Reagan Economic Advisor Debunks the Biggest Tax Myth

Former Reagan economic adviser Bruce Bartlett only needs a minute to debunk the prevailing notion that keeping taxes lower on rich people creates growth and jobs.

Low taxes on the rich do NOT result in growth and jobs. That's a myth.

Well, actually it's a lie. An expensive lie paid for by the rich who had their taxes lowered by G W Bush, which contributed to the economic crisis. A lie perpetuated by the Romney campaign, possibly because Romney and Ryan are extremely rich and prefer to have their tax rate lower than ordinary working people.

Higher taxes on the rich do NOT result in economic decline or recession or loss of jobs or growth. Quite the opposite. Reagan raised taxes in 1982 and the economy did better. Clinton raised taxes in 1993 and the economy boomed. It was the longest peacetime boom in American history.

So saying low taxes on rich people is a good idea is a myth. A lie. A big lie. A dangerous lie.

Think about it. This isn't the opinion of some socialist elitist European professor. It's the evidence based argument of Ronald Reagan's economic adviser, Bruce Bartlett.

Why aren't the pundits and the newspeople on TV listening to him or considering the mass of evidence? Maybe because they are rich and prefer to have their taxes lowered.

Share this information with your Republican or independent brother-in-law. It may persuade him. Or it may cause his head to explode, which would make him ineligible to vote in this election.

Romney's Party Boat Flew A Cayman Islands Flag

In Tampa there are a lot of exclusive parties where the super rich meet to lay plans for a post-Obama tax climate. It was interesting to learn that the Romney party yacht at the GOP Convention flies a Cayman Islands flag. What's the message here? ABC broke this story.

"I think it's ironic they do this aboard a yacht that doesn't even pay its taxes," said a woman who lives aboard a much smaller boat moored at the St. Petersburg Municipal Marina.

Romney defends his secret bank accounts in tax havens, saying: “There was no reduction -- not one dollar reduction in taxes -- by virtue of having an account in Switzerland or a Cayman Islands investment.” Why not keep his millions in American banks then? And why are these places––the Caymans, Switzerland, Bermuda, the Bahamas, Luxembourg––called "tax havens"? Romney's words don't square with common sense or Americans' sense of fairness. This story appeared in the LATimes.

If you want to look more closely at Romney's complex tax evasions, Gawker has posted the most complete information about Romney's tax schemes online.

Gawker's John Cook: "Almost all of them are affiliated with Bain Capital, the secretive private equity firm Romney co-founded in 1984 and ran until his departure in 1999 (or 2002, depending on whom you ask). Many of them are offshore funds based in the Cayman Islands. Together, they reveal the mind-numbing, maze-like, and deeply opaque complexity with which Romney has handled his wealth, the exotic tax-avoidance schemes available only to the preposterously wealthy that benefit him, the unlikely (for a right-wing religious Mormon) places that his money has ended up, and the deeply hypocritical distance between his own criticisms of Obama's fiscal approach and his money managers' embrace of those same policies. They also show that some of the investments that Romney has always described as part of his retirement package at Bain weren't made until years after he left the company."

All of this may explain Romney's nervous chuckle on the stump.

But as much as we focus on Romney's tax secrecy, it's his plans for our taxes which ought to concern us most. His plan would lower his own already very low tax rate and put the burden onto the rest of us who work for a living. The story appeared in the Washington Post.

Romney responded to the criticism, but his response didn't add up either. A good analysis appeared in the Post.

There's also a very well researched analysis in the August Vanity Fair magazine.

There's a lot here about his various offshore schemes, but the most mystifying may be his IRA account.

"Mysteries also arise when one looks at Romney’s individual retirement account at Bain Capital. When Romney was there, from 1984 to 1999, taxpayers were allowed to put just $2,000 per year into an I.R.A., and $30,000 annually into a different kind of plan he may have used. Given these annual contribution ceilings, how can his I.R.A. possibly contain up to $102 million, as his financial disclosures now suggest?"

How indeed.

Andrew Sullivan, a died-in-the-wool conservative finds the tax evasions of rich people like Romney to be repugnant. (Should we rename them The Repugnant Party?)

Sullivan: "Conservatives, it seems to me, should care about all of America, rather than seceding from it. Social and economic inequality are dangerous threats to social stability and democratic legitimacy. That is a conservative belief - and one utterly alien to the fanatics who now run one of our two major parties. If conservatism is to recover, this version of the GOP must be defeated. It's the only language they understand: the language of power." Amen. Remove this Republican Party and give us back the one Eisenhower presided over.

Tax evasion isn't the only theory about Romney's secret taxes. The other theory, reported in the Guardian newspaper, is that Romney is hiding evidence of voter fraud. Was he really living in his son's basement when he voted in Massachusetts? With six large houses do you really think he lived most of the year in a basement? With six houses it has to be a lot of work establishing residency.

The Red States Get the Government Spending, Blue States Pay the Bill

Ever wondered why we need journalism? Read this piece from Eric Black. He provides a useful and intelligent analysis of a very important piece of reporting from yesterdays' New York Times.

"Even Critics of Safety Net Increasingly Depend on It" is an eye-opening feature article from the New York Times. It includes an intriguing interactive map showing region by region breakdown of government spending and taxes paid.

Here's Krugman's commentary on it, with a useful chart.

The point is this: the places and people in the U.S. that oppose government the most are often the places that need it the most and rely on it the most, who take the most from the federal government in subsidies and programs and contracts, in dollars, but pay in the least in taxes.

These Red areas and people oppose the taxes they aren't paying anyway, and oppose the government payments they are receiving more than other bluer, more Democratic areas and people. The areas that pay MORE in tax dollars than they receive in government payouts? Mostly Democratic areas populated by Democrats.

There is something seriously wrong with this picture. And there's something wrong that you don't hear this repeated every time a Republican stands up and hollers about gummint spendin'. All he needs to do is reject it. And if he doesn't it would be less hypocritical if he'd agree to pony up for the government millions he brings to his district. He won't though.

And it's not a new story. Simply underreported. Suppressed you could say. Don't believe the New York Times? Read on.

From Business Insider, reported in 2011.

A tax professor's commentary on the same bizarre red-state paradox, from 2004.

A 2002 paper from the ultra conservative Hoover Institution and Ohio State about The Red State Paradox.

The Washington Post's economist Ezra Klein posted a map of this bizarre but true correlation in 2010.

Data from the Tax Foundation

A 2010 article from SLATE.

You also hear Republicans shouting about the immorality of Democrats. But it's the Red States that have higher measures of the usual moral failures, divorce, teen pregnancy, murder and smut.

From Vox Nova, a Catholic blog, a chart of the correlation between Red States and high divorce, teen pregnancy and pornography rates.

From James Wolcott, a 2006 article on the higher "moral failure" rate in the "ultra-moral" Red States vs. the allegedly immoral Blue States.

It's factual and downright stunning. Especially because Americans in large numbers are angry about something that is not true. Which also shows the power of journalism...or "journalism" in the case of FoxNews, which is a player in the spreading of bad information and the shaping of ignorant opinion.

From INC. Magazine: High Tax Norway is an Entrepreneur's Paradise

Today's must read. Share this INC. magazine article with a small business person you know.

"Only two countries in the OECD—Chile and Mexico—pay a lower percentage of their gross domestic product in taxes than we Americans do.

"But there is precious little evidence to suggest that our low taxes have done much for entrepreneurs—or even for the economy as a whole. "It's actually quite hard to say how tax policy affects the economy," says Joel Slemrod, a University of Michigan professor who served on the Council of Economic Advisers under Ronald Reagan. Slemrod says there is no statistical evidence to prove that low taxes result in economic prosperity. Some of the most prosperous countries—for instance, Denmark, Sweden, Belgium, and, yes, Norway—also have some of the highest taxes. Norway, which in 2009 had the world's highest per-capita income, avoided the brunt of the financial crisis: From 2006 to 2009, its economy grew nearly 3 percent. The American economy grew less than one-tenth of a percent during the same period. Meanwhile, countries with some of the lowest taxes in Europe, like Ireland, Iceland, and Estonia, have suffered profoundly. The first two nearly went bankrupt; Estonia, the darling of antitax groups like the Cato Institute, currently has an unemployment rate of 16 percent. Its economy shrank 14 percent in 2009."

Why did these "high tax" countries weather the recession better? Because their citizens didn't have the bottom drop out of their world. They didn't panic about their retirement accounts because they have a government that insures that. Safety nets are there to guard against the uncertainty problem. The Right in this country thinks the only ones entitled to safety nets are large corporations. That's what's holding us back.

INC. is the international magazine of entrepreneurship. It's the small business bible. It isn't aimed at or written by Wall Street or corporate types. And this article makes perfect sense. America isn't falling behind because of high taxes. We'd be much better off, less worried, more stable, more secure if our tax rate was higher and fairer. If the government took care of the things individuals and companies shouldn't have to worry about. Consumers would be freer to spend. Entrepreneurs would be freer to innovate. Think how productive we could be. Look at how entrepreneurs thrive in Norway. All they have to focus on is what they do best.

A fairer system with Eisenhower era tax rates could remove the healthcare burden from small business and from everyone. That is a major source of uncertainty today. Imagine not having to worry about it. Imagine being able to concentrate on what you do best. (I'm a small businessman, have been for 35 years. I know I would like this.)

America Isn't Broke, Just the Middle Class

AMERICA ISN'T BROKE. So there's no reason to kill Social Security or Medicare.

We CAN and should repair our infrastructure. It would put people to work, which would pay for groceries and clothes and rent and mortgages and healthcare and pay taxes.

Our middle class is dying because their incomes have been starved for the past thirty years, as all the productivity and increased profitability was funneled into the pockets of the people at the top.

Whether we allow the middle class to die, and the American economy with it, depends on choices we make. It's a perverse strategy to tax the people who are out of money and leave the rich alone.

Ask Americans and you won't find many who know this. You will find millions who feel strained, insecure, frightened, pessimistic about the future, but you won't find many who know why this is or what to do about it.

It is easy to get frightened people to do as they're told. First you make people less secure, then you drop the safety net. It brings a lot of people into line very quickly. Lies are essential.

Backed up by 24 hour talking heads repeating the old joke that tax cuts and endless pay raises to rich people will feed and clothe and house the rest of us. That strategy is what got us here. Ten years of tax cuts to the rich bankrupted the country.

Some are happy with the failed GOP strategy and Republicans in the House of Representatives are comfortably in the pocket of a rich minority who pay for their seats.

People need to start shouting back. Call the radio programs that push the falsehoods. Complain to the advertisers who sponsor the lies. Applaud the media sources that tell the truth. Write your congressperson. Give the Democrats some courage. And vote the GOP out.

Be clever. Surprise people. Talk back. Like this.

The Premeditated Murder of the American Middle Class

This headline isn't from a lefty blogger, it's from Investors' Business Daily:

10-Year Real Wage Gains Worse Than During Depression.

Did you wonder how the American economy went bad? Look no further. The vast majority of Americans are nervous, underpaid, and either out of work or working harder than ever. This does not make for a robust consumer economy. When you starve the majority of incomes it has consequences.

The middle class isn't just done, it's been ruled irrelevant. So says Advertising Age. With flat incomes and rising necessary expenses on fuel, housing, education, healthcare and food, their disposable incomes have disappeared. Without money to spend you don't matter anymore.

The engine of the great American prosperity 1945-1975 was a prosperous working and middle class. The two were practically the same thing. Reaganomics ended that by flattening middle class incomes, killing unions and shifting the tax burden off the rich and onto the middle class taxpayer. Reagan accomplished this with the willing help of millions of American workers.

Today's GOP is outdoing Reagan, though, mounting an all-out assault on the American middle class, while protecting the very small, very rich upper class. A lot of Americans still vote Republican out of habit, out of team spirit, out of obedience to the dog whistle.

The middle class Republican has to swallow a lot of outright lies. Self deception is something you learn to do, and if you practice for a long time you get good at it. Being obedient helps. This GOP ability to lie and get away with it is remarkable enough it's written about in places like Forbes.

Who is really paying taxes? We (the working and middle classes) are. They (the rich) are not. Yet the sacredness of upper class tax cuts remains the keystone of Republican politics.

The reason for the current deficit? Reducing taxes on those who've taken all the income increases over the past generation and a half, while increasing taxes on those whose incomes have stalled–––on most Americans. The Republican policy is to protect and help the few who need no help or protection while leaving the less fortunate, most of us, unprotected and unhelped. Sometimes it's worthwhile to listen to a Nobel economist.

The debt, run up by Bush and compounded by the collapse Bush and his Republican policies precipitated, makes the current situation worse. It takes chutzpah to make debt an issue when your own party created it. If you like massive debt––Vote Republican.

We Could Afford To Be More Scandinavian

Some of our parents think very highly of their Scandinavian ancestors and friends. They go there when they can and like to show us their photos afterwards. They admire all things Norwegian/Danish/Swedish, the neatness of the landscape, how well kept everything looks, the good repair of the infrastructure, the modesty and decorum of the people, also of course the blonde hair and the cheekbones. We sometimes hear them wishing America could be more like the old country.

There are a number of ways we could be more like Scandinavia, and it would make us a better society and a fairer one. Raise taxes on the very rich, for instance. Scandinavia is full of rich people who live very very well, who pay very high taxes on the upper end of their incomes and in this way help the less fortunate, less successful, the less healthy, take care of themselves. These rich Scandinavians haven't moved away in droves. They haven't shut their businesses and moved to Mexico or Malaysia or some other low tax/low wage country. Employment is robust (Norwegian friends of ours have noted that a lot of Swedes now work in Norway where there are more jobs than people), national debt is low compared to the U.S., contentedness is high, the sense of economic freedom is equal to ours.

And the Scandinavian economy has functioned just as well as our own, possibly better during this economic crisis. In Scandinavia the basic security of the population hasn't made them too afraid to buy goods and services they need.

Anyway, an excellent analysis can be found at Lane Kenworthy's blog. Worth reading and sharing with your Scandinophile friends and relatives. Kenworthy did his comparisons with Denmark and Sweden. Norway being a very rich oil exporting nation makes the comparison less apt; oil wealth subsidizes a lot more there. We could learn a lot from Scandinavia. How to be a better and fairer, a more efficient society. It's actually wasteful to throw too much money at people who already have too much.

Deficit Hype is Overblown

The deficit talk is hyped though. In recessions deficits are inevitable. And, anyway, deficits are a corporate norm.

When did the Republicans change from the party that created big deficits to the one that makes them an issue? When they dumped them on the next president. Democrats are always left with the messes Republicans create, and are always cleaning them up. Clinton took Reagan and Bush's enormous deficits and turned them into a surplus. The deficit from Bush Jr. though is much bigger and the financial catastrophe he created much worse.

The fact is America's rich are undertaxed at the national level, and it's worse at the state level.

The threat from the Rich Taxpayers' League is that rich taxpayers would move out of the state if the legislature asked them to pay the same rate as regular people. Thing is, this doesn't tend to happen.

I continue to be surprised that a major party can make rich people its only priority and get away with it. Putting rich people above everyone else seems like bad politics; putting rich people's convenience above the lives of the vulnerable is un-American.

If you haven't read it yet, you should read David Cay Johnston's great piece telling what the rich don't want you to know about taxes. This is the kind of reporting that won him his Pulitzer. Getting the rich to pay the same rate the rest of us do would help close the deficit.

Warren Buffett has said he thinks it's wrong that he pays a lower tax rate than his secretary. And he's right.

Where did the deficit come from? Here's a chart from the Center of Budget & Policy Priorities, with information from the nonpartisan Congressional Budget Office

Do you ever wonder why the deficit is an issue now? It didn't used to be. The raising of funds to pay for the things only government can do has gotten more difficult because the very rich have switched from helping pay for new roads, new schools and the like with their taxes to loaning the government money instead. Instead of contributing they are profiting.

Republicans Are Not Their Brothers' Keepers

When a respected insurance man supports Obama's Affordable Care Act it's worth listening. The question he leaves us with is this: Why is the national Chamber of Commerce working so hard to screw over small businesses across the country?

Obama's healthcare reform would help small businesses keep their employees healthy at an affordable cost. It would also help the people who they do business with, the people who buy their goods. Their average customer would have fewer financial worries, fewer health worries, and would be a better consumer with more dollars to spend. Why do Republicans oppose something that would boost the Main Street economy?

There's a moral dimension to this too. Society is responsible for its most vulnerable members. It isn't an optional responsibility, but the Republican position gives the richest Minnesotans an opt-out clause. They pay lower tax rates than the rest of us now. Rather than put their taxes back where they were under former Republican governors, the Republicans in the legislator would rather cut the poor and the sick off entirely. An extreme position opposed by most Minnesotans, and rightly so. But they are standing firm on it. Better to lose thousands of poor people than inconvenience the wealthiest members of our society.

I'm reminded of a famous quote: "Let them die then and reduce the surplus population." It was Scrooge who said that, but it might just as well be a modern Republican.

These new Republicans (so different from the old moderate Republicans) manage to put a smile on their faces and dress nicely, so the unsuspecting, inattentive voters don't imagine what their policies really mean. They go to church on Sunday and worship Jesus, but the rest of the week they forget the Sermon on the Mount and their Christian responsibility to the poor.

What's more sacred is their solemn promise to very very rich people to keep their tax rates lower than everybody else's, even yours and mine. How is this good politics? How is it good business? How is it consistent with Minnesota values?

Ronald Reagan and Zombies

I think it was Yogi Berra who said "You see interesting things by looking."

Imagine Ronald Reagan and Zombies.

Nick Coleman had something relevant to say. When doesn't he have something relevant to say? I guess that's why the Strib let him go.

For the deciders of the Republican party it's about making rich people richer and tax-free.

They get there by serving up hatreds and worries to their hysterical, gullible base.