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Posts Tagged ‘Tax Cuts’

Just Raise Taxes

Sat ,18/07/2015

Being fiscally conservative requires making a sound national budget and raising the revenue to fund our nation’s needs.  The logical approach to paying off our national debt is to find middle ground between raising taxes and cutting spending. The tax rates, particularly those at the top of the earning scale, need to be adjusted upward,and there is also a grave need for spending restraint, elimination of duplicate efforts, and the elimination of waste and wasteful projects driven by special interest groups on both sides of the aisle. Since few Congressmen are willing to vote to cut pet projects, and perhaps lose their own, it leaves us with just one alternative:        ” Just raise taxes”.

As the chart below shows, cutting taxes does not necessarily lead to greater economic growth, but it certainly means a large increase in our national debt. The high tax rates and increasing national debt under the Eisenhower administration were mostly to pay off our war debts and rebuild Europe, yet there was also growth in GDPand and jobs. Reagan dramatically cut taxes, and experienced a lower growth in GDP, more jobs, but also a large increase in peacetime national debt.

Article PhotoTax Rates and Economic Indicators

 

If you wonder why a country as rich as ours is going broke, it may be because of Arthur Laffer‘s economics, Grover Norquist’s anti-tax pledge, and ALEC.   We should not let men we did not elect or some secretive organization that represents special interest groups determine our tax policy. If you will remember, under Eisenhower, the top tax rate was 90% and we used the money to take care of our soldiers, send them to college, rebuild the countries devastated by war, and build the interstate highway system that fueled economic development for the next several decades. Now we have cut the top tax rate, the corporate tax rate, the capital gains tax, and were now working on cutting the inheritance tax, while we are also cutting the safety nets and help for the poor because we cannot pay for them. We are better country than that.

Norquist claims 235 US Representatives and 41 US Senators have signed his Pledge. In doing so, they have clearly given up their responsibility as our elected representatives.   Those in the US Legislature who have signed the pledge are listed here. You may wish to check see who from your state has signed the pledge and contact them. Since Norquist claims that signing the pledge is binding into perpetuity, I would suggest that we make sure none of those who signed his pledge are re-elected.

 

Bits and Pieces 14: Will Rogers on Trickle-down Theory

Thu ,29/01/2015

The Trickle-down Theory, has been around a long time. Back in the 1800’s, they called it the Horse and will rogeresSparrow Theory. If you feed the horse enough grain, some of it will be left over for the sparrows. No economist took it seriously. By Will Rogers day it was called the trickle-down theory and the picture shows what he thought of it. Eric Laffer convinced Ronald Reagan that he should try Laffer’s version of it, and the economy grew less while the public debt ballooned. George W. Bush tried the same thing, and that plus two unfunded wars put our nation deeper in debt.

At the state level, Oklahoma has tried their version of it. They are now having to make cuts in education, infrastructure, the salaries of public workers, and pension plans. Even yet, Oklahoma is cutting taxes even more next year thinking that the problem is that they just have not tried it hard enough. Governor Sam Brownback has put Kansas deeply in debt with his experiment, he calls it, with the trickle-down theory. He refuses to raise taxes even though there is $179 million budget shortfall. Governor Brownback, too, thinks the problem is that Kansans just have not wished hard enough that Tickle-down Theory will work. He is also wishing that the $500 million budget deficit projected for next year will somehow magically go away.

Will Rogers had the theory right. Money trickles up and pools at the top. Those at the top really like that, and they pour campaign money to politicians who will try keep trying the Trickle-down Theory. If there is one good thing that comes out of Brownback’s experiment in Kansas, it will prove once and for all that the Trickle-down Theory does not work. Why should it, it never has.

More on ALEC: Beware the influence of ALEC in Oklahoma

Sun ,03/08/2014

This article by the author  was first posted in the Oklahoma Policy Institute’s blog.  

The American Legislative Exchange Council (ALEC) has a great influence on our Oklahoma state politics, but many Oklahomans ALEC2have heard little about the organization. On the surface,  ALEC is an organization made up of corporations and state-level elected officials which meets three times a year to write “model legislation” for states. Officials can then take the model legislation back to their state for consideration. That sounds like a good process, except that what goes on under the surface of ALEC is kept secret.

In May of 2013, ALEC met in Oklahoma City. While corporate representatives from ALEC met with our legislators, a group of citizens protested across the street. The protesters, as well as members of the press, had been barred from attending by security guards. The agenda of the meeting was secret and an elaborate drop box system was created to avoid FOIA requests. Now, over a year later, there is still little known about the meeting or its influence on our legislators.

Rep. Gary Banz, who organized the 2013 event, described it as “a giant coaches clinic for legislators” and said that, though ALEC has been criticized for its secrecy, “The bottom line is if it’s not on our website, it’s not an issue or area that we have embraced.” That’s not quite right.  While ALEC’s website lists some of its policies and model laws, a part of the website is off limits for non-members. The public, journalists, and small business owners are excluded from ALEC membership by steep fees and by a screening process which insures new members are in harmony with ALEC’s mission. ALEC’s membership and funding sources are kept secret .

Much of what is known about ALEC has been discovered by leaked documents and by citizen’s watchdog groups, such as SourceWatch.  ALEC is a 501(c)(3) organization which is not required to reveal its donors or its funding. It has 300 corporate and 1,800 legislative members, but it will not release its membership lists. Rep. Banz said 70 Oklahoma legislators are members, but  SourceWatch lists only 38, leaving 32 members’ identities secret.

Because of the secrecy, it is hard to know what legislation comes from ALEC. Legislators can copy the bills, change them to disguise their source, and present them as their own. Most voters, the press, and even legislative colleagues often do not realize that the legislation came from ALEC. Sponsoring ALEC legislation ensures politicians they will receive support for their re-election campaigns. ALEC’s legislation is often supported by one-sided research, talking points, and op-ed articles designed to convince voters that the politicians are really looking after their best interests.

Many of ALEC’s model laws claim to promote freedom, fairness, and reform, but the end result is often that average citizens lose out in the process.  Citizen’s watchdog groups, such as Common Cause and SourceWatch, are critical of ALEC, saying its bills undercut health care reform, undermine environmental regulations, promote school and prison privatization, limit workers’ rights, restrain legislatures’ abilities to raise revenue through taxes, and mandate strict election laws that disenfranchise some voters, among many other issues.

As Bill Moyers argues in his documentary, United States of ALEC, ALEC is undermining our system of democracy. The strength of the United States is its unity, but some corporations are working through ALEC to undermine that unity at the state level so they can escape regulation and avoid taxes. ALEC is designed to give more power to corporations, claiming that businesses making decisions in their self-interest will lead to the most good for everyone, but the reality is that it does the most good for the already wealthy. We live in a state with enough resources to ensure that every citizen has food, shelter, medical care, education, and an opportunity to contribute back to society. That won’t happen if our state legislature is unduly influenced by ALEC.

What to do about ALEC is the hard question. ALEC hides its members and its funding sources, and it operates as an educational organization to escape lobbying restrictions. There are apparently 32 ALEC members in our state legislature who have not been identified. My plan is to give ALEC as much publicity as possible and to make it a campaign issue by asking candidates to pledge they will not join any organization which will keep them from representing the best interests of Oklahoma citizens.

J.C. Moore is a retired science teacher, a member of the the American Geophysical Union, and co-founder of OKcitizensfirst.org.

Bits and Pieces: ALEC at Work in the Oklahoma Legislature

Mon ,02/06/2014

In a Readers Forum article in the Tulsa World, “Responsible, conservative reforms working”, Brian Bingman, president pro tem of the Oklahoma Senate, states how proud he is of what the legislature has been able to accomplish. Mr. Bingman is rather quick to pat himself and the legislature on the back, as the reforms he cites were more to the benefit of corporations than of the average citizen. The tax reform and tax cut leaves the state badly underfunded. The balanced budget, achieved by cutting needed services, does not meet the needs of the state. The Capitol building repair was funded by bonds, rather than taxes, which has further indebted the state in the future. The education system is badly underfunded and the tax cuts have only made the situation worse in the future.

The workers compensation reform limits an injured workers right to full compensation for his injuries. Tort reform makes it harder for the average citizen to seek redress in court and limits the liability of corporations. The reform to the state’s public employee pension system, by privatizing the future pension system, destabilizes the existing program, and is a boon to private fund managers. The failure to expand Medicaid will cost the state billions of dollars in Federal funds, that we pay as taxes, and has left 144,000 Oklahomans without adequate healthcare. The hastily passed changes and extensions to corporate oil and gas subsidies, demanded by Oklahoma’s three largest oil and gas companies,  were unnecessary and will make the state’s budget problems worse in future  – and were likely unconstitutional.

Next to the Governor, Mr. Bingman is the highest ranking member of ALEC in our state and his achievements are  high on the list of ALEC’s model legislation. Many of those “accomplishments” benefit  ALEC’s corporate members, but in the end they will hurt Oklahoma and its citizens.  The Governor and 70 of our 149 legislators are members of ALEC, so what chance does an average citizen have?

flag

If you would like to end the influence of ALEC on politics in Oklahoma, please go to http://okcitizensfirst.org/2014/04/24/alec/ and ask your candidates for office to pledge that they will put the needs of Oklahoma citizens first. Let’s vote out anyone who won’t.

Note: The related Credo Petition to Governor Fallin about Medicaid expansion is at:  https://www.credomobilize.com/petitions/governor-fallin-release-the-31-e-mails-about-medicaid-expansion

Alternate Universe Discovered at Oklahoma Capitol

Sat ,05/04/2014

Recent research now suggests that multiple universes may have been formed during the Big Bang. There is evidence that one of those alternate universes may exist here in Oklahoma. I became aware of it by accident because I saw a large sign outside of Yukon Oklahoma which said,

“Welcome to Oklahoma. Where 144,000 people are denied health care because Republicans refuse to expand Medicaid.”.

That is not right, as many Republicans supported expanding Medicaid and it was Governor Mary Fallin’s decision not to do so.

When I called the Governors’ office to protest, I was transferred to someone in the public relations department which may exist in an alternate universe. I did not get the gentleman’s name, but it probably doesn’t matter since he may not exist in reality, so I’ll just call him, Au. I explained to him the reason for my call and ask why the governor had not expanded Medicaid.

Au:  It was a decision forced upon the Governor by the Affordable Care Act.

Me: But the Affordable Care Act allows the Governor to expand Medicaid to cover those people.

Au: Yes, but it makes it too expensive.

Me: But the federal government will pay for Medicaid expansion for the next 10 years, providing $1.3 billion for the program while costing the state something like $200 million.

Au: But the state doesn’t have $200 million, and it could not pay for the expansion in 10 years as then the federal government only pays for 90% after that.

Me: But couldn’t the state cancel after 10 years if it found it too expensive.

Au: We couldn’t do that and leave all those people uninsured.

Note: It was about here that the theme for Twilight Zone began running through my head.

Me: Couldn’t we put the money to expand Medicaid into the budget?

Au: No we couldn’t. You have to face reality.            (Which one?)

Me: Couldn’t we forgo the tax cut winding its way through the Legislature – or just raise taxes enough to meet the needs of the Oklahoma citizens?

Au: The budget meets the needs of the citizens.

Me: Then why is our education system so underfunded?

Au: Our education system is not underfunded.

Note: It just happened on this particular day there were 25,000 teachers, administrators, parents, grandparents, and students outside the Capitol Building protesting because the legislature would not properly fund education.

Me: Then why are all those citizens outside the Capitol Building today protesting educational funding?

Au: That’s not what they’re protesting about.

Me: Of course it is. The Oklahoma Policy Institute says that the current level of education funding is below what it was in 2008.

Au: That’s not true. Oklahoma has actually increased funding for education to an all-time high,  over $12,000 per-pupil.

Me: That’s not what the Oklahoma Policy Institute says. Where do you get your numbers?

Au: Good Day. Click.

That confirmed it for me. Only in an alternate universe would a public relations person hang up on a citizen. In science, however, it takes an independent confirmation before a discovery is credited. Luckily, someone at the Oklahoma Policy Institute also had contact with the alternate universe and was able to retrieve Au’s school budget . A breakdown of his $12,000 per-pupil is shown below, arrived at by including everything but the kitchen sink into the per-pupil expenditures. At the bottom is the Oklahoma Policy Institute’s comment on Au’s budget.

Au

The 64.3% which funds school operation is about $706 less per student in inflation-adjusted dollars than in 2008. Apparently, reality in the alternate universe is very different from the one  that most Oklahoma citizens perceive.

You too may explore an alternate universe. Just call the Oklahoma Governor’s office about Medicaid expansion.

(c) 2014 J.C. Moore

 

More on ALEC

Tue ,25/02/2014

This is a continuation in the series  Who Is ALEC ? and Academic Freedom and Democracy – ALEC Style, as it is important to keep the light on ALEC. On the surface, the American Legislative Exchange Council provides model legislation for state and national legislatures. Its membership boasts 300 corporations and special interest groups, and about 2000 state legislators, governors, US Congressmen, and US Senators. ALEC sponsors meetings where corporations and their representatives entertain our legislators and help craft “model legislation”. From the corporation’s viewpoint, it is “dream legislation” – and ALEC is the organization that helps their dreams come true. What corporation wouldn’t want legislation designed to limit liability, provide subsidies, weaken regulations, criminalize whistleblowing, lower taxes, provide an edge over competing technologies, or to transfer public funds to them by privatizing education, health care, workers comp, public pensions, and prison systems?

About 1000 model bills are available from ALEC. Legislators can copy the bills, change them to disguise their source, and present them as their own. Most voters, the press, and even legislative colleagues often do not realize that the legislation came from ALEC. ALEC’s hidden hand was exposed when a Florida lawmaker introduced a resolution urging “Congress to Cut the Federal Corporate Tax Rate” that carelessly included ALEC’s mission statement. Sponsoring ALEC legislation insures politicians they will receive support for reelection campaigns. ALEC’s legislation is supported by biased research, talking points, and slick ads to convince voters that the politicians are really looking after their best interests. 

 The press, average citizens, and small business owners are excluded from ALEC by steep fees and screening to insure harmony with ALEC’s mission. An elaborate system insures that information cannot be obtained by Freedom of Information Act requests. Much of ALEC’s secret activity is coordinated through Americans for Prosperity, a Libertarian think tank, which now has offices in all 50 states. ALEC takes great pains to keep secrets, as several corporations have withdrawn when their participation was discovered. Clearly, transparency and full, honest disclosure is need.  However, ALEC has 401(C)3 status, which makes it tax exempt and allows it to hide its agenda and the identity of donors. Although ALEC claims it is not a lobbying group, it is hard to see how claiming they are “coaching” and “educating” legislators exempts them from laws requiring disclosure of lobbying activities.

ALEC’ s most shameful activity is attempts to suppress the votes of those not likely to support its agenda – the poor, the elderly, minorities, college students, and working people. Paul Weyrich, the founder of ALEC, once explained why, saying “our leverage in the elections goes up, quite candidly, as a number of voters go down.” One of ALEC’s favorite tactics is to accuse detractors of being leftists or liberals to discredit them with religious groups and Conservatives. However, the network of think tanks and donors that support ALEC are not Conservative, but Libertarian, and their low regard for the for the truth  or the poor or is hardly Christian.  Citizens United gave corporations a large voice with their money, but it could not give them a heart or a soul.

 According to  Bill Moyer , ALEC is undermining our democracy. The strength of the United States is its unity. Corporations, through ALEC , Libertarian think tanks, and the far right wing of the Republican Party, are working to destroy that unity so they can escape regulation and avoid taxes. We live in a country with enough resources to insure that every citizen has food, shelter, medical care, education, and an opportunity to contribute back to society. That won’t happen as long as our legislatures are willing to let some citizens go without so others can have more. The best situation is a balance in power between business, labor and government. However, modern-day Libertarians want to give all the power to businesses, claiming that businesses making decisions in their self interest will lead to the most good for everyone, but the reality is that it makes the most good for the already wealthy.

Aristotle, the Pope, and Income Inequality

Thu ,02/01/2014

 

Aristotle, when comparing forms of government, pointed out some of the problems in a democracy. When the poor gain too much power, they will enrich themselves out of the public treasury and the nation will become poor. If the wealthy gain too much power, then the nation will become an oligarchy and the poor will suffer. Oligarchs insist that citizens be treated differently based on wealth, and they argue that wealth is a sign of virtue and merit, and that the poor are poor because they lack those qualities.  Aristotle concluded that: “A large middle class is absolutely essential for a stable and well-run government because the middle class do not covet rule, are not envious, foster friendship because of their similarity, and can act as neutral arbitrators between the rich and the poor.” –  Aristotle’s Politics

There is ample evidence that the middle class in United States has declined sharply, while the country has moved toward oligarchy, allowing the wealthy to enrich themselves at the expense of the middle class, the poor, and also the nation. The chart below shows how the income is now divided in the United States, with the top 1% owning 38% of the wealth and the top 20% owning 82% of the wealth. Not only is the distribution of wealth much worse than what people consider ideal, it is even much worse than what they think it is.

Wealth in Amer 2

According to Senator Bernie Sanders:

“While the very rich get richer, the middle class continues to disappear and we now have more people living in poverty than ever before.  Despite huge increases in technology and productivity, tens of millions of workers are finding it harder to feed their families, pay for health care, send their kids to college or put aside savings for retirement.” In recent years,  95% of all new income has gone  to the top 1%, we have seen a huge increase in the number of millionaires and billionaires. While the average American is increasingly unrepresented in  the political process, the very wealthy are spending hundreds of millions of dollars to justify their wealth and to convince voters to elect candidates who will further their interests.”

The  wealthy consider the money an investment which has paid off handsomely. It has bought tax breaks, loopholes, and subsidies. Many wealthy Americans are even reaping the lions share of many federal programs that were intended to help the poor and disadvantaged. 

Trickle Down economics  is behind the redistribution of wealth that began during the 1980’s, as shown in the chart at the right. Super rich incomeWhen President Reagan came into office in 1980 the top tax rate was 60%, a rate which the wealthy thought was much too high. Arthur Laffer developed the supply side arguments that led to taxes being cut using the Laffer Curve . Mr. Laffer convinced the Reagan Administration that lowering the tax rate would give the job creators more money to invest, which would stimulate the economy and lead to greater tax revenue. Reagan cut the top tax rate to 28%, which put more money in the hands of the wealthy, but little of it trickled down. The economy grew at 3.5%, a lower growth rate than when tax rates were higher, the wealthy got wealthier,  and the national debt almost tripled. The graph at the right shows a narrowing of the income gap when the Clinton administration raised taxes and a widening gap after the 2003 tax cuts.  

Following Laffer’s trickle down theory put the U.S. on a slow spiral into debt,  austerity, and income inequality. Tax rates are now clearly too low  and, according to the Laffer curve, raising taxes should stimulate the economy. Certainly, raising taxes sufficiently would end our national debt problems and the shameless practice of using the national debt for political purposes. However, Congress thinks the problem is that we have not cut taxes enough, and Paul Ryan has proposed a Congressional budget that would further decrease tax rates. Paul Ryan has proposed  reducing the top tax rate to 25%. The nonpartisan Tax Policy Center estimated Ryan’s budget would add $5.7 trillion to the deficit over the next decade and would increase the after-tax income of the top 1% of citizens by 18%.  His budget is a case of ideology trumping practical economics.

 Jobs: Congressman Ryan is still working under the assumption that trickle down economics works, and he argues that further tax cuts would create jobs. That argument is discredited by Nick Hanauer, a billionaire who has helped start many companies. He explained on Ted.com that the rich aren’t the job creators, as job creation now comes from demand, and the demand would come from a large  numbers of middle class consumers, a person making 1000 times as much as the average citizen does not buy 1000 times as much stuff. When someone calls themselves “job creators”‘, they are making a claim as Aristotle pointed out, on their virtue – the status and privileges they think they deserve.  Mr. Hanauer says the 15% taxes that capitalists pay on interest, dividends, and capitol gains and the 35% the ordinary citizen pays on their job earnings is hard to justify. He points out that of the inequality has been justified by the fallacy that ” as taxes on the rich go up, job creation will go down”. His data shows the opposite to be true. Tax vsjobsHe concludes that demand grows the economy, and taxing the rich to pay for investments that benefit all is the best thing we can do for the middle class, the poor, and for the rich as well.

The Pope recently spoke about the problem of economic inequality as it is worldwide. Many countries are in debt because of policies that favor the rich, and the remedy is too often austerity programs that hurt the poor. In his recently published Exhortation, Pope Francis warns the world against the idolatry of money and the false promise of trickle-down economics.
“Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about great­er justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.”

 “While the earnings of a minority are grow­ing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ide­ologies which defend the absolute autonomy of the marketplace and financial speculation.”” Con­sequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control.  To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide di­mensions. ” In this system, which tends to devour everything which stands in the way of in­creased profits, whatever is fragile, like the envi­ronment, is defenseless before the interests of a deified market, which become the only rule.” – Pope Francis

The IMF: Clearly, there are both sound economic and moral reasons that countries need to act for the common good by correcting income inequality. While the Pope acts to change hearts, the countries’ leaders need to act to make fairer economic policies, raise taxes, and cut out loopholes. The Guardian of financial orthodoxy, the International Monetary Fund, typically calls for nations in difficulty to slash public spending to reduce their deficits. But in this year’s Fiscal Monitor report, subtitled “Taxing Times”, the Fund advanced the idea of “taxing the highest-income people and their assets to reinforce the legitimacy of spending cuts and the fight against growing income inequalities.” There is both a moral and an economic imperative to do so.

(c) 2014 J.C. Moore

 

Laffer Economics: The Long Spiral into Debt

Wed ,28/08/2013

The Laffer Curve: Laffer economics, or supply side economics, is based on the idea that cutting taxes will provide more money for investments and job creation. That in turn should increase economic growth, resulting in an increase in tax revenue. That has not worked well in practice.

The idea was not new to Arthur  Laffer, but he used it to greatly shape the United  States’ economic policies during the Reagan Administration and to this day.  Laffer used the curve  below to argue his case:

LafferIt is based on the idea that at a zero tax rates, the government collects no taxes – and at a 100% tax rate,  the economy would collapse, resulting in zero tax collected.  If taxes are too high, then cutting them will cause a move to the left on the curve, toward higher tax revenue. The top tax rate when Reagan came into office was 60%.  Laffer used his curve to convince the Reagan Administration that lowering the tax rate would move the country to the left on the curve, stimulating the economy, and increasing tax revenue.  Did it work?

Empirical data: Laffer, and those favoring  supply-side economics, often point to the 3.5%  growth in GDP during the Reagan years as validating their theories. However, the GDP growth was less under Reagan and George W. Bush, when tax rates were low, than under administrations where the tax rates were higher.  The table below compares economic indicators among administrations:

President Top Tax Rate  GDP Growth  Job Growth    Public Debt
D. Eisenhower 90% 4% 7.20%      +14.9% GDP
Ronald Regan 28% 3.50% 16.40%        +7.1% GDP
Bill Clinton 39.60% 3.90% 19.60%       -13.6% GDP
George W. Bush 35% 2.50% 1.40%        +5.6% GDP
Source Historical CBO Records Bureau of Labor        CBO

Laffer was certainly wrong about tax cuts leading to GDP growth and increasing tax revenue. Certainly, the public debt grew substantially when taxes were lower. Public debt was high during Eisenhower’s administration because of war debts and because he built the interstate highway system that accelerated economic growth under following administrations.

What went wrong?   Basing economic decisions on Laffer’s theory involves accepting the assumption that tax rates are the main factor driving economic growth, an assumption not borne out by the empirical evidence. Also, Laffer did not present evidence showing that the maximum in his curve was at 50% . Some economists argue that the curve should  actually look like this :

Laffer2

If that is the case,  cutting the tax rate from 60%  would not necessarily stimulate the economy, but certainly would decrease tax revenue, as happened.  Taxes need not be as high as the optimum rate,  but they should be high enough to pay the country’s debts .

Recent tax cuts: Despite its failures, Congress is still trying to justify tax cuts using Laffer’s Theory. A recent survey of 40 economists found that not one agreed with Mr. Laffer that reducing the top tax rate would lead to economic growth over the next five years. A University of Chicago poll  taken in 2012 found that of 40 leading economists, not one agreed with the statement: ”  A cut in federal income tax rates in the US right now would raise taxable income enough so that the annual total tax revenue would be higher within five years than without the tax cut. ”  The results of the survey is listed below:

Laffer survey

  Still, Paul Ryan has proposed  a budget that would reduce the top tax rate to 25%. The nonpartisan Tax Policy Center estimated Ryan’s budget would add $5.7 trillion to the deficit over the next decade and would increase the after-tax income of the top 1% of citizens by 18%.  His budget is a case of ideology trumping practical economics.

 State tax cuts: Arthur Laffer now sits on the Board of Directors of the American Legislative Exchange Council (ALEC).  One of  ALEC’s  goals  is to pass laws at the state level which allow wealthy citizens and corporations to avoid regulation and taxes.  Laffer’s research has been used by members of ALEC to try to justify state tax cuts by claiming  that the nine states that have no income tax had the highest rates of job creation, as shown in his chart below:

 

Laffer5

 It looks impressive, but most of the growth was in Texas and in a carefully chosen time period when job growth was strong because of oil revenues and population growth.  Besides carefully picking his data, Laffer also ignored other economic indicators – and didn’t do a comparison with high tax states. If Laffer were correct, the nine States  with the highest income taxes should have failing economies. However, that is not the case, as shown below:

 

Laffer hgh

  The nine states with high income taxes had higher economic growth , a much smaller decline in household income, and almost exactly the same unemployment rate. Laffer’s research was biased and would never stand up to peer review, yet many states have used it as a justification for income tax cuts for the wealthy.

 Summary: Laffer’s theories are highly popular with the wealthy who want to lower  their income taxes, and with those who want to reduce the size of the Federal government.  While Arthur Laffer may be charismatic, his theories are not borne out by empirical evidence and we should not make economic decisions based upon his theories or his articles. While money may trickle down, it flows upward and pools at the top.  Cutting top tax rates has led to a more regressive tax structure, shifting more of the tax burden to sales taxes, property taxes and a myriad of government fees. Following Laffer’s economics has led to a great disparity in wealth in United States and a crushing national debt.  Arthur Laffer’s legacy is not economic growth, but a long spiral downward into debt and austerity and a tremendous increase in the number of poor Americans. Forbes put it best a couple of years ago – “Economist Arthur Laffer has had a long, distinguished career. Unfortunately one of the things that has distinguished it is that he has often been extremely wrong.”

 

Who Is ALEC ?

Mon ,15/07/2013

On the surface, ALEC is the American Legislative Exchange Council, an organization that provides model legislation for our state and national legislatures. The membership of ALEC is composed of 300 corporations, a number of special interest groups, and many politicians including about 2000 state legislators, governors, US Congressmen, and US Senators. ALEC sponsors meetings where the corporations and their lobbyists entertain the legislators and help craft what they call “model legislation”. From the corporation’s viewpoint, it is “dream legislation” – and ALEC is the organization that helps their dreams come true. What corporation wouldn’t want legislation designed to limit their liability, give them subsidies, shield them from regulation, criminalize whistleblowing, lower their taxes, provide them an edge over competing technologies, or to transfer public funds to them by privatizing health care, workers comp, public pensions, and prison systems?

The press, average citizens, small business owners are excluded from ALEC’s membership and their meetings.  There are steep fees to join, except for legislators, and ther are requirements to insure that members are in harmony with ALEC’s mission. They try to keep keep their membership, agendas, and minutes of their meetings from public scrutiny and most information about them is gained from leaks. An elaborate system has been set up to see that information cannot be obtained from legislators by Freedom of Information Act requests. Often, legislators meet with CEOs and corporate representatives, while citizens gather across the street to protest corporate greed. Much of ALEC’s secret activities are coordinated through Americans for Prosperity, a Libertarian think tank that now has offices in all 50 states.

Over the years, about 1000 model bills have been written, primarily by corporate lawyers with some input from legislators. State legislators copy these bills, change them to disguise their source, and present them as their own. It is like plagiarism with the author’s permission or copying someone elses homework rather than doing the necessary research. The legislation does not arise out of the needs of the state or the nation, but from the need of the corporations to increase their profits. The members of ALEC take great pains to keep the process secret and a number of corporations have withdrawn from ALEC over bad publicity when their participation was discovered.

With so many lawmakers involved, it is hard to keep secrets, particularly when many legislators are proud of their corporate relationships. And then, Murphy’s Law sometimes exposes ALEC’s hidden hand. A Florida lawmaker, Rachel Bergen, introduced a resolution to lower corporate tax rates, but was rather embarrassed when she forgot to remove the mission statement of ALEC.

 

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Oops, the wording was hastily corrected, but the mistake alerted the press to the source of the proposal. Thom Hartmann took note of this error and proposed that all legislation that came from ALEC  should have a similar disclosure. How would it look if a House Bill to approve the Keystone XL pipeline came with this disclosure?

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Would a law to gut Wall Street regulation and the Consumer Protection Act pass if it came with this disclosure?

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Congress has voted 37 times, at last count, to repeal the Affordable Care Act. Would that motion carry again if the bill had this disclaimer?

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Probably. Many politicians have more loyalty to those who fund their campaigns than to the citizens. Supporting ALEC legislation carries an understanding that by sponsoring their bills, politicians will receive support for their reelection campaigns. ALEC’s legislation is supported with biased but academic sounding research, talking points, and slick ads to convince voters that the politicians are really looking after their best interests. Most voters, the press, and even legislative colleagues often do not realize that the legislation came from ALEC.

Clealy,  transparency and full and honest disclosure is need.  However, ALEC has 401(C)3 status as a charity, which makes it tax exempt and hides its motives and the identity of its donors. Although ALEC claims it is not a lobbying group, it is directly lobbying our state and national legislatures while getting around laws that limit lobbying and require disclosures of lobbying activities. One of the most shameful of ALEC’ s activities are attempts to suppress the votes of those not likely to support their agenda. Paul Weyrich, the founder of ALEC was once captured on tape, as shown at 3:49 in this video, explaining that he didn’t want everyone to vote, saying “our leverage in the elections goes up, quite candidly, as a number of voters go down.” That was a long time ago, but Alec is still supporting voter suppression laws that make it more difficult for the poor, the elderly, minorities, college students, and working people to vote.

Though mainly supporting corporate interests, ALEC legislation often gives a nod to religious groups and to conservatives to win their support. One of its favorite tactics is to accuse detractors of being leftists or liberals to discredit them with conservatives and Christians. However, the network of think tanks and donors that support Alec are not Conservatives, but they are Libertarians . It is also hard to see how an organization that has such little regard for the poor or for the truth can be considered Christian.  Citizens United may have given corporations a large voice with their money, but it could not give them heart or a soul. Besides hiding their funding sources, their agenda, and the identity of those supporting them, ALEC, according to  Bill Moyer ,  is undermining the principles upon which the United States was founded.

The strength of the United States is through its unity. However, Libertarians have been working very hard lately, through ALEC , their think tanks, and the far right wing of the Republican Party, to destroy that unity so they can escape regulation and avoid taxes. We live in a country that has enough resources that we could make sure that every citizen has food, shelter, medical care, education, and an opportunity to contribute back to the society. But that won’t happen as long as Congress follows the wishes of those who are willing to let other citizens go without so they can have more. The best situation would be to have a balance in power between business, labor and government. The modern-day Libertarians want to give all the power to the businesses. Their overarching philosophy is that businesses who make decisions in their self interest will lead to the most good for everyone, but the reality seems to be that it makes the most good for the wealthy.

(c)  2013 J.C. Moore

Academic Freedom and Democracy – ALEC Style

Sun ,23/06/2013

Academic freedom is one of the cornerstones of our educational system, so who could be against it? Representive Gus Blackwell introduced into the 2013 Oklahoma legislature HB 1674, called the “Scientific Education and Academic Freedom Act”. But there was something strange about the bill, as science teachers in Oklahoma already have a system ensuring  academic freedom. And, the bill only insured Academic freedom in four areas which Representative Blackwell deemed controversial, specifically “biological evolution, the chemical origins of life, global warming, and human cloning”. Mr. Blackwell’s education and expertise is in religion and business administration, so it’s unusual that he knows what is controversial in science. Oklahoma scientists and science educators were almost unanimously opposed to the bill as it is their opinion that there is virtually no scientific controversy on the core facts of global warming and evolution.

The bill allowed “teachers to help students understand certain information about scientific theories; disallowing State Board of Education, district boards of education, and certain administrators from prohibiting teachers from helping students understand certain information about scientific theories.”  Perhaps the bill would have been more aptly named the “Freedom from Accountability Act”. Apparently Mister Blackwell had not thought this through. It would also shield any science teacher, no matter of what religion, who wished to introduce their beliefs into their science classes. The bill even had an emergency clause providing that it be enacted immediately with a letter sent to school officials informing them of the decision. And, why is this now an emergency? The bill passed Oklahoma’s education committee by one vote, but fortunately for the quality of science education in Oklahoma, the 2013 session ended without it coming up for a vote. But, you can be sure it will be back.

The unusual nature of this bill can be understood as similar bills, with almost exactly the same wording, have been introduced in about 20 states. It is one of the “model bills” being promoted by the American Legislative Exchange Council (ALEC). ALEC is composed of over 300 special interest groups and corporations such as Exxon Mobile, AT&T, pharmaceutical companies, and Koch Industries. They sponsor conferences where their representatives  meet with state legislative members to collaborate on “model bills” and to draft legislation favoring their special interests. ALEC now has over 1000 “model bills”, many of which seek to limit workers rights, limit corporate liabilities, oppose environmental regulations, cut taxes, oppose universal health care, and to privatize such things as education, workmen’s compensation, and the prison systems.

Though mainly supporting corporate interests, the legislation often gives a nod to religious groups and to conservatives to win their support. The state legislators take the “model bills” back to their respective states, often as their own work. It also carries an understanding that by sponsoring the bill, they will receive support for their reelection campaigns. ALEC has 501(C)(4)status as a charity, which makes it tax exempt and hides its motives and the identity of its donors. Although ALEC claims it is not a lobbying group, it is directly lobbying our state Congressmen while getting around laws that limit lobbying and require disclosures of lobbying activities.

Representative Blackwell is a member of ALEC and, according to Source Watch, used state funds to attend their meetings. His interest in the bill was probably to introduce creationism into science classes, but adding climate change to the “controversy” list aligns with the interests of the fossil fuel companies. A leaked document from the Heartland Institute, a Libertarian think tank funded by fossil fuel interests, showed that introducing doubt about climate change into science classes was one of their goals.

Bill Moyer recently had a program on how ALEC is undermining American democracy. Although ALEC claims to promote capitalism, it is actually the citizens who pay. Not only do many politicians attend their meetings at state expense, members of ALEC get a big tax break for their lobbying activities and our taxes still pay for privatized state functions.  Sourcewatch lists 25 Oklahoma legislators as members of ALEC and Governor Fallin was once ALEC’s woman of the year, which means she favored the needs of large corporations and of the wealthy long before she became governor. We just saw a number of ALEC sponsored laws make their way through the Oklahoma Legislature, much to the detriment of ordinary citizens.

 

(c) 2013 J.C. Moore