Tuesday, February 3, 2015

Ten Ways The Political Right Is Vacuuming Money Out Of Your Wallet With Their Trickle-Down Economics. Welcome To "The Great Right-Wing Revenue Switcheroo."

(While promoting higher taxes on the wealthy, via the Revenue Act of 1935, President Franklin Roosevelt said, "Our revenue laws have operated in many ways to the unfair advantage of the few." From The New Deal: A Modern History, p. 338, by Michael Hiltzik, 2011.)
  
According to a recent HuffPost/YouGov poll, "Americans largely think that the current tax system favors the wealthy..." And, a few weeks ago--while discussing the plight of American workers, their families, and the economy--U.S. Senator Elizabeth Warren said, "Many feel that the game is rigged against them, and they are right. The game is rigged against them."

Hmmm, let's take a closer look at this issue, and see if the American people and Senator Warren have it right (hint: they do).

Trickle-Down Economics, Pampering the Super-Wealthy, and the Resulting Revenue Switcheroo:

Over the past few years, Kansas Governor Sam Brownback has been "experimenting" on his citizens by lowering taxes on the wealthy and raising taxes on the non-wealthy (see analysis here). The experiment has been a failure, of course, and now he's looking to plug enormous budget holes by raising taxes on the middle-class & poor, again, by increasing, among other things, taxes on cigarettes from "79 cents to $2.29" per pack, and also by trying to sneak money away from highways, schools, and future retirees. This is on top of previous budget cuts that, for example, closed a homeless shelter. It seems that Brownback and his allies will do anything to preserve tax cuts for the wealthy.

Brownback's trickle-down experiment is, ultimately, just a doubling-down on the national trickle-down experiment that President Reagan began back in 1981 (and that George W. Bush continued in the early 2000s). You all know the general idea: Give colossal tax breaks to the wealthy, and both revenue and middle-class jobs will multiply faster than you can say "lie." (Trickle-down economics was not invented by Reagan of course, but he's the godfather of the modern trickle-down economics movement, overseeing, for example, a cut in the federal top marginal income tax rate from 70% to 28%--a whopping 60% decrease in tax responsibility for the wealthy.)

The failure of trickle-down economics should be obvious to any non-wealthy person: We have the largest prison industrial complex in the world, a large national debt, historically low federal revenue (when measured as a percentage of GDP), the middle-class is shrinking, wages are stagnant, the number of homeless children has reached a record high, our infrastructure is falling apart, and, my God, where is that river of middle-class jobs we were promised?--not the $8-per-hour jobs that have been increasing in recent months, mind you, but the well-paying ones. Where are they?


(In the video above--created on Thursday, January 29, 2015--U.S. Senator Bernie Sanders explains the failure of trickle-down economics, by showing how the wealthiest 10% of Americans have--over time--hoarded more and more of the economic gains in America. Things have gotten so bad that, today, the wealthy are the only ones benefiting from economic growth. Sanders' full discussion on income & wealth inequality--as well as other economic problems--can be found here.)

Our pampering of the super-wealthy, and the gargantuan reductions in the amount of taxes they have to pay, has resulted in a federal government less willing & able to assist the states. This has direct, negative consequences for your wallet.

(***See "Senate GOP blocks $60B Obama infrastructure plan," Associated Press, USA Today, November 3, 2011, "The Stunning Collapse of Infrastructure Spending in One Chart," ThinkProgress, November 1, 2013, and "Will America's Roads and Highways Ever Get Fixed," CBS News, January 27, 2015***)

You see, now that the trickle-down crap has finally hit the revenue fan--and as the federal government twiddles its thumbs, whistles softly, and stares at the ceiling--guess who's being asked to make up the revenue difference? Not the rich, no siree Bob! You are--with a bevy of increased taxes, tolls, fees, and fines at the state & local level. Oh yeah, and your water rates--they need to go up too, because you've got water mains dating back to the Civil War breaking and leaking all over the place.

Yep, that's right! You, the struggling American worker, must step up to the plate and pay higher taxes, tolls, fees, and fines to subsidize historically low tax rates for the super-wealthy, and also to subsidize their tax loopholes, tax avoidance, and illegal offshore tax evasion. How do you like them apples? And, to pour salt into the wound (sulfuric acid, really) the super-wealthy are using their ever-growing wealth to purchase Congress, state legislatures, and governors' mansions, thereby making sure that this hideous trend continues indefinitely.

Are you shaking your head and saying, "No, no, no, this can't possibly be true!" Well, check out these 10 items & stories regarding, what I'm calling, The Great Right-Wing Revenue Switcheroo.

1. The states are saying: "The lower your income, the more income taxes you must pay!"

A recent study by the Institute on Taxation & Economic Policy found that "in 2015 the poorest fifth of Americans will pay on average 10.9 percent of their income in state and local taxes, the middle fifth will pay 9.4 percent and the top 1 percent will average 5.4 percent" ("Study Finds Local Taxes Hit Lower Wage Earners Harder," New York Times, January 13, 2015).

Why would this be? Well, in addition to the fact that the federal government is now less willing & able to help the states, many super-rich folks, we are told, will leave a state if the taxes are not to their liking. On the other hand, workers, who don't make their living by moving numbers around in the stock market, are less able to make that threat since they are tied to their job locations. So, state governments, realizing they have a captive population in the middle-class and poor, put a disproportionate share of the revenue burden on them.

2. As their colleagues in Congress work to minimize federal assistance to the states, Republicans in the states must make up the difference with various tax hikes on the middle-class & poor. 

It was recently reported that "Republican governors across the nation are proposing tax increases...There are proposals for raising the sales tax in Michigan, a tax on e-cigarettes in Utah, and gas taxes in South Carolina and South Dakota, to name a few" ("Republican Governors Buck Party Lines On Raising Taxes," New York Times, January 24, 2015). What do all these taxes have in common? They're regressive--meaning, the less you earn the higher percentage of your income is taken. For example, if you and Bill Gates each buy the same television, a higher percentage of your income will be taken by the state to satisfy the sales tax.

3. In Washington, D.C., the cost of infrastructure is all on the "rate payers."

When an old water main broke in Washington, D.C., a spokesman for DC Water said, "Replacing the infrastructure really falls to the rate payers. It’s not something that the city pays for. It’s not something that the federal government assists with" ("Hidden, aging infrastructure strikes D.C. commuters," WTOP, December 16, 2014). Indeed, all across the country, utility rates are being raised to pay for the repair and replacement of aging infrastructure (if you want examples, just Google search key words like "water rate increase" along with "aging infrastructure"). Raising utility rates to pay for infrastructure improvements is another regressive strategy. The lower your income the higher your burden will be--just the way right-wing politicians like it.

4. Sorry Los Angeles citizens, you need to subsidize tax-cuts-for-the-wealthy by paying more sales tax!

In Los Angeles, with the federal government nowhere to be found on infrastructure issues, a conservative politician/radio show host is proposing a higher sales tax ("Infrastructure Cracks as Los Angeles Defers Repairs," New York Times, September 1, 2014). Again we see how lower federal taxes on the wealthy--facilitated by the political right--pushes the revenue burden down the income scale, forcing tax increases that disproportionately burden the middle-class & poor (i.e., regressive taxes).

5. Crossing a bridge? You better not be poor, otherwise we'll be taking a higher percentage of your income, thank you very much.

In my home state of Maryland, over the past 3-4 years, the toll to cross the Chesapeake Bay Bridge went from $2.50 to $6.00 (a 140% increase). The increase was needed to pay for maintenance and repairs. Like sales taxes, tolls are regressive. The less you make, the higher percentage of your income is taken to satisfy the toll. If you have toll bridges in your area, I bet you've seen similar increases.

(WPA workers repairing a bridge connecting Keyser, West Virgnia, to McCoole, Maryland, in May of 1936. Would you prefer federal, WPA-type assistance on infrastructure projects near you, or would you prefer that your state & local policymakers keep jacking up your taxes, tolls, fees, and fines to pay for those needed repairs & improvements? If the latter, well, vote for the political right--they'll be happy to oblige you. Photo courtesy of the University of Maryland College Park Archives.)

6. Toll Roads.

In an effort to privatize our infrastructure (or simply to enhance existing funding mechanisms), many on the political right would like to see a greater use of toll roads (see, e.g., "Mitt Romney taps Bushies for transpo advice," Politico, October 11, 2012).

Tolls roads, in addition to putting a disproportionate financial burden on the middle-class & poor, would also increase traffic congestion. Think your commute is bad now? Wait until toll booths are placed every few miles along your route. You'll be sitting in traffic longer so that some super-wealthy investors and executives can add a few more millions of dollars to their off shore bank accounts.

In Texas, a greater use of toll roads by the Republican government is making even their Republican constituents angry ("Republicans Against Toll Roads," New York Times, October 20, 2014). But, I have a few questions for those angry Republican voters: "What did you think was going to happen, after you've been backing Republican politicians for these past 30+ years? Did you think your roads and bridges would just magically maintain themselves? Could you not foresee that lower taxes on the mega-wealthy would eventually mean higher taxes, tolls, fees, and fines for you?"

7. For heaven's sake, don't increase taxes on millionaires & billionaires! Instead, just hand out more more traffic fines to the middle-class & poor!"

Recently, "Missouri Attorney General Chris Koster...filed a lawsuit against 13 St. Louis County municipalities, alleging they violated a Missouri law that limits revenue from traffic fines and court fees" ("Missouri Attorney General Sues Municipalities Over 'Predatory' Traffic Fines," December 18, 2014). 

Well golly, if you're not going to get more money from the Forbes 400--who are worth $2.29 trillion, by the way--you have to get it from somewhere, right?? So, pull over the middle-class & poor and nail them with more traffic fines. See, revenue problem solved! Better still, traffic fines are regressive and thus--like local taxes and tolls--extremely unfair. Yippee! (Oh, how the right-wing millionaires & billionaires must be rolling on the ground with laughter at this particular revenue switcheroo.)

8. Regressive (yes regressive) fuel taxes.

Conservatives and progressives often (not always) seem to agree on raising the fuel tax. Conservatives like it because it hammers the middle-class & poor (as opposed to millionaires & billionaires) and progressives like it because it discourages fuel use and thus helps preserve the environment. Problem is, it's just another regressive tax (despite what you hear from some policy wonks, e.g., "Hey, those poor people don't have cars anyway and, even if they did, they wouldn't drive as much because they can't afford to go on vacations!").

The regressive nature of the fuel tax could be offset with some sort of tax credit for low-income folks; but I don't hear policymakers talking about credits nearly as much they're simply talking about raising fuel taxes for more revenue. In any event, there is pressure in various parts of the nation to increase the fuel tax to pay for infrastructure (see, e.g., "New Year's gas tax increases hit states, hike up fuel prices," Washington Times, January 3, 2015)

9. Oooops! Cutting taxes on the wealthy doesn't raise revenue? Guess we'll have to raise property taxes!

Recall that Kansas Governor Sam Brownback and his colleagues reduced tax rates for the wealthy, and eliminated business taxes altogether, in a scheme they promised would create an economic paradise--a free-market oasis in the land of "creeping socialism!"

Well, things didn't work out the way they wanted and the tax cuts blew a giant hole in the state's budget. The political right's Alice in Wonderland belief that massive tax cuts for the wealthy will increase revenue just isn't panning out (and it's just been reported that revenue for Kansas, in January 2015, was tens of millions short of right-wing predictions, again). I wonder if they'll be coming out of the rabbit hole anytime soon.

Scrambling to plug the budget hole, Brownback and his trickle-down comrades have been working feverishly to raise taxes on the middle-class & poor and also to cut spending on programs that help the middle-class & poor. Their latest strategy is to force an increase in property taxes. The trickle-down tricksters in Kansas want to cut even more funding for education, and also transfer some of the budget burden away from the state and onto the locals, via property taxes, despite the fact that "property taxes in many areas of Kansas are already onerous." And, as the Institute on Taxation & Economic Policy points out, "Property taxes are typically regressive..." Republicans LOVE those regressive taxes!

10. Want to see the beauty of our national parks? Okay, pay more. Lots more.

This past October, Yosemite National Park made a proposal to substantially raise its fees, e.g., raising the entrance fee from $20 to $30 (a 50% increase). The fee increase is proposed, in part, to pay for "enhance[d] visitor services, including repair and maintenance of park facilities, restoration and rehabilitation of visitor service buildings, additional park programs and transportation services, and increase[d] resource protection."

Yosemite is hardly alone. As Time Magazine reports, "Price Hikes Up to 150% Are Planned for Your Favorite National Parks" (October 21, 2014). It's hard to blame the National Park administration though, because they have a maintenance backlog of about $11 billion. Sure, the Forbes 400 could take care of that pretty easily, with their $2.29 trillion, but they've probably already had a word with their congressional representatives: "Hey, do you want more campaign cash? Then you best not raise my taxes. Understand?"

So, since there will probably not (no, make that "certainly not") be a new federally-funded Civilian Conservation Corps, guess who's going to pay the maintenance bills? You'll find the answer in the nearest mirror. And these types of entry fees are...drum roll please...yep, you guessed it, regressive: The less money you make, the higher percentage of your income will be required to enter the park.

The New Deal vs. Today    

During the New Deal, federal policymakers made massive investments in infrastructure when struggling Americans couldn't. For example, with regard to the tens of thousands of WPA infrastructure projects across the nation, between 1935 and 1943, localities only had to raise about 20% of the cost before WPA funds filled in the rest. Today, however, with Republicans & Tea Partiers in charge, we have a different reality: More and more of the burden is falling on the people who can afford it the least.

President Obama is currently proposing a half-trillion dollar national infrastructure upgrade, paid for, in part, by taxes on corporations--corporations that have been (a) enjoying record profits and (b) utilizing a multitude of tax avoidance gimmicks these past many years. Republican Congressman Paul Ryan--a man who has benefited from (and is still benefiting from) big federal programs (see here, here, and here) but doesn't want anyone else to--responded to Obama's proposal with the typical right-wing cynicism of anything that doesn't pamper the wealthy: "What I think the president is trying to do here is to, again, exploit envy economics. This top-down redistribution doesn't work."

What Ryan is saying, in effect, is: "The middle-class and poor will have to pay a disproportionate amount of money for infrastructure improvements, through regressive taxes, tolls, fees, fines, and utility rate increases, so that my super-wealthy campaign donors don't have to pay another dime." Problem is, Mr. Ryan, the middle-class & poor are not experiencing record profits like Corporate America and the super-wealthy are, and thus cannot handle the additional & disproportionate burden.

Not all Republicans are against taxing the wealthy to pay for infrastructure. For example, Matthew Dowd, a national strategist for the Republican Party, recently wrote: "we need to have a well-paying jobs program tied to infrastructure improvements administered locally by cities, counties and states where people still trust government to get the job done. And this should be funded by tax policies at the federal level which put a much bigger burden on the wealthy in this country."

Unfortunately, Dowd's voice is the rare voice of reason in the Republican Party. More often than not (much more often than not) Republican politicians act as bodyguards against increased taxes on their political sugar daddies (campaign donors), thereby forcing a revenue burden shift downward to the middle-class & poor.

So, let's sum this up: The wealthy are getting wealthier--but are being asked to pay less. The middle-class and poor, who have been stuck with stagnant wages for decades--are being asked to pay more. Read that again, very slowly and very carefully.

Welcome to The Great Right-Wing Revenue Switcheroo! Now, open your wallet...because the right-wing vacuum cleaner is coming for more.

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