Tuesday, October 19, 2010

Tea Party anger

What are the Tea Party enthusiasts angry about?

Is it about the fact that 1% of our population has a quarter of the total income?
No, they want to lower all taxes.

Is it because the wasteful, vainglorious war in Afghanistan continues?

Is it because Congress has not passed a new energy bill?

Is it because Congress has not passed a more sizable economic stimulus ( to offset the reduction in lower state revenues and spending at least)?
No, they rail against the size of government.

Is it because the Supreme Court says the rich can spend all they want on political campaign contributions in the name of free speech making a mockery out of democracy?

Sunday, October 10, 2010

Taxes and Jobs

Some Republicans are perpetrating another slogan of weird logic. They argue we must continue the tax breaks for the rich because they are the answer to unemployment. Can you believe that the state of Colorado will vote in November to eliminate all taxes on business. First, the rich argument--the rich will just stick any extra profits in their pockets. Tax policy is working on the wrong end of the income distribution. The problem is the decline in consumer spending. The lower income people would buy things and give investors the necessary incentive to invest to meet consumer demand.
Then the matter of business taxes. Business uses public services such as roads, an educated and healthy workforce. These are inputs into production just as are labor and materials. Why pick on taxes that support necessary inputs? Soon we will hear petitions to restore slavery as that would decrease costs of production, create investment and jobs for the slaves!
We need to remind ourselves that the cost of business credit is at a low point as it was for the Japanese for a decade. Just reducing one cost does not automatically increase investment when entrepreneurs are pessimistic about consumer demand. This is just opportunistic money grabbing that was rampant in the Bush administration when the tax cuts were first implemented.