Postmodern Tax Analysis: GOP Plans Awesome!

Marco RubioAt last week’s Republican presidential debate, I was struck by the repeated mention of the Tax Foundation and how it had found that all their highly regressive tax plans were totally great: they would balance the budget, give jobs to everyone, and gift ponies to all good boys and girls. And it is no surprise. Although it has a similar sounding name to the Tax Policy Center, the Tax Foundation is a Koch Industries backed grouped. Back in 2008, Paul Krugman wrote, The Tax Foundation Is Not a Reliable Source. (Of course, sleazy Greg Mankiw is for it, so that’s about all you need to know.) But here’s the kicker: even the Tax Foundation wasn’t that sanguine on the Republican plans — at least in terms of how regressive they were.

This is indicative of a major problem in American politics and the way that the media cover it. It would never fly for a politician to say, I ran the tax plan by my brother-in-law George (he took an accounting course in high school), and he thinks this plan will be dynamite. But you give George a million bucks and the title of President of the Tax Institute for Very Serious Accountability, and suddenly George’s opinions are golden. There’s no way that a journalist could ever distinguish between George’s Tax Institute for Very Serious Accountability and the Tax Policy Center. And the politicians will just say, “They have their experts and we have ours.”

The the history of the last 40 years has been one where progressive taxes like the federal income tax has gone down, and regressive taxes like sales and usage, and payroll taxes have gone up.

Now you would think that after all these years, the voters would wake up. Last year I wrote an article I’m rather proud of, Reagan’s Legacy: Tax Cuts for Rich, Tax Hikes for the Rest. People think of Reagan and all the Republicans as lowering their taxes. This is no doubt due to the fact that this is the narrative that the media pushes. But the history of the last 40 years has been one where progressive taxes like the federal income tax has gone down, and regressive taxes like sales and usage, and payroll taxes have gone up. Net result: the lower and middle classes pay more in taxes and the rich pay less.

What continues to amaze me is the laser focus on the federal income tax. I understand the argument. Conservatives claim that everyone should pay the same percentage in taxes. Of course, they aren’t concerned about that when it comes to capital gains taxes. Marco Rubio wants to get rid of that all together. He would argue that there is a social purpose for that: it will help create jobs. But there is an even better argument for cutting the taxes of the poor: it will create jobs. But usually the conversation doesn’t get even that far. The media just allow Republicans to make these claims without putting it in context. The situation is even worse with the payroll taxes, of course.

You need to think about it in terms of opportunity costs. Imagine that the government wanted to spend $100 billion. It could do so by cutting taxes on the rich or giving benefits to the poor. In an economy that is not at full employment (which is pretty much all the time — and certainly now), much if not most of the $100 billion in tax cuts would sit unused. All of the money given to the poor would be used, thus stimulate the economy. This means that the conversation can’t be about whether tax cuts help the economy but rather if they help the economy more than alternative uses. It’s like the difference between using money to fight a war or to build infrastructure.

But we can’t talk about any of this because our media is postmodern. According to them, there is no truth — just opinions. So if Marco Rubio says that his tax plan is totally awesome, who’s to say it isn’t? And when even a right wing outfit like the Tax Foundation is skeptical, you know it has to be bad. But don’t worry! George’s Tax Institute for Very Serious Accountability will back him up.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

3 thoughts on “Postmodern Tax Analysis: GOP Plans Awesome!

  1. The sad thing is that the print media was covering this three years ago:
    http://www.forbes.com/sites/adamhartung/2012/10/10/want-a-better-economy-history-says-vote-democrat/
    http://www.foxbusiness.com/investing/2012/09/04/history-shows-markets-gdp-outperform-under-democrats/

    But the TV media ignores it because of fear of the Republicans not showing up on their TV shows. Even though they could just chose to call the Republicans’ bluff and stop ignoring the other half of the political spectrum. Eventually the Republicans would give in and for a while the TV media could get used to asking hard questions so when the Republicans did come back, they would get proper grilling.

    We know that will never happen. So I am going to go back to watching a delightful YouTube channel that has all of these British TV history and artistic documentaries on it.

    • I know that for a long time, I didn’t push the stat because I thought it was just a statistical fluke. It was only when I read Mark Thoma’s article (and he’s no extremist) that I saw that there were real reasons for it. But the news can’t talk about economics because that would be partisan. Just look at the way they have dealt with global warming. If the Republicans claimed that the world was flat — in unison for a couple of years — the press would report it as if it were a debate. I’m not exaggerating. That’s actually what would happen.

      • I dunno, I wrote that before I started my morning reading and so far it has been interesting to watch the media fighting back over the debates issue. What does this mean long term? Probably nothing. But it was nice to see even Fox News pointing out that the Republican candidates were being crybabies over this.

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