There’s an old saw, “Those who are good at making excuses usually aren’t much good at anything else,” and the GOP is offering up a vivid example of this truth.
No sooner does the President’s plan to cut taxes for middle class Americans and raise taxes for the top 1% of income earners come out – notice we’re not using the expression “wage or salary earners” – than the GOP cranks up the Whine Machine with all the old excuses.
Hoary Old Excuse Number One: It will hurt small business. This topic has been covered before, when DB provided some myths, facts, and figures about Small Businesses in the good old U.S. of A.
“Here’s the point at which not all tax breaks are created equally. Most firms in the U.S. are bringing in less than $500,000 in receipts annually. Formulas based on the number of employees alone will necessarily benefit those establishments which may hire fewer than 500 persons, BUT which may also be generating receipts well over the common $500,000 threshold for receipts.”
The GOP played this game before, H.R. 9 back in 2012 gave a $46 billion loophole to the 1%, all in the name of “small business.’ Who would be the primary beneficiary of the GOP largess? Try Hedge Funds and Lobby Shops. Both have small numbers of employees, thus earning the categorization of “small business” from the Republicans, BUT small hedge funds are those with less than $100 million assets under management, medium sized ones range from $100 million and $999 million, and then there are the big ones – the ones with funds from $1 billion to $5 billion. [BusInsider] Since when is a firm with $500 million worth of assets under management the same thing as the 76% of American businesses which have annual incomes below $200,000? Only in Republican mythology would Mom’s Diner be in the same category as Mighty Mountain Megamoney Capital Management.
Hoary Old Excuse Number Two: “You’ll Be Next.” Fear-mongering is one of the things Republicans do best. If we raise taxes on the incomes of the Top 1%, the “tax and spend” Democrats will come after you next. Not. So. Fast. Remember the second part of President Obama’s proposal is a tax CUT for those who are among the vast 99% of the American public not basking in the upper reaches of income levels. How does one explain ‘they’re coming after you’ when YOU (at least those of us in the 99% range) are to be the beneficiaries of a tax CUT?
Hoary Old Excuse Number Three: Here they go again, “Are you going to actually grow the economy and jobs, are entrepreneurs going to be better off, are small businessmen going to be better off, with more taxes and more government? No!” he (Rep. Chaffetz R-UT) told CNN’s “State of the Union” show.” [Reuters] This little mish-mash has all the basic GOP elements tucked into a nice sound bite. The premise is that the economy won’t grow if taxes are increased. Wrong. Under good old fashioned garden variety Capitalism, the economy grows as people make transactions in the REAL economy. They manufacture things, provide services, transport things, sell things, buy things, and generally do so with cash or credit instruments. The notion that more taxation at upper income levels will decrease investment pre-supposes that (1) all investment is located in or targeted to the REAL economy, and (2) all upper income investors will necessarily invest less in REAL economic prospects at larger taxation levels even though the investments may be high quality. Both of these ideas are downright silly.
There is a whopping difference between investment in shares of common stock issued by General Widget and Gadget Inc. and investment in Mount St. Helen’s Volcanic Macro Hedge Fund. One is capitalism, the other is gambling. If you aren’t sure about this take a gander at what happened to the formerly very real Mount Everest Hedge Fund. The fund bet the ranch on the Swiss Franc’s dropping – it didn’t. This brings us to GOP conflation number four.
Hoary Old Excuse Number Four: We are punishing success! Nonsense. We tax income. If we look at the top 1% there is a range of professions included, but focusing on the source of household income the scene is a bit different:
“We find that executives, managers, supervisors, and financial professionals account for about 60 percent of the top 0.1 percent of income earners in recent years, and can account for 70 percent of the increase in the share of national income going to the top 0.1 percent of the income distribution between 1979 and 2005,” [WaPo, WilliamsEdu pdf]
A person who is a successful carpenter, steelworker, teacher, firefighter, grocery store owner, salon/beauty shop owner, hardware store owner makes his or her income by working. Those top earners? Securities, business equity, and investments. At the risk of being a bit crude about it, we now tax the incomes of those who actually manufacture screwdrivers, transport screwdrivers, and sell screwdrivers at a higher rate than we tax those who assemble funds to leverage the hostile takeover of the screwdriver manufacturing company, sell off the assets of the screwdriver company to pay off the incurred debt, and then toddle off to their next financial adventure. This shouldn’t be about “punishment” perhaps it ought to be about REWARDS – as in, how do we reward WORK.
Win big in the local casino and you’ll probably have between 25% and 28% kept back for Uncle Sam, [turbo] but gamble in a hedge fund that bets on the British Pound and the capital gains tax is 15%. Are we rewarding work or speculation?
No one minds rewarding success, but rewarding speculation is another matter entirely.
However, those enthralled with the now thoroughly debunked Trickle Down rationalization for the aggrandizement of the top 0.1% will still cling to their talking points. It’s high time we stopped listening.