by Linda Beale

Does Lowering Corporate Tax Rates Create Jobs? Answer is a resounding “no”

For years (decades, actually), the American pro-wealthy right has argued that lowering corporate tax rates will create jobs.  That is the presumed purpose behind the push by Dave Camp to enact a tax reform package with lower corporate rates, and the reason that even President Obama has voiced (tepid) support for lower corporate rates.

Baucus at Senate Finance and Camp at House Ways & Means are part of an oft-cited “bipartisan consensus” (though its never clear whether there really is one) for cutting corporate tax rates through  “revenue neutral” corporate tax reform.  This is a consensus which, if it does exist, has resulted from decades of corporate lobbying in Congress and near-absolute capture of the media on the issue, combined with the proliferation of robotic economics and “law and economics” faculties who scribble endlessly about the “economics” of corporate and capital income taxation, producing studies that suggest policy based on simplifying assumptions commonly used by economists that ensure that the outcome of their mathematical games should have almost no application  in the real world.  See, e.g., Ponnuru, Max Baucus’s Self-Defeating Corporate Tax Plan, Bloomberg.com (Dec. 2, 2013) (indicating that “There’s bipartisan support for lowering the 35 percent federal corporate tax rate, which is among the highest in the developed world. Both parties see the rate as a burden for the economy because it pushes investors — American and foreign — to seek their returns in other countries. Economists argue that the tax therefore depresses wage growth in the U.S., a claim supported by numerous studies.”)

by Linda Beale

The Countermajoritarian Difficulty and Congressional Ethics–Ending the Shutdown

[Edited to add Marcotte article on role of fundamentalism in Tea Party politics.]

We have seen congressional ethics probes of Congressmen for exacting quid pro quo bribes from businessmen or for conflicts of interest or apparent failure to pay personal taxes.  What about failing to perform their most fundamental duty–to protect the integrity of the U.S. democratic process and constitutional system?

It seems to me that people like Paul Ryan, Ted Cruz, Michele Bachmann, and the rest of the Tea Party acolytes in Congress are committing an ethical violation even more severe than money-corruption.  They are sacrificing the economic stability of the country and the individual lives of hundreds of thousands of its citizens to the altar of their own  personal  religio-political dogmas.   [For a discussion of the role of fundamentalist religious dogmas in Tea Party politics, see, e.g., Marcotte, Christian delusions are driving the GOP insane, Salon.com (Oct. 10, 2013).]  They are willing, that is, to extort the vast majority of citizens of this country–anyone who doesn’t agree with them–in order to get their way on something in which they are a minority of a minority.

by Linda Beale

Economic Terrorism: the Tea Party/GOP’s Hostage Taking Plan (Tom Tomorrow’s “Giant Killer Robots”)

As the New York Times reported on Saturday:  Stohlberg, A Federal Budget Crisis Months in the Planning, New York Times (Oct. 5, 2013), the current fiscal and political crisis was planned as a manuver to get their way  by the inner operatives of the Tea Party/GOP coalition.  What the media has tended to report as a partisan dispute with both sides to blame is in reality a planned attack of economic terrorism on the United States government and its citizens from members of that very government–an artificially created economic crisis planned as a heavy ax over the President’s head that would force him to give away the ship in order to save hapless federal employees, their families and their communities from the economic havoc that would ensue with a government shutdown or, most especially, with a refusal to increase the federal debt limit.  And that attack has been supported by the likes of the Koch Bros (who’ve reaped a fortune from the oil-friendly laws they lobby for so successfully) and groups funded by them and similar interests,  like the Tea Party groups, Americans for Prosperity, the Heritage Action for America, and the Club for Growth.

On the debt limit (sometimes called the “debt ceiling”), let’s review just what the issue is.

1. Congress has already approved certain spending measures.

2. Congress has already approved the legislation that determines the amount of tax revenues the government is currently bringing in.

3. The mathematical equation that shows the relationship between spending and revenues requires borrowing to make up the difference:  Spending MINUS TaxRevenues EQUALS RequiredBorrowing.

by Linda Beale

Dear GOP: a Daily Kos staff reminder on the constitutional process for changing the law

The Tea Party/GOP coalition has often talked about the importance of the Constitution, but one can’t help wondering if the recent extortionist behavior doesn’t belie that, when the governnment shutdown it has caused as a means of extorting its way to getting rid of Obamacare is costing us $300 million a day. And getting back up to snuff after the shutdown ends will be extra-expensive–an inefficient increase in the deficit that the right complains so much about.  Those extra expenses will claim even more of thetax revenues that we don’t have because we still tax the wealthy people’s income at ridiculously low preferential rates (the capital gains preference, the carried interest debacle) and we have tax rate brackets that ignore the reality of CEOs who earn 400 times what their average worker earns.

The Daily Kos staff came up with a thoughtful bit to remind the right how government is supposed to work–a letter to Dear GOP.  Excerpts, self-explanatory, follow.

by Linda Beale

Cruz, Tea Party, Hostage-Taking Budget Tactics (and the IRS)

The House, dominated by Tea Party/GOP politicians (or those fearful of their impact on upcoming primaries) passed a bill that attempted to tie the continuing operations of the government to compliance with Tea Party ideas about getting rid of the health reform legislation duly enacted four years ago.  See Weisman, House Bill Links Health Care Law and Budget Plan, New York Times (Sept. 20, 2013). Ted Cruz has now run his non-filibuster filibuster in the Senate, and then voted against his own “principled” filibuster position (presumably out of a quite justifiable fear that he would be shown for the fool he is as the only one voting in support of his “principles”, since the Senate vote was unanimously on the other side). Ted Cruz Filibuster, NY Daily News (Sept. 27, 2013).

by Linda Beale

How should underpayment of employees affect tax policy?

In a pre-Labor Day blogposting, Robert Reich wrote about the brute capitalism results for many employees today–a full-time job that doesn’t play a living wage.  Walmart was his example–“America’s biggest employer” where a “typical employee is still paid less than $9 an hour.”  See Reich, Wal-Mart’s typical employee is paid less than $9 an hour, Salon.com (Aug. 30, 2013) (posted originally on Reich’s blog).

by Linda Beale

Swiss and US Apparently Reach Deal on Bank Disclosures related to Tax Evasion

Bloomberg reports (in a minimal news story at this point based on an anonymous tip prior to the settlement being officially released) that the United States and Switzerland have reached an agreement that settles the dispute about Americans’ use of Swiss banking secrecy to evade US taxation of undeclared accounts.

Apparently, the deal will result in some banks being permitted to voluntarily disclose activity, while others will face penalties because of undeclared assets.

Related articles

Switzerland Close to Resolving Undeclared U.S. Accounts – Bloomberg

Swiss Give Green Light for Banks to Settle U.S. Dispute

Switzerland agrees to U.S. settlement over bank

by Linda Beale

Same-Sex Married Couples Will be Recognized for Federal Tax Purposes Even When Moving to Nonrecognition State

The Treasury issued a Revenue Ruling today that sets out the rules that will guide the government in handling interpretation of the tax code regarding “marriage” and “husband” or “wife” or “spouse” in respect of same-sex married couples after the Supreme Court’s historic DOMA decision in United States v. Windsor, 570 U.S. ___, 133 S. Ct. 2675 (2013).  See, e.g., IRS Rules All Legal Same-Sex Marriages Count Now–Even Retroactively, Forbes.com (Aug. 29, 2013); Michael Cohn, Treasury and IRS Recognize Same-Sex Marriages for Tax Purposes, Accounting Today, CCH (Aug. 29, 2013).

Revenue Ruling  2013-17 released today builds on a much earlier ruling (Rev. Rul. 58-66) that recognized common-law marriages for federal income tax purposes.  It states that same-sex couples whose marriage takes place in a state (including domestic and foreign jurisdictions entitled to grant marriage licenses) that recognizes same-sex marriages will continue to be recognized as married for federal law purposes even if they move to a state that does not recognize same-sex marriages. Its rationale is straightforward:

by Linda Beale

The Elderly May Not Be As Taxing As Generally Thought

One of the common assumptions about health care costs (and the costs of benefit programs like Medicare) has been that the increasing life spans of Americans will result in significantly greater health care expenses.  It is common knowledge that much of the highest cost medical care occurs near the end of life, as the elderly need more medicines and assistance in daily living.  So speculation has suggested that as Americans live longer, health costs will increase correspondingly.

A recent study provides a glimmer of good news–apparently, most of the highest medical care costs occur in the last year of life, even for those that are living longer.  That means that the longer lifespans aren’t translating into more time in intense medical care, but rather more years of generally healthy and active lifestyle followed by a similar duration of end-of-life care.  See Michael Fitzgerald, Old Age May Not Ruin Medicare Budgets After All, Salon.com (Aug. 22, 2013).

by Linda Beale

The Right’s Goal–end the one tax expenditure that truly aids poor working families

The Tax Foundation, that propaganda tank that masquerades as a “nonpartisan” “think” tank, is at it again.  Now it’s pushing the right-wing agenda of ending any tax expenditures that redistribute resources down to those in the lower-income distributions. It’s produced a study on the “benefits” of eliminating the Earned Income Tax Credit that often makes the difference between food security and living in your car for the working poor.  Erik Wasson, Tax Foundation Charts Benefits of Ending Earned Income Tax Credit, The Hill (Aug. 6, 2013).

The Tax Foundation “study” includes various right-wing assumptions about the working poor and the benefits of tax cuts that are not empirically supportable.

1) While conceding that the EITC helps the “really” poor, the Tax Foundation repeats the old right-wing saw that those working poor who aren’t “really” poor will be disincentivized to work by having the EITC, in essence making that old Romney claim that the EITC is a “bad” policy because it provides aid to the poor, which will keep them from taking “personal responsibility” and thus keep them from getting those multiple jobs that would provide them the same sustainability that the EITC provides. Here’s how the Hill story describes the report on this point:

The report argues that the tax credit encourages work for very low wage  individuals but serves to discourage work for those making more because the  refundable credit phases out.  Id.