Wednesday, August 13, 2008

The Real Re-Distribution of Wealth

Andrew Sullivan, one of my favorite bloggers and political thinkers, regularly reminds his readers about Obama's crappy tax plan and the dangers of the redistribution of wealth. He believes that raising taxes on the wealthiest Americans so that the middle class can pay less is misleading, since the richest Americans are responsible for the greatest portion of tax revenue in the country.

And largely I believe him, simply because an inefficient and often unfair government interference stuck into the flow of money in this country eventually leads to market drag and economic slowdown.

However, Robert L. Borosage, who has been working in the progressive arena for decades, wrote Tuesday on Huffington Post about what I think is the real redistribution of wealth: the dumping of corporate taxes onto working people and the elderly. Money quote:

[T]he core of McCain economic agenda consists of breath-taking corporate tax breaks. He calls for cutting the top corporate rate from 35% to 25% and allowing corporations to write off investments in the first year. Combined, the Tax Policy Center wonks cost these at over $1.3 trillion over 10 years. Len Burman of Tax Policy Center estimates that in total, McCain would cut corporate revenues by about 50% from current levels. They'll be making hundreds of millions of dollars and not paying taxes. This is no joke.

On the one hand, you have Obama, who promises to raise the tax rate on wealthy individuals and corporations so that he can give middle class Americans a real tax cut. On the other hand, you have McBush, who promises to cut corporate taxes and raise them on working Americans and the elderly.

Forget about which plan seems more fair -- that's pretty obvious, although I'm sure partisans on both sides can argue against the fairness of the other's plan. Instead, let's focus on how America works. After 9/11, Bush urged Americans to go out and spend money, to keep things as close to "business as usual" as possible. It was good advice: our whole economy is a consumer economy. The more money we spend on goods and services, the more of that gets produced to meet the demand. Higher GDP growth rates lead to a stronger dollar, which leads to lower oil prices, lower gas prices, and lower food prices. If demand outstrips supply, however, prices continue to go up, though maybe not as strongly as with a weaker dollar. (I'm sure my economist friend Titus Levi will weigh on this anyway.)

If we provide tax relief to working families so that they can spend more money and put more money into the economy -- which was, as you'll recall, Bush's rationale for the Economic Stimulus Package earlier this year -- you will see real economic recovery. As Borosage notes (emphasis mine):

So they want to cut corporate taxes, inevitably increasing the burden on labor. The economic future looks dim because consumers, drowning in debt, are cutting back.
Consumers who are drowning in debt are at the point where they are cutting back to spend more money on debt relief. I can't think of a single person I know who received a check from the US Treasury in May who used it to buy consumer goods or services. Most of them paid off credit cards or paid their utility bills, which have been mounting for months.

The McCan't rationale for cutting corporate taxes is the same old trickle down crap they've fed us for years, which benefits only the wealthy.

PLUS -- and this can't be forgotten although it's off-topic -- McCan't wants to continue the failed foreign policy of the Bush Administration. So the voters get to choose between two candidates: one who will let rich Americans and corporations pay lower taxes on incomes which have been steadily increasing every year since 2000, AND who will also increase military spending to finance an immoral and failed war in Iraq and gear up for another such war with Iran; or one who will raise taxes for those fortunate Americans and reduce our commitments for war in Iraq and opt for diplomacy over guns with Iran.

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