My local alternative paper, Metroland, has an incredible article by David Cay Johnston for the run up to the April tax deadline. In Fat Cats and Foolish Choices; Busting the myths from 30 years of supply-side economics and regressive tax policy, Johnston comes right out and says the unspeakable:
You would think that whether this grand experiment worked would be settled after three decades. You would think the practitioners of the dismal science of economics would look at their demand curves and the data on incomes and taxes and pronounce a verdict, the way Galileo and Copernicus did when they showed that geocentrism was a fantasy because Earth revolves around the sun (known as heliocentrism). But economics is not like that. It is not like physics with its laws and arithmetic with its absolute values.
Tax policy is something the Framers left to politics. And in politics, the facts often matter less than who has the biggest bullhorn.
Follow me over the jump for more on the tax myths that are killing this country.
For those who don't know, Johnston is one of the most credible writers on taxation in the U.S. The fact that he's appearing in alternative news and not headlining the Sunday morning talk shows or the nightly news is an indication of how badly our media serves us.
For thirty years the cult of Supply Side Economics has poisoned debate in this country and made it impossible to govern on a rational basis. Supply siders believe tax cuts, cutting government, and deregulation can make the economy grow so much, the government can more than make up for lost revenue. In theory....
Thirty years later, we're all still waiting for the gains Ronald Reagan promised us. The failure of these policies to do anything except make the rich richer and everyone else poorer has not caused those embracing this insanity to have second thoughts. They're doubling down. Just how far over the edge they've gone is ably summed up by one of the original acolytes. While Bruce Bartlett still worships at the altar of this failed ideology, his critique of today's over the top adherents is spot on.
Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates — the tax on each additional dollar earned — as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.
The original supply-siders suggested that some tax cuts, under very special circumstances, might actually raise federal revenues. For example, cutting the capital gains tax rate might induce an unlocking effect that would cause more gains to be realized, thus causing more taxes to be paid on such gains even at a lower rate.
But today it is common to hear tax cutters claim, implausibly, that all tax cuts raise revenue. Last year, President Bush said, “You cut taxes and the tax revenues increase.” Senator John McCain told National Review magazine last month that “tax cuts, starting with Kennedy, as we all know, increase revenues.” Last week, Steve Forbes endorsed Rudolph Giuliani for the White House, saying, “He’s seen the results of supply-side economics firsthand — higher revenues from lower taxes.”
emphasis added
Bartlett is still a believer - his excuse is that Supply Side Economics has somehow become perverted. This piece appeared in the NY Times back in April 2007 - just before everything the Reaganites had worked for blew up the economy. But then, they never really cared if what they believe works as long as it is an excuse to cut taxes. They've learned nothing, and haven't changed.
Back to Johnston. He takes nine myths about taxes and - in a factual way - lays out the truth. Each one of the points below is backed up with numbers and facts that you will NOT hear coming out of Washington save on rare occasions or by accident.
1. Poor Americans do pay taxes.
2. The wealthiest Americans don’t carry the burden.
3. In fact, the wealthy are paying less taxes.
4. Many of the very richest pay no current income taxes at all.
5. And (surprise!) since Reagan, only the wealthy have gained significant income.
6. When it comes to corporations, the story is much the same—less taxes.
7. Some corporate tax breaks destroy jobs.
8. Republicans like taxes too.
9. Other countries do it better.
Go read the whole thing, share it, save a copy, email it to your wingnut relatives and keep it handy while the fanatics, fools and scoundrels in Washington keep prating the buzz phrases of their toxic belief system. It's a much needed antidote to the continual stream of zombie lies coming from those places with the big bullhorns. We really need to wake up and send Supply Side Economics to the ash heap of history where all the other failed belief systems have ended up. When a news story about a major corporation paying billions to the government turns out to be too good to be true, you know we're screwed. As Johnston concludes:
Here is a question to ask yourself: We started down this road with Reagan’s election in 1980 and upped the ante in this century with George W. Bush.
How long does it take to conclude that a policy has failed to fulfill its promises? And as you think of that, keep in mind George Washington. When he fell ill, his doctors followed the common wisdom of the era. They cut him and bled him to remove bad blood. As Washington’s condition grew worse, they bled him more. And like the mantra of tax cuts for the rich, they kept applying the same treatment until they killed him.
Luckily, we don’t bleed the sick anymore, but we are bleeding our government to death.
P.S. If you want an honest analysis of where the tax debate currently is going, Paul Krugman today looks at the boundaries currently being fought over - fantasy versus a start on returning to the real world.