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Monday, March 23, 2009

A Plurality Of Ignorance: Teabaggers Think They Know It All

*cross posted at Daily Kos *

Michelle Malkin, and many other bloggers, have extensively covered the "tea-parties".

Malkin, in her latest piece, makes this statement:

no national wire coverage of these thousands of protesters across the country, but AP covers measly anti-war protest turnout in Washington…

That's a bit like asking someone who you've publicly ridiculed numerous times to pay attention to you and give you some type of priority coverage.

Oh, wait. That's EXACTLY what that is.

Malkin's new bit of "please-feel-sorry-for-us" nonsense aside, one has to ask the question - do any of these people that are attending and praising the "sucess" of their tea-parties know anything about economics?

First, you have to look at where these people are getting their information.

Rush Limbaugh, the aforementioned Michelle Malkin, andb blogs such as FreeRepublic, RedState, and HotAir.

So, what is the one thing that none of these people are giving their audience - an alternative, economic, plan.

Rush does offer somewhat of a plan, though it is filled with information that is either false or has been proven to not work:

I say, cut the U.S. corporate tax rate -- at 35%, among the highest of all industrialized nations -- in half.

Limbaugh's getting his "facts" on the corporate tax rate wrong.

From Media Matters

In its August 2008 report, the GAO estimated that "[t]he average U.S. effective tax rate on the domestic income of large corporations with positive domestic income in 2004 was an estimated 25.2 percent." Further, in its Paying Taxes 2009 publication, based on its 2009 Doing Business report, the World Bank-International Finance Corporation estimated that the United States has a lower effective rate of current corporate tax than several developed economies, including Germany and Italy. Moreover, in June 2007, the Treasury Department concluded: "If special provisions were eliminated, the top corporate tax rate could be lowered to 27 percent or more than 40 percent expensing could be provided to all businesses for new the cost of tangible investments, and the tax system would produce the same level of revenue."

In Paying Taxes 2009: The Global Picture, the World Bank noted that "reducing the statutory rate of corporate income tax has been the most popular government tax reform in the period. However in most of the economies, the case study company does not pay corporate income tax at the statutory rate on its profit before tax, since the tax rules require adjustments to be made to this in order to calculate taxable profits."

DeocracyNow's Amy Goodman interviews Pulizter Prize winning investigative Journalist David Cy Johnston about the stimulus and specifically references further tax-breaks for corporations

DAVID CAY JOHNSTON:....spending—tax cuts have not worked. The Bush tax cuts, all of them were financed with borrowed money. And where did we end up at the end of the Bush administration? If you add up all of the bailouts that the Bush administration did in the fall, the investments, the spending and the guarantees, it’s over $8 trillion. How much money is that? It is more than all of the income taxes paid by all Americans for the entire eight years of the Bush administration.

The fact is that if you don’t fix and maintain roads, you can’t move goods around efficiently, the economy suffers. If you don’t spend money on higher education, on research and development, the economy suffers. This notion that government money is, as a student once said to me, taken out in the ocean and just dumped has to go away. We need to recognize that government, which is the biggest single part of our economy, is absolutely vital, if we’re going have a robust economy. That doesn’t mean there isn’t waste and stupidity. And corporate America has plenty of waste and stupidity, too.

Rush then goes on to state:

Suspend the capital gains tax for a year to incentivize new investment, after which it would be reimposed at 10%.

But who pays Capital Gains taxes?

Fewer than one in seven individual taxpayers report taxable capital gains in any year. In 2006 just 13.4 million out of 138.3 million taxpayers reported taxable net gains (net long-term gains in excess of net short-term capital losses and capital gains distributions, which are taxed at favorable capital gains rates) on Schedule D, and another 4.6 million reported capital gains distributions from mutual funds on their Forms 1040. Many taxpayers with gains had modest incomes ? more than half (52 percent) of those with taxable net gains or capital gains distributions had incomes below $75,000. But high-income taxpayers accounted for the overwhelming share of capital gains (Table 1). The 3 percent of tax returns with adjusted gross income exceeding $200,000 reported 31 percent of AGI and 83 percent of capital gains. The 0.3 percent of returns with AGI exceeding $1 million reported 15 percent of AGI and 61 percent of capital gains. Capital gains represented less than 4 percent of AGI for gains recipients with income less than $200,000, but about 40 percent of AGI for those with income exceeding $1 million.

Many more Americans accrue capital gains on corporate shares they hold within tax-deferred employersponsored retirement saving plans or individual retirement accounts. But capital gains from stock sales within those accounts are not subject to capital gains tax. Accruals within those accounts are tax free until distributed and then are taxed as ordinary income.

Newt Gingrich had the same idea for Capital Gains. Turns out Rush is just as wrong about the idea as Newt was:

Here are a few examples of why Newt and Rush's plans for Capital Gains won't work.

Capital Gains Cuts Mostly Benefit The Wealthy:

If you care about who benefits from tax cuts, and don’t think it should mainly be the rich, and in particular if right now you’re not so crazy about cutting taxes on the people on Wall Street who are responsible for getting the country into the huge financial mess it’s in, this probably isn’t your favorite tax change. The benefits of capital gains tax cuts overwhelmingly go to those who own capital assets outside of retirement and other tax-protected accounts. By definition it is the rich who own most capital assets.

The Incentive Will Be To Sell:

A 0% capital gains rate would in fact be a disaster for the market. One virtue of having a tax on capital gains is that it dampens volatility and promotes longer-term investing. That is, if you pay tax on profitable trades, you’re less likely to make moves based on short term movements on the market. Given the uncertain times we face, it’s far more likely that a zero rate on capital gains would prompt a massive exodus from the market than a massive entry into it. In fact, if you think about it, the immediate motivation of a 0% capital gains tax rate is to sell - not buy.

There Will Be No Incentive To Save:

We worry all the time about insufficient savings in this country for retirement and education. One of the ways in which we encourage saving is to create no-tax retirement and education accounts. If all accounts are no-tax, money will likely not be put into these forms, which it’s much harder to pull out of.

That's the meat of Limbaugh's plan - a plan that won't work.

The remainder of those touting the tea-parties have nothing real to offer to the discussion. It's all "red-meat" prattling that amounts to nothing more than delusional speculation.

Malkin has all sorts of paranoid theories about the stimulus.

She went on Cavuto's "business" program on Fox"News" to discuss her theory that Robert Reich was advocating that stimulus money be kept away from experienced workers and "white-male" construction workers.

Reich even responded.

In a time like this, when tempers are riding high and many Americans are close to panic about their jobs and finances, you have a special responsibility to consider the accuracy of what you say and the consequences of inflammatory and erroneous statements. In the last few days, manifestly distorting my words and pulling them out of context, you have accused me of wanting to exclude white males from jobs generated by the stimulus package. Anyone who takes a moment to examine what I actually said and wrote knows this to be an absurd misrepresentation of my position (see this). My goal is and has always been to create as many opportunities for as wide a group as possible, and not exclude anyone from access. There is and has never been any ambiguity about this. The hate mail I have received since your broadcast suggests that the mischievous consequences of your demagoguery are potentially dangerous, in addition to being destructive of rational and constructive political discourse. I urge you to take responsibility for your words. Words and ideas have real world consequences, and you have demonstrated a cavalier disregard for both.

People like Malkin, Limbaugh, conservative bloggers ( et al ) refuse to listen to anyone with any type of economic background.

Perhaps it's because it's too difficult for them to understand?

I'm guessing yes on that one.

It's far easier to digest and then vomit up neatly packaged "sound-bites". Couple that with buzz-words like "socialism" and "communism" and even "totalitarianism" and you'll have a crowd of people ready and willing to follow you. And they will follow you out of fear, even if it is a fear that is grounded in lies.

And what of those that attend the "te-parties".

What knowledge of the economy do they have?

It's a fairly safe bet that some of them may have some knowledge of economics, but are they attending these rallies out of anything more than a reflexive fear that Obama and the government are "out to get them"?

Nothing but catch-phrases.

Then there are the governors of states that are lambasting the stimulus. Then they turn around and say they will only accept certain portions. Sarah Palin is part of this gang.

The biggest single chunk of stimulus money that Palin is turning down is $160 million for education. There’s also $17 million in Department of Labor funds (vocational rehabilitation services, unemployment services, etc.), about $9 million for Health and Social Services and about $7 million for Public Safety.

Then there's South Carolina Governor Mark Sandford.

Louisiana Governor Bobby Jindal.

These three, to me, are examples of Republicans that are showing a complete lack of interest in the people within their own states. Why are they only rejecting those speicific portions of the stimulus. Why aren't the "tea-baggers" asking that question?

People are actually dumping teabags into rivers and think that this act is somehow going to help the economy. Actions do often speak truth to power, but what "truth" are they expressing? Are they buying these tea bags? When people started protesting France, they were actually buying the wine they were pouring into storm drains.

Of course, I don't have all the answers either.

Truth of the matter is, I'm willing to admit that I don't know enough about economics. But I'm willing to learn the truth behind something before simply reacting.

It amazes me how so many people who aren't going to have their taxes raised - whether they are self-employed or not - are so willing to be part of the stimulus in the first place.

Perhaps it's a part of their nature. Maybe they have such a strong desire to be a part of something that they give up the ability to think for themselves. Maybe for them, being part of "the crowd" is more important than being informed.

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