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Trump, lies, and tax cuts: Why they will not help the economy

REUTERS/Kevin Lamarque
The truth about taxes – especially income taxes on individuals and corporations – is that there is no correlation between tax rates and economic growth.

Among the most enduring political-economic myths is the claim that tax cuts on the wealthy stimulate the economy and will benefit all of society, including the middle and lower classes. This is the central claim of supply-side economics, and this is the logic behind the Trump tax cuts. One might as well believe in the tooth fairy, Bigfoot, and the Loch Ness monster.

schultz portrait
David Schultz

The truth about taxes – especially income taxes on individuals and corporations – is that there is no correlation between tax rates and economic growth. There is also no evidence that taxes serve as potent tools to encourage business relocation decisions. History has repeatedly proven both of these claims wrong, yet both ideas fail to die, enduring as a chicanery that continues to waste public money, benefiting only the rich.

Two issues place the role of taxes in the economy back on the agenda. The first is the Trump tax plan; the second is the scramble across the country to use tax incentives to lure Amazon to locate its corporate headquarters to a specific state and community, such as Minnesota.

Multiple frauds and myths

Turning first to the Trump tax plan, there are multiple frauds and myths here. First, the plan calls for an elimination of the estate and the alternative minimum tax as well as increasing the standard deduction. The three are described as helping the middle class. In reality, none of them will do anything for the middle class or poor. Right now few individuals pay estate taxes. As of 2016, there is no estate tax if the estate is valued at less than $5.45 million. There are not too many poor or middle class people I know who are worth more than $5.45 million.

Second, the alternative minimum tax only applies to the likes of billionaires like Donald Trump or major corporations who are able to use creative tax formula to avoid regular incomes taxes. The alternative minimum tax was meant to impose taxes on the rich, and no poor or middle class pay it. Finally, for most middle class families, the doubling of the standard deduction will not be used because either they make too much or, in the case of the poor, make too little to qualify. The trump tax cuts will do little to help most middle class Americans.

If any tax cuts would help the middle class and the poor, it would be cutting the payroll taxes, which are regressive. For example, change the Social Security taxes from a flat tax into a progressive one, or lift the income cap on the maximum taxable income for Social Security. These options would actually put more money into the hands of the poor or middle class. The same would be true of increasing the Earned Income Tax Credit.

But the bigger fraud is the belief that taxes are efficient and effective tools to stimulate the economy and encourage business investment decisions. Do high taxes really hurt the economy as much as they believe and will lowering them have much of an impact on stimulating it? Anecdotal stories and illustrations confirm the tax fallacy. High tax states such as Minnesota have generally fared better in terms of economic growth, unemployment, median family incomes and location of Fortune 500 companies than low tax ones such as Mississippi and Alabama. If taxes were the only factor, Mississippi would be thriving, Minnesota in the tank.

Look at what taxes buy

At best, there is little correlation between taxes, income, and unemployment rates, but in many situations high taxes, and with that, government expenditures on education, workforce training, and infrastructure, correlate positively with income and low unemployment and business retention. One needs to look not just at one side of the equation — taxes — but the other side too — what taxes buy — to see what value businesses get out of them in terms of educated workforces and infrastructure investments. Most debates fail to do this.

Using statistics gathered by the Bureau of Economic Analysis, one can also examine how economic growth is related to tax rates. One can compare annual economic growth as measured by the percent change in the gross domestic product (GDP), percent based on current dollars, comparing it to the highest federal individual marginal tax rate and the top corporate tax rate since 1930. Effectively, look at the tax on the wealthy and corporations. If taxes are a factor affecting economic growth, one should see an inverse relationship between growth of the U.S. economy and higher tax rates. The GDP should grow more quickly when top individual and corporate tax rates are lower. If taxes are a major factor deterring economic growth, lines on a graph should go in opposite directions: As tax rates go up the GDP should go down.

No such pattern emerges between high taxes and GDP growth over 80 years. During the Depression era of the 1930s corporate and individual taxes rates increased, but in 1934 through 1937 the GDP grew by 17%, 11%, and 14% annually. Top corporate tax rates climbed to over 50% through the 1960s, again with no discernible pattern associated with decreased economic growth. The same is true with top tax rates on the richest, which were as 91% into the 1960s. Conversely, since the 1980s after Kemp-Roth, and then after 2001 with the Bush era tax cuts, there is no real indication that the economy grew more rapidly than in eras with significantly higher tax rates on the wealthy and corporations. Looking at time periods when tax rates were at their highest, GDP often grew more robustly than when taxes were cut. Visually, the graph simply fails to demonstrate that tax rates negatively impact economic growth.

Checking the statistics

Pictures are worth a thousand words, but statistics are priceless. Statistically, if a tax hurts economic growth, the correction with it is -1. If they positively facilitate growth the relationship is 1, and if they have no impact the figure is 0. The correlation between GDP and top individual taxes is 0.29, between GDP and top corporate taxes is 0.32, and among the three it is 0.14. Statistically, there is a slight positive impact on either top individual or corporate taxes or economic growth, but overall almost no connection between tax rates on the wealthy and corporations and economic growth in the United States.

But what about taxes as job killers? Again, running similar statistical tests, there is little connection. Using Bureau of Labor Statistics data on unemployment rates since 1940, the correlation among top individual and corporate taxes and the annual unemployment rate is -0.02 — essentially no connection at all.

Now some will claim that the 1963 Kennedy tax cuts are an example of how changing tax rates will stimulate the economy. Contrary to the folk legends, there is little evidence they helped the economy. And even if tax cuts do stimulate the economy, the U.S. economy is currently doing well, with near 3% GDP growth. The cuts will do little to help the economy, especially if concentrated in the hands of the wealthy or corporations. If anything, targeted cuts to help those currently unemployed, or incentives to invest to increase worker productivity would be more helpful.

Cuts in taxes without cuts in spending inflate the national debt, and that may not be beneficial. Conversely, cuts in taxes along with cuts in government spending will depress the economy.

The Amazon bidding war

Finally, think about the bidding war by states to lure the new Amazon headquarters to their communities. Again, there is little evidence that tax incentives are a major determinant of business location decisions. Businesses, when looking to locate, look to the quality of the workforce, access to markets and suppliers, infrastructure, and other amenities (such as the arts) as far more important factors influencing location decisions than tax cuts. Literally hundreds of studies and interviews with businesses confirm this. Businesses ask for tax cuts for one reason — because they can — and governments are foolish enough to oblige.

The belief that tax cuts make much of an economic difference is a lie that is hard to kill off. Trump’s tax plan, along with the Amazon bidding war, are just the latest examples of policy ideas that do no more than enrich the wealthy at the expense of the rest of us.

David Schultz is a Hamline University professor of political science. His latest book is “Presidential Swing States: Why Only Ten Matter.”  He blogs at Schultz’s Take, where a version of this piece first appeared.   


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Comments (40)

  1. Submitted by Ray Schoch on 10/05/2017 - 09:36 am.

    Happy to see

    …professor Schultz call “supply side” economics what it is: a lie. That fits right in with the governmental style of both the Current Occupant of the Oval Office, and top Republican leaders in both the House and Senate. Mr. Ryan and Mr. McConnell are both quite accomplished liars, at least in the policy field of economics. Their campaign donors generally applaud their lies, while the people they keep saying they’re helping generally see no benefit at all.

  2. Submitted by Ron Gotzman on 10/05/2017 - 09:52 am.

    typical tax and spend logic…(lies?)

    It seems Mr. Schultz is arguing that a “huge” tax increase on the rich is great for the poor and the middle class and the economy.

    How much more income does the government need to confiscate so the poor and the middle tax to be better off?

    Is Mr. Schultz saying that the Government has an revenue problem?

    More people need to be taken off the tax rolls so the “rich” can carry even a greater share of the load?

    “If anything, targeted cuts to help those currently unemployed….. would be more helpful.” The unemployed or the poor do not pay taxes. Mr. Schultz is simply talking about good old fashion redistribution.

    The plan put forth by the author would make socialist Bernie burst with joy.

    • Submitted by Frank Phelan on 10/05/2017 - 10:01 am.

      Read It Again

      It’s pretty clear what Schultz, whether or not one agrees with it. Tax cuts on the wealthy don’t juice the economy, and never have.

      As you have not disputed that notion, it would seem you do not disagree with it.

    • Submitted by RB Holbrook on 10/05/2017 - 10:34 am.

      Did We Read the Same Article?

      I read this article–carefully, without advance assumptions about what some liberal intellectual was going to say–and didn’t see anything that advocated a tax increase. Can you point me to that language?

      “The unemployed or the poor do not pay taxes.” Almost 2/3 of people below the poverty line (63%) are working at least part-time (this is, by the way, almost the same percentage of poor people who are eligible to work, meaning not retired, going to school, or disabled). The working poor pay payroll and Social Security taxes.

      “The plan put forth by the author would make socialist Bernie burst with joy.” Again, what plan? He says tax cuts are not necessarily the bringers of economic growth. I saw no “plan.”

  3. Submitted by Hiram Foster on 10/05/2017 - 11:11 am.


    My theory is that people want to live in nice places. If giving that half billion dollars to the Vikings at all, it’s that purchasing their presence will make our community a more exciting, a more interesting place to live.

    We can talk about fairness at length, but the fact is taxes, like your paying your electricity bill, acts as a drag on the economy. In each case, it’s money you don’t spend at Target. But in evaluating any expenditure, it’s a question if whether you get value in return. I don’t like taxes, but I do like things like roads, health care, schools and social security, etc. My own sense is that the value of those things exceeds what I pay for them in taxes. Maybe a market approach would be better, but I don’t see any of those things offered on ebay.

    • Submitted by Thomas Nicholson on 10/06/2017 - 11:00 am.

      Not true

      This is not true: “…the fact is taxes, like your paying your electricity bill, acts as a drag on the economy”. That is not a fact. I minored in economics and have studied this. When taxes are increased, unemployment generally goes down. When taxes are cut, it often times goes up. How is that a drag on the economy? When taxes are increased, the government generally spends more, spending more on business’ goods and services. How is that a drag on the economy? Moreover, equating taxes with a decrease in money you are able to spend elsewhere, like at Target, is a fallacy. If that were true, then when taxes are lower business income should be higher and that doesn’t generally hold true either when one takes a look at the stats.

      • Submitted by Hiram Foster on 10/11/2017 - 06:29 am.

        How is that a drag on the economy?

        Because people have less money to spend. I think if you read the whole sentence you won’t find much disagreement.

        If that were true, then when taxes are lower business income should be higher and that doesn’t generally hold true either when one takes a look at the stats.

        Of course you always have to distinguish between tax rates and taxes actually paid. What do we mean when we say taxes are lower? That the rates are lower? Or that we are paying less in taxes?

        Tax rates don’t necessarily mean a lot. That’s because looking at rates alone means you are looking at associated tax breaks, which can lower the effective rate. As for taxes overall, when the economy is struggling that depresses tax revenues.

    • Submitted by Gerald Abrahamson on 10/09/2017 - 11:30 am.

      If paying your electric bill is a drag on the economy,

      then how big a drag on the economy is paying all the other bills you get? You do not have a clue.

      That electric bill is a debt owed to the electric company for power you chose to buy and use. You used that electricity for your own benefit, so you owe them that money. The electric company will go out of business if enough people choose to not pay their electric bills. What will you do to get electricity when the power company stops providing it to you? Or is that something you have not really considered?

      Taxes are used to pay for things business will not provide on its own: Roads and bridges, schools, healthcare, public safety, fire and police, defense, and much more. There *used to be* fire departments that were privately operated–and they only served their own subscribers. If your neighbor’s house caught fire and they were NOT a subscriber to a fire department (but you were), your fire dept would come out to protect YOUR house–but not the neighbor’s. Their house would likely burn down as a result. With competing fire departments in the same neighborhood, there was sometimes sabotage (of various types) by the competing companies. Eventually, that led to the current system of having a public fire department that served the public (i.e. everyone) and it was supported by taxes on all property in the city.

  4. Submitted by Howard Salute on 10/05/2017 - 12:00 pm.

    What bubble does this guy live in?

    Schultz states his premise as “The truth about taxes – especially income taxes on individuals and corporations – is that there is no correlation between tax rates and economic growth. There is also no evidence that taxes serve as potent tools to encourage business relocation decisions.”

    Where has Schultz been? Maybe talk to Omar Ishrak, the CEO of Medtronic, about how tax policies impact location of Medtronic’s new facilities.? Why have so many auto makers located facilities in the South rather than in Michigan? Talk to the people of Puerto Rico and ask them what happened to the medical industry companies that were located in Puerto Rico (and the related jobs) when the tax incentives went away.

    Maybe Schultz should get out of the class room and see the world.

    • Submitted by Frank Phelan on 10/05/2017 - 12:16 pm.

      Today’s Auto Industry

      Has chosen to locate in the south primarily due to access to cheap non-union labor and the anti-American socialist attitude of southern red states that open the public treasury in complete contradiction of their coveted free market principles.

      What’s that got to do with tax rates?

    • Submitted by Tim Smith on 10/05/2017 - 01:37 pm.

      Just Happy

      that David is finally out of the alt left closet.

      How about Scott Walker reviving the Wisconsin economy from a decade of nothingness? Tax limits/cuts for manufacturers and agriculture helped lower the unemployment rate from 8% to 3.4 (as low as 3.1 this year). Businesses are flowing in from Illinois at an unprecedented rate. Over 4,000 new jobs this year already.

      • Submitted by RB Holbrook on 10/05/2017 - 03:01 pm.

        Yeah, But . . .

        Our Pal Scott said he was going to create 250,000 private sector jobs in four years. Six years later, the state is still short 64,000 new jobs.

        How about that Foxconn deal? If all of the projections pan out, the state should break even on it sometime in 2042. Of course, it’s worth it to have a company with such a stellar employment record (did they get a tax break on suicide prevention nets? That could be valuable to them).

        “Over 4,000 new jobs this year already.” Cool! In nearly 10 months, he replaced the 4,000 jobs the state lost in December of 2016!

        • Submitted by Tim Smith on 10/05/2017 - 10:23 pm.

          Facts n reason

          Evidence shows the Wisconsin economy is vastly better than when Walker inherited it, Long tern rather than short term big construction stimulus.

          • Submitted by RB Holbrook on 10/06/2017 - 12:18 pm.

            Reason n facts

            Evidence shows that Walker became Governor in 2010, when the country was just beginning its recovery from the Great Recession. The economy in just about every state has improved since then, albeit to varying degrees.

            • Submitted by Tim Smith on 10/06/2017 - 01:38 pm.


              when Wisconsin’s manufacturing economy lagged behind some others his first 2-3 years he was hammered on in these pages for killing the wisc economy, now that his policies have taken hold and businesses want to set up shop there everyone else but him gets the credit. Sorry, can’t have it both ways.

              • Submitted by RB Holbrook on 10/06/2017 - 02:06 pm.

                It’s Hammer Time!

                What difference does it make that he was “hammered on in these pages?” Facts are still facts.

      • Submitted by Frank Phelan on 10/05/2017 - 03:18 pm.

        The WI Economy

        Has lagged other states. And given Right To Freeload and the elimination of prevailing wages on public construction projects, consumer demand will suffer as working folks incomes stagnate.

        Walker took over when the economy was still suffering the Bush Recession. Of course there would be new jobs created as the economy improved. But Walker’s economy is under performing.

      • Submitted by Pat Terry on 10/05/2017 - 05:04 pm.

        Walker’s model is a race to the bottom – attracting low-wage jobs by cutting taxes and regulations. There’s a reason Wisconsin was once again last in business start-ups. He’s basically eating the seed corn in cutting education to do this. Its a long-term losing strategy.

        • Submitted by Tim Smith on 10/05/2017 - 06:33 pm.

          So false

          His model is actually the opposite, good paying jobs aare moving into the state.
          Yes, they do finish last in start ups but that is always the case, even under the dem governor before him. It has to do with laws in place that other states dont have. He should fix that.

          Bottom line is that is absolutely true he has improved the economy there, overall.

          • Submitted by Pat Terry on 10/06/2017 - 01:45 pm.


            That simply isn’t true. It has nothing whatsoever to do with any laws in Wisconsin – its about cutting education and opportunities for business to grow. The Walker model is killing innovation. If it wasn’t for the huge success of Madison despite Walker, Wisconsin would be completely in the toilet.

            The economy has improved while Walker is in office, as it has everywhere else, but he is killing Wisconsin’s future. They will be stuck with horrible deals like the FoxConn swindle.

    • Submitted by RB Holbrook on 10/05/2017 - 01:41 pm.

      See the World!

      Start with Kansas, where slashing state taxes to the bone and cutting spending has lead to private bliss and public wealth.

      Continue to Mississippi, where low taxes have made the state 50th in personal and household income.

      Maybe, while he’s out and about, he can review the stellar performance of the US economy in the aftermath of the Bush tax cuts.

      “Talk to the people of Puerto Rico and ask them what happened to the medical industry companies that were located in Puerto Rico (and the related jobs) when the tax incentives went away.” I don’t know how to tell you this, but the pharmaceutical and medical device industries remain a mainstay of the Puerto Rican economy (employing around 100,000 people and generating close to $14 billion for the local economy). Just this morning, the failing liberal fake new outlet New York Times reported that the aftermath of Hurricane Maria has many in the industry and government concerned that there could be shortages of some 40 drugs, made by 10 different companies.

    • Submitted by Gerald Abrahamson on 10/09/2017 - 11:36 am.

      Bad management decision?

      “Why have so many auto makers located facilities in the South rather than in Michigan?”

      The Ford Plant in St Paul was the “lowest cost producer” in the entire US Ford assembly system. So why did they close it? Remember, closing the LOWEST cost producer means production must be shifted out of the US in order to obtain even lower costs. Now we know they are moving more production to Mexico and China. Plus, automation will take over more and more of the jobs over time. This is already happening.

  5. Submitted by Bill Willy on 10/05/2017 - 04:40 pm.

    Second opinion

    The problem with this article (for True conservative believers) is that it’s got strong clear facts in it. That’s a problem because there’s no one way to refute them except to not look at them and do the usual conservative thing: Keep pretending they aren’t real and that they don’t matter because . . . because . . . Well, you know.

    And then, of course, keep right on saying the kind of things those who disagree with the author have said here (and say all the time).

    For those who see David Schultz as just another liberal dope and would like a second, guaranteed non-liberal, opinion, take a look at what a guy named Bruce Bartlett had to say about these proposed tax cuts a couple weeks ago.

    If you’re not familiar with him, he’s a bona fide Reagan conservative. As far as that goes, he worked for Ronald Reagan and was one of the people who put together the original supply-side, trickle-down tax plan Reagan sold to America just before the economy started the 30+ year downward slide it’s been on ever since (for everyone but one of the richest groups of people on Earth).

    “I helped create the GOP tax myth. Trump is wrong: Tax cuts don’t equal growth”

    That’s the article’s headline. And, among other interesting things, he says this:

    “By the time Ronald Reagan was president, Republican tax gospel went something like this:

    — The tax system has an enormously powerful effect on economic growth and employment.

    — High taxes and tax rates were largely responsible for stagflation in the 1970s.

    — Reagan’s 1981 tax cut, which was based on a bill, co-sponsored by [Rep. Jack] Kemp and Sen. William Roth (R-Del.), that I helped design, unleashed the American economy and led to an abundance of growth.

    “Based on this logic, tax cuts became the GOP’s go-to solution for nearly every economic problem. Extravagant claims are made for any proposed tax cut. Wednesday, President Trump argued that ‘our country and our economy cannot take off’ without the kind of tax reform he proposes. Last week, Republican economist Arthur Laffer said, ‘If you cut that [corporate] tax rate to 15 percent, it will pay for itself many times over. … This will bring in probably $1.5 trillion net by itself.’

    “That’s wishful thinking. So is most Republican rhetoric around tax cutting. In reality, there’s no evidence that a tax cut now would spur growth.”

    • Submitted by Frank Phelan on 10/05/2017 - 06:06 pm.

      For The GOP

      It’s a faith based thing.

    • Submitted by Frank Phelan on 10/06/2017 - 05:59 am.

      Inconvenient truths

      Conservatives forget two important truths about their hero Ron Reagan.

      First, he benefited greatly from the global collapse in oil prices in his first term, which juiced the economy. Had that collapse come two years earlier, Carter would have won handily in 1980.

      Second, while known as a tax cutter, he signed many tax increases into law. For uneducated voters, the modest income tax cuts of 1982 were swamped by the FICA tax increases that came later. When facing a sea of red ink, Reagan passed tax increases into law, a quiet admission of an earlier failure.

      If Ron Reagan were to run in GOP primary today, Faux News, Grover Norquist, and Karl Rove would have him branded as a tax and spend liberal in a heart beat, and he’d go down in flames.

  6. Submitted by Ilya Gutman on 10/05/2017 - 09:44 pm.

    I guess the NY Democratic governor would disagree since he is constantly running TV ads emphasizing lower taxes…

    Anyway, Mr. Schultz is professor of political science, not economics, but it is not necessary to be a professor at all to understand that a blanket statement such as “The truth about taxes – especially income taxes on individuals and corporations – is that there is no correlation between tax rates and economic growth” cannot be correct even theoretically because it all depends on conditions. Here is an extreme example but in science on example to the contrary proves a statement incorrect: Imagine if the tax rate is 100% and then it is reduced to 50% – will anyone argue that it will not make any difference?

    • Submitted by Frank Phelan on 10/06/2017 - 12:30 pm.

      Guv. Cuomo

      May have a “D” behind his name, but he’s no progressive, and NY progressives are not enamored of him in the least.

  7. Submitted by Cameron Parkhurst on 10/06/2017 - 11:14 am.

    The problem with Conservatives and Republicans

    is that no matter what the tax rate is, it can always be cut. And the cuts have no correlation to the services provided by government. And if revenue needed by government can be reduced, services will be reduced, and then it can be argued that government is ineffective, so why pay more in taxes for inadequate services. And the race to the bottom continues. And the answer is that the private sector and supply and demand will provide a better way of getting services to the citizens. Until, it is proven that the private sector cannot provide what is needed.

    That failure becomes evident particularly when there is a large natural disaster and assistance is needed quickly. In those instances the nature of supply and demand is that a $1.00 bottle of water might sell for $10.00 and a hotel from that is normally $89.95 is now $159.95, because that is how it works. Supply goes down, demand goes up, and the market prices accordingly.

    Finally, it is fun to watch a Conservative or Republican politician use the the “taxes must be cut” mantra when they are seeking election to an office previously held by another Conservative or Republican. It proves that they want to cut taxes for the sake of cutting taxes, not for any intellectually honest reason.

  8. Submitted by Joe Smith on 10/06/2017 - 11:49 am.

    Simple reason the “lie” won’t die.

    The tax paying American people understand that if they have more money to spend on things to make their life better they will spend it. The tax paying American people understand giving their hard earned tax dollars to a congress, with a 15% approval rating, is not good economics. Anyone with half a brain understands that Bill Gates making billions doesn’t affect them at all!! The “evil 1% is taking money from you” theme only works on the gullible and folks who don’t understand economics. That is why the “lie” won’t die!

    • Submitted by Cameron Parkhurst on 10/06/2017 - 12:17 pm.

      So how much

      should the tax paying public expect to budget as part of their household expenses for infrastructure, police, fire, military and similar items?

      • Submitted by Joe Smith on 10/06/2017 - 02:06 pm.

        Police, fire and military fall under protecting U.S. citizens.

        We should pay for that thru a consumption tax or fair tax. As far as education, bring that back to the school districts, county boards and local Government. Allow for school vouchers, so the actual people who know the children (parents), can make their best decision for their child. Some bureaucrat making decisions for 10’s of millions in DC, has not worked,change it. Local Property tax can pay for that. Infrastructure should be a free market system. Again a consumption tax on gas taking the Federal tax of 18.4 cents a gallon and giving it back to the state, add that to the state tax of 30 cents a gallon comes to $9.76 per 20 gallons. If you want you can use the money from licenses and tax on the car too. Bid out every job to the best construction company for the lowest bid in an open setting where every bid is announced after. Get that out of DC also by giving it back to the states. An answer to your question of how much should we pay in taxes is simple, a whole lot less than 4.1 TRILLION that the Fed brings in now!!!

        • Submitted by Frank Phelan on 10/06/2017 - 08:29 pm.

          Golden Arches Prices, Steakhouse Quality

          By current law, public construction contracts are awarded to the lowest bidder; all bids being public once they are opened.

          You say you want the best contractor and the lowest bid. In construction you get to choose only two of the following three: cost, quality, speed. Which two do you want? When you buy tires, do look for the highest quality AND the lowest cost? In a free market healthcare system, would you look for the lowest cost surgeon?

          Joe, how does federal or local government insure low cost and quality on construction projects?

    • Submitted by RB Holbrook on 10/06/2017 - 12:22 pm.

      Die, lie, die!

      “The tax paying American people understand giving their hard earned tax dollars to a congress, with a 15% approval rating, is not good economics.” We’re crowd sourcing economic knowledge now?

      The public hates high taxes. Yes, I think we can all agree on that. Now, tell me how that hatred translates into proof that lower taxes stimulate the economy.

    • Submitted by Bill Willy on 10/07/2017 - 11:27 am.

      So you’re saying David Schultz is lying?

      Bill Gates’ net worth is $88 billion (they say).

      That’s 88,000 million dollars . . . 88,000 one-million dollar bills.

      Bill Gates will be 62 years old on the 28th of this month.

      If he lives another 38 years he’ll make it to 100.

      If he threw up his hands tomorrow, saying, “I’ve had ENOUGH of this! I’m outta here!” and cashed it all in by his birthday, built an underground vault in his back yard, put it all in there, never made a nickel on interest and just lived off it for the rest of his life, he and his family would have to budget things so that they could get by on a little over $2 billion, $300 million per year.

      That’s $190+ million a month, or just over $3,700,000 a week.

      Does that affect me? Probably not (and more power to him . . . he, his wife and their foundation are doing a lot of good things for people’s health around the world . . . way more than today’s Congress is trying to do right here in America — they’re in the process of taking access to health care away from kids right now — see: “CHIP funding” — to save a little more money for “desperately needed tax relief”?).

      But does Bill Gates need a tax cut? Does he even want one? Could he afford to pay a few percentage points more than he’s paid for the last 30+ years so middle-class families and the “working poor” could pay a little less and we, as a society, could afford to do a few things like, say, rebuild our infrastructure, paying all kinds of private contractors (like we do now) and their (millions of) employees decent money in the process? Like we, as a society, did after Dwight Eisenhower (America’s last real Republican president) twisted enough congressional arms to sell the “Federal-Aid Highway Act of 1956” that built the interstate system you may have used, toll-free, a few (thousand) times in your life?

      And, as Senor Holbrook asked, what does what you’re speculating on and suggesting — or anything the president, Paul Ryan and the Republican Congress is proposing — have to do with any form of economic growth other than the growth of America’s wealthiest people’s net worth?

      You know . . . The economic growth conservative Republicans always say tax cuts will produce even though they never do (for anyone other than those getting them)?

      The thing this article was about?

      Speaking of which, are you saying this article is just another a pack of lies?

      Are you saying its author is one of those folks who doesn’t understand economics?

      Are you saying all he’s doing is helping to keep the gullible among us ignorant and cut off from getting our slice of the Great Conservative American Economic Growth Pie?

      Or what?

  9. Submitted by Dennis Wagner on 10/07/2017 - 07:50 pm.

    Good Article Dave

    And supported with some reasonable and rational as well as factual dialogue. We can always expect the “anti-tax ” boo-birds to come out for no other reason than “tax is a 3 letter word, but they never prove their fairy tale case. Example above: Wisconsin and fascist in waiting Gov. Walker, its those facts again: Wisconsin # 25, Minnesota #17, big low tax states Kansas # #38, Mississippi 48, and Louisiana # 50.
    And: On the other side:
    California # 1 income tax state # 2 best business environment
    Oregon # 2 income tax state # 1 best business environment
    Minnesota # 3 income tax state (9.85%) # 14 best business environment
    Wisconsin #10 income tax state (7.65%) #25 best business environment
    But wait:
    Property Tax:
    Wisconsin: 1.96% Ranked #5
    Minnesota: 1.19% ranked #19

    Seems that the article was pretty accurate and the title fitting, thus the moral of the story is don’t be so lazy, check things out, A. you might learn something, B. It will help you become less of an easy target for “T” and companies bombast, and C. It keeps you from coming across as an uninformed blow hard.

  10. Submitted by Paul Udstrand on 10/08/2017 - 09:03 am.

    The real question…

    Isn’t whether or not magical thinking i.e. “cut taxes and wait for the magic to happen” or dishonest politics will “help” the economy? The question is how long will it take this time (this won’t be the first time Republicans waved their magic wand) for Republicans to convert a recovery into another recession.

  11. Submitted by Karen Sandness on 10/10/2017 - 12:25 pm.

    The lie about tax cuts stimulating the economy works with the public because the majority have never run a business. As such, they assume that businesses are taxed in the same way as individuals, i.e. that they can take a few measly deductions while all the rest is taxable.

    “Sure,” they think, “if businesses didn’t pay so much in income taxes, they could afford to hire more people.”

    Instead of being taxed on all their revenues minus a couple of tiny deductions, businesses, whether sole proprietorships, partnerships, or corporations, are taxed only on their PROFITS, or, in other words, income minus costs of doing business.

    These costs of doing business include employee wages and benefits, leasing of business premises, buying or upgrading equipment, research and development, marketing, business travel, utilities and other overhead, supplies, cost of goods sold, raw materials, insurance, charitable contributions, promotional gifts to potential customers, interest on loans, and countless other expenses that businesses incur.

    Now if individuals makes $1 million per year, they are in the top tax bracket, and they are taxed on most of that sum.

    However, if a business takes in $1 million in sales and spends $900,000 on costs of doing business, then it pays income tax only on the $100,000 left over.

    If a business is NOT profitable, if it spends $1 million on the costs of doing business and takes in only $900,000 in sales, then it pays no federal income tax.

    Such a deal!

    So businesses have the potential to reduce their taxes to almost nothing, especially if they use some of the clever accounting tricks available to them, or, if they’re more ethical, paying their employees more or increasing their charitable contributions.

    When Reagan sharply reduced corporate taxes, major shareholders received a huge windfall. Naturally, they liked this, and they wanted more. Hence the pressure, beginning in the 1980s, to freeze wages and eliminate employee benefits, delay upgrading, spend earnings on acquiring and stripping the assets of other companies, cut back on product quality and customer service, offshore as much as possible to low-wage countries, hire business majors instead of training new employees in-house, reduce the number of employees through layoffs and attrition while making the rest do all the work of their former colleagues, and institute other practices that harmed the middle and working class in many ways.

    It was during that era that I first noticed that the stock market had nothing to do with the state of the economy as experienced by the average person out in the real world.

    Another misconception is that cutting taxes on wealthy individuals will stimulate hiring, but even the very rich hire few people directly–maybe a maid and a gardener or personal trainer– and there is a limit to the priming effect of multiple mansions and multiple sports cars.

    Still another fallacy that the right wingers promote is “double taxation.” They say that dividends and interest income should not be taxed at all, because the company has already paid taxes on that income, and that inheritances should not be taxed, because the deceased already paid taxes.

    This is one of those facile, superficially attractive right-wing arguments that sounds good until you think about it. What they are saying is that no individual dollar should ever be taxed more than once. By that logic, because you pay taxes on your wages or salary, then the grocery store should not have to pay taxes, because the individuals who shop there have already paid taxes, and furthermore, their employees should not have to pay taxes, because the customers of the store already did.

    There are some right-libertarian absolutists who believe that nobody should pay taxes except to support the military and the criminal justice system (Hmm, only the coercive elements meant to keep the starving masses from slaughtering the aristocracy?). But in real life, as opposed to libertarian dogma, every government in the history of the world has taxed and spent.

    The right wing has been preaching these lies for over 35 years without much opposition. No wonder they find it easy to sell their line of bull.

  12. Submitted by Joe Smith on 10/12/2017 - 09:38 am.

    Always hilarious to me to see folks

    claim that everybody keeping more of their money doesn’t help the economy but giving more money to DC does. I feel sorry for folks who feel that elected officials are more responsible with their money than they are. Reminds me of when all the evidence came out about smoking and the Lefties wanted the Government to make people stop smoking. The same folks who think the Government can stop folks from smoking think that giving the Government more of our money is a good investment.

    • Submitted by RB Holbrook on 10/12/2017 - 02:52 pm.

      Smoke Gets in Your Eyes

      Apparently, you’re not reading the article before you comment. Why is that?

      The whole thrust of the article was that lower taxes do not help the economy. Nowhere did it say that higher taxes are a “good investment.”

      Government anti-smoking efforts have not been 100% successful, but the rate of smoking in the US is down from what it was when the efforts started.

      Are you one of those guys still grousing because the big city liberals said you can’t smoke in the bar at your municipal liquor store anymore?

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