Conservatives and tax cuts (a long rant)

I don’t even know where to begin, given the abundance of articles on taxes in the past week. But one article with the header Taxes On The Rich Are The Poor Man\’s Burden by John Tamny of Forbes especially caught my attention with the first thought that came to my mind “Is he fucking serious?” I also thought that with such a bombastic statement he’s going to tell something I haven’t heard before. Let’s see what his main points are. He starts his article by saying that 47% of US households don’t pay taxes and links to the source article that confirms this notion. Nearly half of US households escape fed income tax

So far so good, I thought, what’s to complain about – isn’t that a conservative dream? I thought that conservatives love tax cuts, and the fact that 47% of the households don’t pay taxes would show that we’re on the right track. Let’s first see how those households end up not paying taxes. If a family of four made $50,000 they claimed a standard deduction of $11,400 and additional $3,650 a piece for four personal exemptions. That would bring their taxable income to $24,000. The federal income tax on $24,000 is $2,769.With two children younger than 17, the family qualified for two $1,000 child tax credits. Its Making Work Pay credit was $800 because the parents were married filing jointly. The $2,800 in credits exceeds the $2,769 in taxes, so the family makes a $31 profit from the federal income tax.

I don’t see what would stop the higher income earners from claiming the same exemptions. If you make $1mln a year you too can claim the same deduction for yourself and for your children. But since that doesn’t cover the tax bill, what do you suggest we do to placate those earners? Make exemptions in proportion to their incomes? Because them and their children are what? Smarter, prettier, attending a private school? Should we have a kid from a poor family receive $1000 tax credit and a kid from a family making $1mln receive $20,000 credit? So that all is fair? Since when the word “fairness” has entered the vocabulary of the top 1%?

No, no! I hear conservatives screaming: forget credits – we want more tax cuts! But I thought you were already quite upset that almost half don’t pay any taxes at all. If we cut more taxes then that figure would increase to what – 60, 70, 80%? Damn you, guys, just say what you really want – cut taxes on just the top 1%. Let’s be honest already. But I digress.

The author starts off very predictably:

Indeed, when the rich are fleeced, it is the non-rich who truly suffer.

To see why, we need to ask ourselves if we’ve ever been turned down for a business loan or investment, if we’ve ever complained about a soft jobs picture, and most of all, if we’ve ever yearned to work for a company only to be told that a hiring freeze would make working there an impossibility.

Well, if you get a business loan from your rich uncle he might turn you down. That might as well be Obama’s fault, yes. But most businesses in this country get their loans from banks and there were no shortage of those until quite recently. And nowadays if you get turned down for the loan it’s hardly because some billionaire refused to give you one. More likely reason is that the bank was rescued by the government (read your money) and is now a little tight with their (your) money. And Obama administration is aggressively pushing banks to give loans. By the way, just a few days ago my banker asked me (without even a suggestion on my part) if I want to get a loan. I kid you not, it was JP Morgan Chase if you must know. I said sure, why not.

Because of authors like this I do find this old conservative mantra of “cut taxes” a bit disingenuous. For some reason he doesn’t like that 47% of families don’t pay taxes. In order not to sound too elitist he can’t just say let’s cut taxes for top 1%, he has to wrap it in populist terms and presented in also somewhat tired mantra of trickle down economics.

This guy is a piece of work. Further in the article he goes on to contradict himself by saying:

And those government benefits that so many low- and middle-income Americans supposedly can’t live without, aren’t those paid for by the rich? Not really. (Emphasis mine) Once again, those not wealthy will pay through the nose for inefficient government programs owing to the tautological reality which tells us that government spending funded by the rich naturally draws down the incomes of the non-rich.

How the fuck are the poor paying for the government programs if just a few paragraphs ago you argued that they pay no taxes at all?

The more I read, the more I thought this whole article is a farce. This guy could not possibly be serious. Take this passage for example:

By virtue of being rich, the well-to-do in our midst have a great deal of disposable income. When the government is not confiscating it, this capital is either saved or invested. So when readers experience the frustration of hiring freezes–or salary freezes, for those lucky enough to be working–they should think once again of the rich. (Again emphasis mine).

That’s right, if you got fired or you barely holding for your job with reduced hours and benefits you should pray that, God forbid the rich pay higher taxes.

Like I said at the beginning I truly hoped this author is going to show why taxing the rich is bad for the poor. I did get the feeling that he’s confusing the “rich” with the “entrepreneurs”, because he proceeds to say that when companies don’t hire it’s bad for the little guy. Most of the companies in this country are small businesses that started with $50,000 of capital or less. Very few grow to make their owner a multi-millionaire. Those small businesses are already primary receivers of Obama tax cuts. Why is he refusing to acknowledge that? Which made me think that this sudden concern for small businesses is really a clever (or not so clever) disguise to portray the top 1% as being the same guy who runs a Subway store on the corner to get sympathy.

The trickle-down economics might as well work. But the only thing that trickles down from the top is debt and bills, not loans and jobs.

And the most obvious question that lingers in my mind: If taxes on the rich are a poor man’s burden, why are the rich so upset?

Look, if he was trying to say that it’s bad to tax the rich progressively, because everyone should pay a flat percentage which is fair, I would respect his opinion, even though I would disagree. But saying that progressive taxation is bad because the poor will suffer the burden – I do find it intellectually dishonest. I could feel how he was forcing himself into some illogical mental contortions to make the connection and I still couldn’t follow how one leads to another. It felt like it was another poor attempt to mislead people into voting against their economic interests. Did he really expect to see the crowds of poor people with pitchforks demanding the tax cuts for the rich? Oh, wait. That’s kind of already happening.

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