Supply side, schmupply side...
The Right always seems to get its oversimplified, non-dot-connecting, super-direct, cut-all-corners way. And for some reason, they just love showering rich people with money from taxpayers, which I don't understand.
The House on Friday approved a sweeping blueprint aimed at cutting the deficit by hitting at the heart of entitlement programs, calling for dramatically revamping Medicaid and Medicare to pare trillions of dollars over the next decade.
The GOP's nonbinding budget framework for the next fiscal year, beginning Oct. 1, won by 235-193, with only four Republicans voting against the measure and no Democrats voting for it. The plan would purportedly cut nearly $6 trillion in spending over 10 years, close tax loopholes and reduce tax rates for corporations and the wealthy. -NPR
So, if that really turns out like I read it, I'm seeing the aged, ill, and injured (including vets, I'm sure)-who worked a lifetime in this country and over the last 30 years, never got ahead-now have to fend for themselves when it comes to getting healthcare in the profit-infested, shark-ridden waters of private healthcare (which since they're retired, they don't have a job to attach the benefits to). The unemployed will also not have access to healthcare, nor will the working poor. But corporations and the wealthy will get to 'keep' more of their money (to what end?).
I understand the supply-side argument: if corporations have more money, then they will reinvest it in themselves and that means more jobs (or at least more equipment). The problem is: there are no strings attached. Corporations, like individuals, get to choose where to spend their money. Right now, corporations simply aren't spending their money, aren't creating jobs, and there are no guarantees that the jobs that will be created will be in the US. Republicans are incenting off-shoring. The probelm I have is supply-side is great in theory, but I don't see it being enacted in practice.
Additionally, as David Cay Johnston points out in his recent article in Willamette Week, lower tax rates for corporations lead to a disincenting of reinvestment. Essentially, pulling money out of the corporation rather than letting it ride is cheaper than it was when tax rates were higher, so it has the opposite effect. Lower corporate tax rates means lower reinvestment. I've always been curious about why the US was so successful during its mid-20th century expansion. The top tax rate (90% under Eisenhower) had something to do with that. Say you have 1M tied up into your company. If you pull it out of the company, you get 10%; if you reinvest in the company (hire people or buy equipment), that works for you, without the penalty.
Similarly, in our 401(k) plans and IRAs, there is a penalty for pulling out the principal. It is a small penalty (35%?) but it keeps people from taking money out of their plans. A corporation is a shared retirement plan, really, by the investors. And pulling money out of a corporation is like bleeding it. You can do it a little bit, but you can't pull everything out, or else you will kill it. That's generally called corporate raiding. That happens when an investment comes in, changes management, puts up bad processes, and pays a bunch of vice presidents exorbitant rates. They're bleeding the pig until it dies, and then they feast on the remains, while everyone else loses out.
Low corporate and investor tax rates allow this to happen. It encourages cashing out instead of letting it ride. And if you're a casino, which of these do you want (business is a gamble, by the way, but usually one with much better odds than a casino)? If you're a worker, which do you prefer? Bigger bonuses for nameless, faceless investors or VPs, or more jobs? What if you're an unemployed worker, or an overworked worker?
Here's Johnston's evidence:
The 2004 American Jobs Creation Act, which passed with bipartisan support, allowed more than 800 companies to bring profits that were untaxed but overseas back to the United States. Instead of paying the usual 35 percent tax, the companies paid just 5.25 percent.
The companies said bringing the money home-“repatriating” it, they called it-would mean lots of jobs. Sen. John Ensign, the Nevada Republican, put the figure at 660,000 new jobs.
Pfizer, the drug company, was the biggest beneficiary. It brought home $37 billion, saving $11 billion in taxes. Almost immediately it started firing people. Since the law took effect, Pfizer has let 40,000 workers go. In all, it appears that at least 100,000 jobs were destroyed.
Now Congressional Republicans and some Democrats are gearing up again to pass another tax holiday, promoting a new Jobs Creation Act. It would affect 10 times as much money as the 2004 law.
How does this cycle of despair and plutocracy come to an end? Obama and a Democratic house and senate was supposed to be our saving grace.
I'm certainly glad I don't identify as a faithful person; I'd be losing my shit right now.