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Tax cuts leads to economic boom?

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  • Tax cuts leads to economic boom?

    Thought this was interesting article, since it very real life experiment of key Tea Party economic approach.

    Sam Brownback, the Republican governor of Kansas, doesn't just believe in whistling past the graveyard--he's willing to stroll past it in full-throated song.

    The graveyard is where the economy of Kansas has been buried since 2012, when Brownback and his Republican state legislature enacted a slew of deep tax cuts in a tea party-esque quest for economic "freedom."

    Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy," he promised then. Brownback's tax consultant, the supply-side guru Art Laffer, promised Kansans that the cuts would pay for themselves in supercharged economic growth.

    Instead, job growth in Kansas trails the nation. The state's rainy-day fund is dwindling to zero. Month after month, revenue comes in even lower than fiscal officials' most dire expectations.

    In the rest of the country, school budgets are finally beginning to recover from the toll of the last recession; in Kansas, they're still falling. Healthcare, assistance for the poor, courts, and other state services are being eviscerated.

    Who's benefiting? The rich, including those proud offspring of Wichita, Kan.: the Koch brothers.

    Despite all this, Brownback resorted to an op-ed in the Wall Street Journal a few weeks ago to declare that "the early results are impressive." Among other statistics he cited, "In the past year, a record number of small businesses — more than 15,000 — were formed."

    Yes, but as shown by the Center on Budget and Policy Priorities, a Washington economic think tank, 16,000 disappeared. And many of those businesses that Brownback crowed about were surely created to take advantage of one of the tax-cut quirks Brownback enacted. This is the elimination of all taxes on partnerships, sole proprietorships, and LLCs that pass through their tax liabilities to their owners. That allows everyone from freelancers and petty contractors to huge partnerships to avoid any state income tax at all, as long as they're organized as a certain type of "small business."


  • #2
    Ahhh, where the wall of reality meets the dreamscape of ideology... that's what I like to see.


    • #3
      But somehow they will go over the cliff and take everyone down with them.


      • #4
        Where is everyone? Usually threads involving tax cuts is pretty lively. It seems nobody's got **** to say now.


        • #5
          Originally posted by elsid13 View Post
          But somehow they will go over the cliff and take everyone down with them.
          I keep waiting to see the trogs wake up to the fact that voting against their own economic interests is unwise, but like all ideological fundamentalists, maybe they won't realize there aren't 70 virgins waiting for them until after they blow themselves up.


          • #6
            Seems a better place than any and relevant:

            MOANING MOGULS
            JULY 7, 2014

            The past few years have been very good to Stephen Schwarzman, the chairman and C.E.O. of the Blackstone Group, the giant private-equity firm. His industry, which relies on borrowed money, has benefitted from low interest rates, and the stock-market boom has given his firm great opportunities to cash out investments. Schwarzman is now worth more than ten billion dollars. You wouldn’t think he’d have much to complain about. But, to hear him tell it, he’s beset by a meddlesome, tax-happy government and a whiny, envious populace. He recently grumbled that the U.S. middle class has taken to “blaming wealthy people” for its problems. Previously, he has said that it might be good to raise income taxes on the poor so they had “skin in the game,” and that proposals to repeal the carried-interest tax loophole—from which he personally benefits—were akin to the German invasion of Poland.

            Schwarzman isn’t alone. In the past year, the venture capitalist Tom Perkins and Kenneth Langone, the co-founder of Home Depot, both compared populist attacks on the wealthy to the Nazis’ attacks on the Jews. All three eventually apologized, but the basic sentiment is surprisingly common. Although the Obama years have been boom times for America’s super-rich—recent work by the economists Emmanuel Saez and Thomas Piketty showed that ninety-five per cent of income gains in the first three years of the recovery went to the top one per cent—a lot of them believe that they’re a persecuted minority. As Mark Mizruchi, a sociologist at the University of Michigan and the author of a book called “The Fracturing of the American Corporate Elite,” told me, “These guys think, We’re the job creators, we keep the markets running, and yet the public doesn’t like us. How can that be?” Business leaders were upset at the criticism that followed the financial crisis and, for many of them, it’s an article of faith that people succeed or fail because that’s what they deserve. Schwarzman recently said that Americans “always like to blame somebody other than themselves for a failure.” If you believe that net worth is a reflection of merit, then any attempt to curb inequality looks unfair.

            That’s not how it’s always been. A century ago, industrial magnates played a central role in the Progressive movement, working with unions, supporting workmen’s compensation laws and laws against child labor, and often pushing for more government regulation. This wasn’t altruism; as a classic analysis by the historian James Weinstein showed, the reforms were intended to co-opt public pressure and avert more radical measures. Still, they materially improved the lives of ordinary workers. And they sprang from a pragmatic belief that the robustness of capitalism as a whole depended on wide distribution of the fruits of the system.

            Similar attitudes prevailed in the postwar era, as Mizruchi has documented. Corporate leaders formed an organization called the Committee for Economic Development, which played a central role in the forging of postwar consensus politics, accepting strong unions, bigger government, and the rise of the welfare state. “At the very top, corporate leaders were much more moderate and pragmatic, and, because that’s where national politics were, they were very influential,” Mizruchi said. Corporations supported policies that might have been costly in the short term in order to strengthen the system as a whole. The C.E.D. called for tax increases to pay for the Korean War and it supported some of L.B.J.’s Great Society. As Mizruchi put it, “They believed that in order to maintain their privileges, they had to insure that ordinary Americans were having their needs met.”

            That all changed beginning in the seventies, when the business community, wrestling with shrinking profits and tougher foreign competition, lurched to the right. Today, there are no centrist business organizations with any real political clout, and the only business lobbies that matter in Washington are those pushing an agenda of lower taxes and less regulation. Corporate profits and C.E.O. salaries have in recent years reached record levels, but there’s no sign of a return to the corporate statesmanship of the past (the occasional outlier like Warren Buffett notwithstanding). And that’s one big reason that it’s become impossible for Washington to get things done, even on issues of bipartisan interest.

            If today’s corporate kvetchers are more concerned with the state of their egos than with the state of the nation, it’s in part because their own fortunes aren’t tied to those of the nation the way they once were. In the postwar years, American companies depended largely on American consumers. Globalization has changed that—foreign sales account for almost half the revenue of the S&P 500—as has the rise of financial services (where the most important clients are the wealthy and other corporations). The well-being of the American middle class just doesn’t matter as much to companies’ bottom lines. And there’s another change. Early in the past century, there was a true socialist movement in the United States, and in the postwar years the Soviet Union seemed to offer the possibility of a meaningful alternative to capitalism. Small wonder that the tycoons of those days were so eager to channel populist agitation into reform. Today, by contrast, corporate chieftains have little to fear, other than mildly higher taxes and the complaints of people who have read Thomas Piketty. Moguls complain about their feelings because that’s all anyone can really threaten. ♦


            • #7
              What I find remarkable is that we have concrete evidence that the progressive world not only worked, but created the best standard of living this country has ever seen. In other words, evidence. And we've traded that in for the dream of neocons/neoliberals which for thirty years has proved absolutely disastrous for the majority while enriching a tiny sliver of the society to such a point that they have to find offshore banks to stash their piles of money in. And when you ask them why their system is such a failure, they scream, "More tax cuts for the rich! More deregulation! More privatization!" The one question the one percenters can't answer? How rich is rich enough? I don't think there is an answer for that, other than, "More!"
              Last edited by Rohirrim; 07-12-2014, 11:42 AM.


              • #8
                This therefore leads to a surprising conclusion: "At the bottom quintile of income, Republicans are not significantly different from either Independents or Democrats" with respect to their denial of climate risks, the study reports. It's only as income increases that Republicans become so much more likely to be deniers.

                So why does this occur? There are several possibilities discussed in the paper.

                The first is that income is actually a proxy for something else: Namely, being politically aware. It's possible that being wealthy is related to paying more attention to politics and your political party, and people who do so would be more aware of what those who agree with them on other issues actually think about global warming. (The study controlled for another possible influencing factor, education.)

                The other possibility, though, is that climate denial is a defense of economic interests. "Among individuals with conservative political orientations, there is a correlation between occupying advantageous positions within industrial economic systems and an unwillingness to acknowledge the risks associated with climate change," Bohr writes. "Perhaps to validate their economic interests, these individuals are more likely to process information on climate science through political filters that result in denying the risks produced by climate change."



                • #9
                  Big deal states like Tex, N. Dakota, Washington, have great growth and among the lowest tax rates. Calif has a high tax burden but has shown good growth recently.

                  It has to be what works for each state.

                  So you all think Kansas could just raise tax and that would increase growth? I have no idea what industries fuel Kansas economy but I doubt just a tax raise will do it.


                  • #10
                    Originally posted by cutthemdown View Post
                    Big deal states like Tex, N. Dakota, Washington, have great growth and among the lowest tax rates. Calif has a high tax burden but has shown good growth recently.

                    It has to be what works for each state.

                    So you all think Kansas could just raise tax and that would increase growth? I have no idea what industries fuel Kansas economy but I doubt just a tax raise will do it.
                    No I think if Kansas actually spent funds and did Keynes approach while maintain a solid tax base, the state economy might actually grow.


                    • #11
                      So Kansas must have some of the lowest tax around then?


                      • #12
                        Weird Kansas not even in the top 10 of low tax states.


                        • #13
                          Targeted tax cuts are generally effective. The best way to boost growth, long term, not necessarily short term is to keep debt in significant check.


                          • #14
                            OK just wanted to update the op

                            By Max Ehrenfreund April 21
                            Wealthier Kansans are paying much less in taxes after Republican Gov. Sam Brownback overhauled the state's income tax a few years ago. Brownback and other Republican officials hoped that more generous policies would stimulate the economy, bringing more revenue into the state's coffers and making up the difference on the bottom line.

                            It didn't work. Kansas's economy has kept expanding at more or less same plodding pace as the rest of the country. And now, according to official estimates released Monday, the state will have at least a $143 million budget shortfall in 2016, and likely more. Lawmakers are looking for a way to plug the hole.

                            One thing they're not considering: asking the wealthy to chip in. Instead, in a legislature that last week barred welfare recipients from using their benefits to go swimming or watch movies, the proposals that look most likely to succeed are sales and excise taxes that would be paid disproportionately by Kansas's poor and working class.



                            • #15
                              Yes, raising taxes on everybody(only the real mental midgets think raising taxes just happens to the Gates and Buffets) and tens of thousands on food stamps and unemployed helps make the economy boom. Idiots.