Wednesday, December 29, 2010

Laffing All the Way to the Bank

And the moral, boys and girls, is that taxes are evil and shame on the liberals for chasing away the multimillionaires and billionaires. So saith Fox Business News and Art Laffer.

For those of you who don’t live in Oregon and had never heard of Measure 66 and its little sister, Measure 67, here’s a newspaper article from last August to give you the rundown. And even though the tax cuts were extended by another two years, right wingers are still pouncing on Oregon as a bellwether of what would’ve happened if the federal government had (gasp!! O, the horrors!) let the Bush tax cuts expire for the wealthiest 2%.

That’s why Fox Business trotted out Art Laffer, a smiling psychopath reminiscent of that laughing doll in the Saw series. Art Laffer is the guy falsely credited with the Laffer Curve (even Laffer said it wasn’t an original concept) that would become part of the hallowed bedrock of the uberdestructive economic clusterfuck known as Reaganomics or Supply Side economics that saw personal income tax go down from 70% to 31%.

At least half of the Laffer Curve (which gained traction after it was explained in 1974 to none other than Donald Rumsfeld and Dick Cheney) springs from a straw man argument. According to this misleading, oversimplified graph, revenue would plainly be nonexistent if the tax rate was 0%. But then Laffer went to the other extreme and said that tax revenue would also be nonexistent if it was 100%, something no politician in his or her right mind would ever propose.

You would think the magic number that the Laffer Curve purports to seek is somewhere around 50%, which would be acceptable to a lot of liberals and progressives but you’d be wrong. Essentially, Laffer’s curve says, with a straight face, that the less we tax the rich, the more income states and the federal government generate. The more we tax the wealthy, the less revenue we’ll generate because we’ll scare them away.

The Laffer Curve was novel only in the respect that, like Issac Asimov’s psychohistory, it sought to predict trends in human behavior by using as its rubric largely ridiculous tax scenarios (0% and 100% tax rates). Laffer’s curve advocates the wealthy paying just barely enough taxes to keep things running but doesn’t call the wealthy on being the greedy sociopaths they largely are.

And this is exactly what happened in Oregon this year. When Measure 66 (raising individual tax rates) and Measure 67 (raising tax rates on corporations) went into law, the landed gentry in Oregon were terrorized that they may not be able to afford that third house or 10th car and fled like bloated rats leaving a slightly listing ship.

And, according to Fox Business News and Art Laffer, it’s all the fault of stupid liberal, tax-thirsty Democrat politicians. It’s also serving as a morality tale on what would’ve happened if we’d “raised” taxes on the wealthy after this Saturday. The wealthy would’ve simply fled the country and bought a villa on the Riviera or 100,000 acres in Paraguay. Or, heaven help us, ship American jobs by the millions overseas by folding up their tents while still enjoying tax breaks and incentives for doing so.

Reality time out: Measures 66 and 67 were passed by a statewide ballot. Democrats, alarmed at the $733 million dollar shortfall in the 2009-11 budgets, logically sought higher taxes for the wealthiest families making $250,000 and individuals making half that much. The people of Oregon, at least those not making six and seven figure incomes, wanted this. So, according to Art Laffer and the Fox ventriloquist dummy on the left, blame democracy. Or blame liberal Democrat pols. Blame everyone but the wealthy and their greed-motivated selfishness.

And the wealthiest, alarmed at having their tax rates modestly raised a couple of percentage points, took their expensive ball and left the state. This was also predictable. The same thing happened in other states, most notably in Maryland in 2008 when the state legislature instituted their own millionaire tax.

But to listen to right wingers talk, it’s all the fault of the evil liberal politicians killing the goose that laid the golden egg because they wanted to maintain funding of schools and social services instead of having to lay people off.

It’s not the fault of the wealthy who have never once felt themselves to be part of a community and have for centuries if not millenniums felt as if they were not responsible for the general welfare of a system that had enabled them to amass great individual wealth without a shred of individual responsibility.

The Laffer Curve so warmly embraced by Ronald Reagan, a man still terrified of the memory of his poverty-stricken days in Hollywood when his tax rate was 90% when he was still a successful actor and president of a union known as the Screen Actors Guild, is completely supported under the proposition that while the wealthy cannot be called on or criticized for such cowardly and selfish behavior, those who set the tax code should be ashamed of themselves for making the wealthy resort to economic treason.

It automatically absolves or shields the wealthy of any lack of responsibility to a capitalistic system of goods and services and taxation that was so good to it, sociopaths who have grabbed all they could for themselves like mortgage lenders in a Las Vegas money booth.

Laffer also makes a sweeping, and very wrong, assumption that all wealthy people are “job producers” who are perfectly free and perfectly right to simply fold up their tents and take their jobs with them when any liberal even whispers the words “shared sacrifice.” They are not all job producers. Aside from the team of 24 massage therapists and crane operators required to give him a full body massage, how many people does Rush Limbaugh actually employ? And, a few minimum wage-earning horse groomers and landscapers aside, how many does Lou Dobbs actually employ?

The Laffer Curve is simply, aside from Milton Friedman, the single most destructive economic force in our nation’s history. It advocates taking money out of the federal and state treasuries without assigning any culpability to the wealthiest who are portrayed more as victims for being burdened with higher taxes than as economic hit men for shirking their tax duties. These are the same exact people who have no use for a centralized government except for when they want oversight and regulations lifted and their taxes lowered even more regardless of the deficit, national debt, inflation and levels of unemployment.

The Laffer Curve, and supply side economics, should’ve been put to pasture no later than the Reagan administration that tripled the debt while lowering personal income taxes from 70% to 31%. National economies are like massive ponds and the ripples of what we did or didn’t do sometimes decades before are still shaping the face of that pond. The few boom years we had under Clinton were a mere respite from the long-term, decades-long damage under Reagan-Bush I that hasn’t even been accurately or comprehensively catalogued. It’s a slide toward complete and utter ruin, with a tax code that is predicated entirely on personal greed while going after much poorer people who can’t hire tax attorneys when they get audited for sums in multiples of hundreds.

1 comment:

  1. This blogpost was pretty informative. Dan Mitchell of the Cato Institute has a pretty cool lecture series on the Laffer Curve. You might want to check it out. Here it is (in 3 parts):


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