The Purpose of a Tax


Taxes* serve two purposes: the first is to provide governments with revenue, and the second is to deter or regulate activity i.e. sin tax on alcohol or trade tariffs.

Notice, neither purpose’s main role is to serve as a catalyst toward economic growth like Republicans believe. Republicans are confident, just so sure, that if we lower taxes the economy will prosper. But understanding the purpose of taxes, and just basic tax history, there is little evidence to support the Republican model. Tax rates have been consistently decreasing for decades, yet the economy has still had its ups and downs. The point is economic growth is not solely determined by tax rates – it’s not that simple.

I think Democrats better understand the purpose of taxes. Democrats do not argue higher taxes lead to economic growth (because it is true at a certain point when taxes go too high they will deter economic activity). When liberals reference the higher Clinton era tax rates, they are referring to the strong economic growth that went on during that time. The significance being high tax rates did not deter economic activity. They did, however, serve the role of raising revenue, which led to 4 years of a balanced budget.

So Republicans are framing the debate around taxes incorrectly. It’s not; we need to lower taxes because that will lead to economic growth. Instead it’s at what rate should taxes be set in order to maximize revenue, but at the same time not deter economic growth.  So the tax rate should not be viewed as an economic starter, but only an economic deterrent.

Given our current tax code, it’s hard to argue that it is high rates that are hindering economic growth. Taxes were slightly higher in the 90’s and drastically higher in pervious decades, and in both cases economic growth was much greater. If taxes now are lower than during an era of greater economic prosperity then there is no reason to believe lowering them more will solve the problem. So the basis of the Republican argument, taxes are too high, is really an unfounded claim.

Now, this is not an argument that government should try to squeeze every penny out of taxpayers it can without hurting the economy. But given the country’s increasing deficits, under funded schools, crumbling infrastructure, growing numbers of people living in poverty, a disappearing middle-class, and a slew of other problems, more revenue is not inherently bad.

The larger point in all this is Republicans’ answer to every problem is to cut taxes. That’s obviously not the solution. Tax rates are historically low, and there’s no evidence that further reducing them would spur on economic growth. Instead we should set tax rates so they can serve their purpose of raising revenue without being a drag on the economy.

We need to look at other ideas to promote economic growth outside of just ‘cut taxes!’ This could be rebuilding our infrastructure, investing in new infrastructure like high-speed rails, investing in new alternative forms of energy, or creating policies that promote hiring here in America rather than overseas. Here is where the Democrats have an edge, the stimulus package that was passed, and The American Jobs Act (that was not passed) were filled with ideas to boost economic activity. They were ideas that went beyond cutting taxes for the rich in the hopes the wealth will trickle down. Although some may disagree, most economists concur that the stimulus did work, and the American Jobs Act would have reduced unemployment.  Economic growth will not come from padding the pockets of the wealthy, but from investments aimed at putting people back to work.

*To make things simple, taxes in this post refers to individual tax rates

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The Greatest Country?


The Mitt Romney platform for foreign affairs is America does not apologize for being America – America is right and you are wrong. Why I think this is important is because it embodies a larger ideal of the Republican Party. Today’s Republican Party holds dearly the belief that America is the greatest country and can do no wrong, and because of that feeling they see no reason to make any changes. They offer no solutions to advance the status quo.

Climate change that is ruining our environment – it doesn’t exist. A growing population living in poverty with a vanishing safety net – people just need to work harder. Students riddled with debt from the increasing cost of college – just go to a cheaper school or ask your parents to help. Women’s rights systematically being rolled back – just say it’s an attack on religion. A middle-class disappearing – just continue a tax policy that benefits the wealthy. A healthcare system that simply cannot support itself – just cut benefits.

Instead of addressing these problems, Republicans just turn a blind eye, or make some excuse, and say this is greatest country in the world. America is the land of the free and the home of brave. America has freedom, it has Democracy.

Let’s not forget the land of the free and the home of the brave enslaved African-Americans for nearly a century. Let’s not forget our free nation made women and minorities second class citizens for decades. And let’s not forget our democratic country now faces income disparity that is leading to a rich and poor America.

I believe America is the greatest country in the world, but not because we have freedom here. There are plenty of countries who are free and have fully functioning democracies. But we are still better.

We are better because as a country, when faced with adversity, we didn’t brush off major problems and make excuses – we fought to make a change. People literally fought to end slavery.  People fought for civil liberties. Women have fought for equal rights. Today we see environmentalists fighting to save the earth. Occupy protestors are fighting for income equality. And we even saw the President fight to make healthcare a right and not a privilege.

America isn’t great because we are free, America is great because throughout our history we tackled problems in order to make every American better off. I don’t see that coming from the Republican Party today. I see the Republican Party in rut, unwilling to offer any new ideas or solutions. I see them as content, without any intention of truly making the country better off.  It is not enough to just say America is the greatest country in the world – action actually has to be taken – or America may not stay the greatest.

Paul Ryan and The Tea Party: A Not So Serious Bunch


Remember this picture…

Yes, this is the infamous Tea Partier who vehemently proclaimed government, and its wasteful and inefficient ways, needs to stay out of Medicare. Obviously, the statement is laughable since Medicare is run by the government (not to mention run more efficiently than private insurance).

It should have been at this time we realized the Tea Party was not a serious party. We should have realized they were a party of false assumptions, far-right idealistic plans, and absurd platforms.

Sadly, this realization did not happen, and the Tea Party was not only given legitimacy, but they were actually given positions of power. Now we have an extreme sect of the Republican Party that has no business being in Washington.

I disagree with Republicans, but I believe they create a nice balance with Democrats. The Tea Party on the other hand, has paralyzed Washington with an unrealistic, fantastical and detrimental set of demands.

They say they’re fiscally responsible, but to put it bluntly – they have no idea what they’re talking about. Part of their platform is to eliminate the national debt. First, our founders believed the country should have a national debt. Second,  Andrew Jackson actually paid off the national debt once before and it sent the country into a recession. Finally, a report was done by the Clinton administration that said paying off the national debt would have detrimental effects on the economy, both globally and domestically. The study concluded the country should carry a national debt.

They say they’re Taxed Enough Already, but in reality taxes are historically low. And I’m not just referring to the income tax. The capital gains rate is lower than it’s been since the 1930’s. And the corporate tax rate is lower than it was during the 40’s, 50’s and 60’s. I’m pretty sure business was good then.

They say they’re patriots – doing the work of the founders. Well, clearly they didn’t get the founder’s message about the national debt. Furthermore, the Tea Party constantly associates themselves with evangelicals. (I actually went to a Tea Party meeting that opened with this prayer, and I quote “Thank the Lord for the Romney/Ryan ticket.” Who knew God was rooting for the Republicans in 2012.)  One would think a group of patriots would listen to Thomas Jefferson who declared there to be a “wall of separation between church and state.” 

They are a delusional party with policies that are simply out of touch with reality. I think the nation is coming to the realization the Tea Party is not a serious party, but rather a well funded group of far-right-talking-heads who have a loud voice – and nothing more.

This brings me to a recent quote about Medicare, “We’re going to restore this program, and we’ll get these bureaucrats out of the way.”

Translation: Keep government out of my Medicare.

Who said this? It was not a fringe Tea Party leader or Fox News pundit, no, it was vice presidential nominee, Paul Ryan.

Just as this line should have hinted that the Tea Party was not a serious Party a couple of years ago, Paul Ryan saying it today should be a red flag. As much as the news and media wants Paul Ryan to be an intellectual conservative, he’s not.  He’s a lot like the Tea Party.

His plan is unrealistic and lacks necessary specifics like which loopholes he plans on closing in order to pay for his tax cuts. It’s not the plan of a fiscal  conservative. It’s a plan that sounds good to the base because it increases addresses the deficit and tackles entitlements. In reality, it does neither.

As Paul Ryan goes around promoting his agenda, remember, his plan is nothing more than idealistic ideas lacking any realistic backing. Just as the Tea Party is losing its influence, we the people need to stop giving Paul Ryan credibility.