Here They Go Again

I hate to sound like Ronald Reagan, but here they go again. The Republicans still want us to believe that enriching the rich produces jobs. They are still arguing that letting Bush’s outrageous tax cuts for the rich lapse will hurt “small” businesses. This argument is so obviously false that is an insult to our intelligence. Letting the tax cuts lapse would restore the higher tax rates for large personal incomes rather than increasing the taxes paid by businesses. Increasing the personal income tax of wealthy individuals will not create a disincentive to for them to invest in their businesses. In fact, it will have the opposite effect because the sums used to improve or increase the size of businesses are deductible business expenses rather than personal income. In this regard, it makes perfect sense to defer some personal income by using it to improve their businesses. This will lower the taxes they pay on personal income and increase the future personal incomes they will derive from those businesses.

It is interesting that the Republicans are trying to cast their argument in terms of small businesses rather than giant corporations. Could this be because most people are not very sympathetic to executives who are pulling down base salaries of several million dollars per year and do not have the same expenses other people have because of all the perks those executives also receive? Ah, but there is the stock market. The problem with the stock market argument is that it is based on the same trickle down theory that has failed time after time. Dumping more money into the stock market simply inflates the price of stock. It does nothing to increase demand, and demand for the goods the corporations produce is the only incentive for producing more goods. There is no reason to make more products if no one is going to buy them.

During the Bush administration we have seen an increasing concentration of wealth into the hands of fewer and fewer individuals. The result has been a decrease in real wages and a shrinking market. What has made this country so great and so prosperous is the middle class. It is the labor unions that allowed workers to earn more then they needed to buy the most basic necessities. It is the small entrepreneurs who could get the loans they needed to produce innovative products that allowed them to compete with the giants. The fallacy behind what the Republicans euphemistically call supply side economics is that it fails to recognize that wages and employment create the demand that drives our market based economy. In other words, they are still trying to till the garden with the wrong end of the hoe. They are still saying that the rich should not pay taxes they can well afford to pay even though reducing those taxes has only resulted in decreasing the revenue the government can collect and thereby increasing the deficit. The remarkable thing is that the Republicans are doing this while predicting dire consequences because of the deficit. If this hypocrisy does not tell you the Republican Party is still selling old bricks, I do not know what will.