxes cut! McCarthy can stuff it.
We've lowered marginal tax rates multiple times, and it never produces more revenue.
I keep hearing that. Then I look at reports from the GAO (page 4 of the PDF file) and the OMB (page 5 of the PDF file) and guess what it shows? An increase in revenues every year from 2004 and on. Nowhere do I see anything that says the federal government could have had even more revenue had the Bush tax rates remained the same; they very well could have been higher. However, the purpose of the Bush tax cuts was to reduce unemployment, which it did quite nicely. And with more people working, thanks to the tax rate cuts for everybody, more people were paying taxes. So while cutting a tax rate seems to mathematically make it appear revenues will be reduced, the effects of tax rate cuts show something else.
BERNIE MADOFF:
"The reason is that, to a large extent, our tax system operates on the honor system"
"So when the tax filings of wealthy people are subjected to actual scrutiny--which rarely happens--it is often the case that they are found to owe money to the government."
"But there's a much easier way to make these people pay up than nominating them to the cabinet. Just hire more tax auditors! And have them focus their efforts on the wealthy."
Yes, Virginia, the President does have a huge impact on the economy. He can ask for an increase in personnel in areas such as IRS audits, enough inspectors for the FDA, or Consumer products, or just have a ton of CITY policemen do a lot of the work for Homeland Security, etc. A President puts his efforts behind programs he values, or corresspondingly, Doesn't value.
How can Bernie, who supposedly hasn't made a stock trade for his (?) in the last 15 years not have ever been audited? President Bush ENABLED this kind of deceit by how he allowed divisions to be under-staffed, when in reality they needed MORE people to carry out their missions.
Then I look at reports from the GAO (page 4 of the PDF file) and the OMB (page 5 of the PDF file) and guess what it shows? An increase in revenues every year from 2004 and on.
Revenues are influenced by a lot of things not just tax cuts. When Clinton increased taxes revenues went up too.
If the only change you were making was to borrow and spend an additional Billion dollar, it would only be logical that revenues would go up. Do you have any examples where the Republicans cut the deficit and taxes at the same time? After all according to you the additional revenue from the tax cuts would have allowed us to cut deficits or to turn the deficit into surplus.
However, the purpose of the Bush tax cuts was to reduce unemployment
Go back and read the transcripts of the 2000 Presidential debates. Bush was then talking about tax cuts not as a tool to reduce unemployment. Rather he was saying then that tax cuts were a way of returning some of the projected surplus back to the people. Guess what - the surplus never materialized.
Anonymous at 4:17pm:
Do you have any examples where the Republicans cut the deficit and taxes at the same time?
Nope. And that was shameful by both Congress (with the Republicans in the majority) and the Bush administration. However, in one fell swoop under the Bush administration and a Democratic-controlled Congress, the deficit doubled with the passage of TARP. Now with a Democratic-controlled Congress and the Obama administration, the deficit doubled after Porkulus. Obama's budget will proceed to increase the deficit every year in a greater amount than any budget deficit Bush had prior to TARP. And we still haven't seen a word from the Obama administration on how to pay for it (other than letting the Bush-era tax rate cuts expire).
When Clinton increased taxes revenues went up too.
Yes they did. Fortunately the people saw through the theft by the Democratic-controlled Congress of 1993-4 and put in the Republicans; their huge reductions in spending was largely responsible for reigning in the deficit, not Clinton's tax increase.
Anonymous at 4:21pm:
Guess what - the surplus never materialized.
Did you forget something? Maybe...9/11? That changed a lot of things.
Besides, I'm looking at reported effects, not guesses made by politicians during a pre-election debate.
How to lie with statistics:
1. Pick your endpoints carefully. For example, the Bush tax cuts were enacted in 2001 and 2003, and revenues dropped (helped by a little recession). They've never recovered to the 1982 - 2000 trend curve, which puts the lie to "the tax cuts increased revenue."
But remember, with Steveil, it's probable that he's just parroting without understanding something he read and digested from some right-wing source.
In other words, it's probably ignorance, not dishonesty in this case.
I also got a kick out of the "simplified" taxes, that involved doing your taxes TWICE - the old way AND the new, 'simple' way. If you do your taxes twice how it is simpler??
Assuming everyone will choose the higher number is icing on that cake - how ironic that to get a higher revenue they had to assume a higher tax rate. Yet more evidence that they don't actually believe in their own crap.
Nope.
I knew it. If tax cuts were the revenue generators that you claim they were, then there should have been surpluses.
Yes they did. Fortunately the people saw through the theft by the Democratic-controlled Congress of 1993-4 and put in the Republicans; their huge reductions in spending was largely responsible for reigning in the deficit, not Clinton's tax increase.
The revenues went up during 1993-4 also. Doesn't that directly contradict your assumptions?
I don't know how you can compartmentalize so neatly that the good things happened because of the things you support and the bad things happened because of the things you did not support.
Did you forget something? Maybe...9/11? That changed a lot of things.
So factors other than tax cuts influence revenue. This is the first thing I said.
Looking forward to your analysis which demonstrates that the tax cuts (and not other factors like the massive deficit spending) increased revenues under W.
"...with Steveil, it's probable that he's just parroting without understanding something he read and digested from some right-wing source."
I disagree. While his sources may be right-wing, I think SteveIL is very smart, reads a lot and absorbs a lot of material. But he then actively restricts that data to those tiny bits that only support his preformed conclusions. He's more like a cultist, who can stare the facts right in the face then form an *almost* believable but actually bizarre conclusion.
And yes, in a world where everything is relative, the same could be said about anyone, to a degree.
steps to creating perfect repubican arguments:
step 1)anything the opposition says or does is bad
step 2)give the opposition's ideas names (such as 'porkulus')
step 3)pracice the art ig disengeniousness, for example: if roosters crow and then the sun comes up, then roosters make the sun come up!
step
4)ridicule, ridicule, ridicule
step 5)repeat all ridicules, ridiculious ad hominen attacks, distort figures, create 'acts' by saying "well, everybody who isnt a kooky monnbat knows that....blah, blah , blah"
step 6) fear is a tool.
To be clear, the argument of the supply siders like Larry Kudlow is that tax cuts at certain levels will increase revenue beyond the amounts the cuts were in. In other words, these people claim that tax cuts pay for themselves.
There is virtually no evidence to back up this claim. Piss and moan that some explain this point imprecisely all you want, but realize that it won't change that fact.
Besides, I'm looking at reported effects, not guesses made by politicians during a pre-election debate.
Um, no. You explicitly said that "the purpose of the Bush tax cuts was to reduce unemployment".
In all fairness to the Republican wingnuts, in addition to cutting the top rate to 25%, they do propose eliminating all deductions. To the discredit of Democratic wingnuts, they keep reporting the first fact and not the second one.
If tax cuts create increases in government revenue, why not cut taxes down to 1%, or 0.5%?
Another factor to remember is that when supply side economics entered the mainstream of political thought the top marginal tax rate was much higher than now. Till 1981 it was 70% or higher. With a marginal tax rate that high its easy to understand why supply side economics would become much easier to sell politically. With current top rates its a fairly laughable argument.
G. G. Griffith said... If tax cuts create increases in government revenue, why not cut taxes down to 1%, or 0.5%?
You just quite accurately described the Republican view on capital gains taxes.
They like to say that they encourage investment. They always forget to enunciate the flipside, which is that they discourage work. Looking at their Lehman, AIG, Goldman, and other buddies who were such titans of finance, you can understand why they don't value real work.
Ok, so let's take the premise that lowering taxes always lowers revenue, and raising taxes always increases revenue (as A.L. insists).
Then why not tax at 100%? Really, at what rate are you socialist taxers willing to admit that a certain level might - just *MIGHT* - result in enough suppression of economic activity so as to decrease actual revenue?
What's the number? Please, do tell.
Ok, so let's take the premise that lowering taxes always lowers revenue, and raising taxes always increases revenue (as A.L. insists).
Way to put words in my mouth. Look, I don't question the fact that at some point, taxes can get so high that they actually hurt economic productivity and thereby reduce revenues. But literally no reputable economist believes that marginal rates in the U.S. are anywhere near the level that would produce such an effect. With the range of actual tax rates that exist in the real world, raising them produces more revenue and lowering them produces less.
It is fair to note that at the very pinnacle of the US economic prosperity (the 1950s), the marginal tax rate was 90%. The richest Americans paid the vast majority of their income, minus deductions, back to the government and the deductions specifically favored beneficial social and economic activity. Corporate executive salaries were in the low six figures, and American business was more successful than it ever was before and has ever been since.
The marginal tax cuts have been cut 65%, many deductions have been eliminated, and corporate salaries have skyrocketed. Yet the economy is in the tank and the rich/poor divide is considerably greater. The majority of these changes have been since 1981, by Republican presidents or by Republican congresses. Nothing has trickled down. Indeed, real wages for everyone BUT corporate executives have fallen dramatically with the outsourcing and off-shoring of labor to save costs that have not lowered real cost of living. The real cost of living is higher, real wages are lower, and more money is in less hands.
Economies are dependent upon consumers having the money to purchase goods and services. If no one can afford to buy anything, the rich get poorer over time because the rest of society cannot support them any longer.
To steal a pretty Republican catchphrase, trickle down economics is the real source of trickle up poverty.
A.L. Wrote:
"With the range of actual tax rates that exist in the real world, raising them produces more revenue and lowering them produces less."
and Eclectic Radical Wrote:
"It is fair to note that at the very pinnacle of the US economic prosperity (the 1950s), the marginal tax rate was 90%. The richest Americans paid the vast majority of their income, minus deductions, back to the government..."
Then why not cut spending too? Back in the 1950's, Federal spending as a % of GDP was about 50% lower than today. And that number will grow after the bailouts, TARP, further war spending, and the upcoming budget.
Then there is the American work ethic. It's one thing to raise taxes and spending, but I think Americans have grown too lazy to accept the duties and responsibilities that come with that level of social service.
I was in Denmark last fall. Their tax rate is above 60%, they provide cradle-to-grave health care, education, and retirement, and they have the lowest unemployment rate in the civilized world. But one stark contrast I noticed over there (vs. here) was that everybody wants to work. Few people looked at every step of life as something "owed" to them by someone else.
The U.S. couldn't handle that level of social service because too many people would just look at it as an excuse to sit around and do nothing. Denmark can get away with it because everyone works and contributes. Wouldn't happen here.
Post a Comment
Links to this post:
Create a Link
<< Home