Showing posts with label Taxes. Show all posts
Showing posts with label Taxes. Show all posts

Wednesday, December 8, 2010

More evidence that our democracy is broken

There is a new poll on the public's position on tax cuts. You can find the entire poll here and a summary here, but I want to just make one point:


More people want to let all the cuts expire (27%),
(a position held by zero Senators)

than want to extend the top tax cuts permanently (19%).
(a position held by the majority party in the Senate)

This is a fundamental breaking of our representational system.

Could it be related to Senators, themselves, falling into that top tax bracket? I'll keep waiting for the millionaire reporters and pundits to ask them that one . . . .

Thursday, October 21, 2010

Capital Gains are NOT the Key to Economic Growth

This is a persistent fiction. It is encountered frequently, as it is used by conservatives to explain to the middle class why they should care about capital gains tax rates for the rich. Simply put, the economic theory is as follows: economic growth comes from investment - investment comes from capital gains - lowering capital gains taxes allows increased investment - increased investment results in increased economic growth.

I could explain how this economic theory fails in terms of economic theory. Arguing about where investment money goes and how economies grow. But, that isn't necessary at all. The frustrating part of this conservative economic fantasy, is that it ignore history. Basic, simple, recent history.

Conservative economists like to live on the blackboard. Which means they like to explain their economic theories in a way that sounds good, but never test these theories in the laboratory of history. This is how conservative economists can still manage to insist that free market economics prevents racism and sexism in the work place. Despite the fact that we know that both of these things have co-existed for decades. So it is with capital gains taxes and economic expansion.

The historical reality is simple: the tax rates that Republicans insist will destroy our economy are very similar, if not identical, to capital gains tax rates we had in the 80's and 90's. That's right, those decades of economic disaster. Somehow, despite taxing the rich for doing us the favor if having investments that make money, our economy still managed to expand. It's almost as if it's labor, and not wealth, that drives economic expansion . . . but, I digress from the main point.

The point is simple: economists should not be able to get away with this. This isn't rocket science. We all live in the world. Everyone reading this remembers the 90's. It is not hard to think back and realize that taxing capital gains like we did in 1996 isn't going to destroy the economy.

So good. Now no one will ever make that claim ever again. Problem solved.


If you're interested in the numbers, you can find some here:


Tuesday, October 19, 2010

"Tax cuts are great! wait, why are you voting for Republicans?"

Here's an article on how nobody knows that Obama cut taxes. It's a solid and informative read. It's also a great article to bookmark so you can send it to any conservatives you know. But, if you don't read it, the gist is simple: Obama cut taxes substantially for 95% of Americans, but if you ask Americans, they don't know he cut taxes.

I would venture to guess that there are two main liberal responses to an article like this. One of them is to declare people stupid. The other is to declare the Democratic Party stupid.

The first response decides that people can't be educated and that they don't know basic facts. "If only voters had a minimal knowledge of basic facts the Democrats would win more elections." They will say.

The second response is basically the same, but it blames the Democrats for failing to deliver the message. "When the Republicans cut taxes, everyone knows about it because they do nothing but talk about it all the time. Where was our message machine on these tax cuts?" They will say.

I think that's not only the wrong approach, but a potentially disastrous one. That response plays right into political and policy suffering. It's how the Republicans have played the Democratic Party for at least 10 years. Not in an elaborate Sting like con, but with the most basic political maneouver in the political playbook.

It works like this. When you want to get a populace to vote for you, you don't try to convince them to agree with you on the issues. Instead, you figure out the issues on which they already agree with you, and you convince them that those are the most important issues there have ever been ever, ever.

The reality is that it is very difficult to change people's perceptions about the world. Ideas are like stains on the fabric of our brains. They set in quickly and are almost impossible to wash out. Once I believe that it's ideal to drink 8 glasses of water per day, it takes an absurd amount of convincing to get me to think otherwise. Even though the original idea was just mentioned to me a few times. Even when I'm convinced that it's no longer the pinnacle of health, it's much easier to then re convince me back to my original setting, with even a tiny bit of evidence. We see this play out in politics all the time.

However, we're pretty fickle when it comes to what is most important to us at any given moment. If you think I should drink less water, it's a lot easier to convince me that it's too far to walk to the kitchen, then it is to convince me that 8 glasses a day doesn't do any good. Our primary concerns fluctuate on a small and grand scale. Even if our priorities are centered are a particular thing, like a child, those priorities will change rapidly. One moment I'm concerned about my child's class-size, the next I'm concerned about crime near the school, or whether he will be drafted, or asbestos in my ceiling, or whether I can buy him groceries, and on and on.

This plays out dramatically in our political system. In our two party system, people have pretty set ideas about what the two parties do well. These are the stains on our brain, and these numbers are astoundingly difficult to move. It took a long series of epically horrible Republican screw-ups on foreign security, for those numbers to kind of edge toward maybe being even between the parties. People know what they know, and they know that Republicans are good at some things and Democrats are good at others. It takes long arching changes in political structure to change these conceptions.

Actually, the Democrats are good at lots of things. No, really, it's true. And, amazingly enough, a lot of people agree. I worked on campaigns in Alaska, a very conservative state. The polls there consistently showed that people felt more confident in the Democratic candidate on a wide array of issues. Most notably: education, healthcare and the environment. Keep in mind, this was in one of the most conservative states in the country, and the Democrats polled substantially ahead of the Republicans on numerous policy issues.

The real crux of elective politics in the short term, is what issues the voters feel are most important. If voters think that one politician is going to keep them safe from an impending terrorist attack, then it doesn't matter if they think the other guy is better on school reform.

So this is where the national Democratic Party has been taken to school over the last ten-years in particular. The Republicans have been screaming for a long time that tax-cuts are the best thing a government can possibly do. Because people like money, this is not a hard message to sell.

Here, the R's were engaging in the above strategy. Everyone knows that Republicans are great at tax-cuts. So, the key was to convince all of us that we care more about tax-cuts than we do about healthcare, education, environment, roads, competence, moral leadership etc.

How have the Democrats responded? By shouting "I cut taxes too!" By frantically trying to gain our tax-cut street cred, the Democrats reinforced the Republicans message: that tax-cuts are super duper important. We were doing their work for them.

We have done it every single election year since 2000. You can't throw a rock during an election season without listening to a politician talk about how s/he is going to cut taxes. It's tempting to insist that Democrats had no choice, but that's how we were played. You see, we've been spending our energy trying to take the tax-cut mantle away from the Republicans, but I would reference the article that starts this post. It hasn't worked. Not even kind of. And, it isn't because the Democrats haven't talked about our tax-cuts. Obama talked about those tax-cuts every chance he got. People did hear it. Even the guy in the article remembers when prompted, that 'oh, yeah,' Obama did cut taxes. He just forgot it. He forgot it because everyone knows that Republicans are better at cutting taxes. It's as common knowledge as the fact that the water going down the drain spins the other way in the southern hemisphere.

Ask people in this country if they care about the environment, almost everyone will say yes. Ask them which party is better at protecting the environment. The majority will answer D. Same on education. Now ask voters which issues are most important to them in an election? Throw in national security, taxes, abortion, and watch environment and education slide down the list.

Are people stupid? Maybe. But people are definitely stubborn. The lesson from 'the tax cut that no one heard of' is that we need to spend more time telling people what's important. Our schools are important, the health of our children is important, the future of the earth is important. These things are worth $400 a year.