by Linda Beale
Romney’s Tax (Mis)Calculations: if your two and two don’t add to four, pretend the Laffer curve gives you more
Anybody watching last night’s presidential debate surely became aware at some point that Romney’s so-called “plan” for economic growth is an empty shell based on the idea that he’s made money for himself so he knows how to run a country.
Romney’s plan is pure market fundamentalism–a mistaken view that the “market” will take care of all problems and vigorously grow to elevate everyone’s livelihood just so long as government regulators stay out of the business of regulating and allow business owners and managers (particularly huge multinational corporate owners and managers) to do whatever they want, including fire workers, outsource business assets, and engage in complex schemes to turn tax laws into tax avoidance bonanzas. Oh, and the government should provide all kinds of subsidies to aid those businesses at minimal or no (tax) cost–from interstate roadways to easy rights to exploit national lands owned by the public; from localo fire protection to federally funded international security; from state-based contract protection to federal courts that provide handy forum choices to the wealthy and big corporations; from state and local property tax exemptions and waivers to federal intellectual property rights that provide monopoly power and stifle innovation (exactly the opposite of the Founders’ dream).
And when Romney claims that he can “simplify” the tax system and lower everyone’s rates without increasing the deficit, reducing the taxes paid by the upper crust, or increasing the taxes paid by the middle class, while at the same time increasing the military budget and striking more threatening poses a la the Bush neo-cons on Iran? That’s gibberish, as many respected studies have shown.
So to his rescue comes one of those propaganda tanks in the guise of an intellectual “institute”–the Institute for Policy Innovation (IPI). The Institute puts out a “Tax Bytes” newsletter/blogpost supporting right-wing, market fundamentalist, Friedman-lite tax policies. Not surprisingly, the Institute is sanguine about making a Reagan-style across-the-board rate reduction program work even in an economy that is still in transition back from the brink that the Bush market fundamentalist tax and fiscal policies put us in. That is, in spite of the fact that Romney-Ryan stand for things like making the Bush tax cuts permanent, eliminating the estate tax, maintaining the preferential rate structure for capital gains and carried interest, and even extending that very low rate preference to all other capital income (like interest) for those earning less than $200,000 (who don’t have much capital income to worry about though, since the vast majority of it goes to the people in the very top 5% who make millions, not thousands)–the Institute says “increased private sector growth” will make the plan work. See “Of Course It Can Work“, IPI, TaxBytes 9.25 (October 17, 2012). That’s just the Laffer Curve idea at its worst–the wacky concept that when you cut taxes, there will be more tax revenues because of all the wonderful things that a self-regulated market does for economies.
So IPI thinks you can cut government revenues even more than Bush did (when the Bush tax cuts of 2001-2003-2004 (and the rest) amounted to about one-third of the cause of the Great Recession). It buys into the fairy tale that has been used by the far right to justify obstructionist, non-realistic policy positions and that has created the fiscal debacle we are still climbing out of. That fairy tale is the market fundamentalist “pie in the sky” concept that broad economic growth can be magically generated just by letting the rich continue to get richer even if the middle class is falling into poverty and infrastructure is crumbling.
cross posted with ataxingmatter