How America was Tricked on Tax Policy. Bret N. Bogenschneider

Чтение книги онлайн.

СКАЧАТЬ ever said that corporate tax cuts should be expected to cause price reductions. The formalization of some causal hypothesis in advance of testing by observation would be considered necessary in any field of actual science apart from economics as applied to tax policy. The lack of any causal theory in economics means there is no true “science”—and accordingly, no testing of predictions made by economists—about corporate tax cuts or other matters of tax policy. Rather, tax policy is all a magic show put on to trick you.

      So, how does this magic trick on corporate tax cuts and consumer prices work? Why do corporate tax cuts not lead to lower consumer prices? Well, perhaps for lots of reasons, but I suspect the most important one is that large corporations set the price for their products based on what the customer is willing and able to pay, not by an anticipated level of after-tax profits. Prices and profits are not the same thing. Profits are not fixed such that a corporate tax cut means that the price for the product can and should be reduced. This is also to say that the universe economists live in is not the same universe we consumers live in. In fact, if a corporate executive set prices in the manner that economists propose, he or she would probably be fired. Corporations are tasked with maximizing profit, not with maximizing fairness to consumers in the relative prices of products. Furthermore, the markets in which large corporations operate are not efficient. Many large corporations compete in markets where small businesses have been bankrupted over the past decade or so by both the tax system and trade policy, so there is little or no price competition for the large corporations. The simple fact is that consumer prices did not noticeably decrease after the passage of the Tax Cuts and Jobs Act of 2017. Accordingly, it is not necessary to debate back and forth why this is so or might be so. We have strong and essentially incontrovertible evidence now that corporate tax cuts do not lower consumer prices. Furthermore, it would be a relatively easy task for economists to gather evidence about consumer prices in relation to corporate tax cuts and put their theories to the test. Since this has not been done (and will likely never be done unless some objection is raised) it is appropriate to now begin to reject the predictions of economic theory on the imaginary pass-through of corporate tax reductions to consumers in the form of price reductions, at least until some empirical evidence is collected on consumer prices and correlative tests performed on these supposed dynamic effects of corporate tax cuts.

      THE TAXATION OF WORKERS

      Justifications for why workers should always pay the taxes in society are easily found in libertarian, economic or liberal writings on tax and the supposed philosophy thereof. However, the conclusions of these philosophical writings are essentially all the same: it is right, good, fair, efficient or essential that workers pay all the taxes. Indeed, the conclusions are all so much the same that tax scholars no longer even attempt to distinguish the various types of philosophy relevant to taxation. No matter what you read, it will contain justifications for tax policy that are always premised on taxing workers.

      In the first, place, by the actual numbers, it is unrealistic to expect that workers could really pay any more in taxes than they already do. Although the respective terminology has not been widely adopted in the United States, in Europe tax scholars would say that workers lack the “ability to pay” any more in taxes than they already do because they lack the disposable funds to pay incremental taxes. Further taxes on workers would entail larger portions of American society becoming insolvent even while working multiple jobs. The taxation of workers has essentially been maximized to allow for the wealthy to accumulate the largest possible hordes of capital. Yet, the prior tax literature does not say, that tax policy is a trick designed to allow for the accumulations of capital that is premised on an illusion of progressivity, fairness and efficiency. These concepts actually have been created as a means to keep the workers paying unreasonable amounts of tax into the system. The truth is, the tax system is regressive, unfair and inefficient. One objective of this book is to attempt to shift tax discourse from discussions primarily among the wealthy about how to best justify an oppressive, inefficient and unfair tax system to various realistic discussions about how to improve the system for the benefit of the working people that comprise a democratic society.

      Existing tax policy literature is aimed at the wealthy—both individuals and corporations—and its purpose is to justify their accumulation of huge fortunes. This is to justify the concentration of wealth rather than a diffusion of wealth that is achieved primarily through the tax system. Some wealthy persons do feel guilty about not paying much in taxes while workers do. And moreover, the wealthy are able to complain loudly about tax policy to policymakers in government and the news media. Furthermore, many outspoken moral philosophers and economists claim to be experts in tax policy, but they often have little or no training in taxation and thus no idea about how the tax system works in actual practice. This combination of vociferous complaining by the wealthy about taxation and lay commentary on tax policy makes it possible for regular people who are trying to understand the tax system to believe that the wealthy pay taxes when they actually do not.

      The recent tax cuts targeted for large corporations have not been matched to any spending cuts, so tax policy wonks say they are not “revenue neutral.” Notably, the Tax Reform Act of 1986 was at least ostensibly revenue neutral, so it was not funded by increased deficits. The recent tax cuts are instead funded by increased government debt today, along with targeted tax increases on the middle class and tax increases on the working class, to be collected at some point either now or in the future. Therefore, the term “tax cuts” is not the right term to describe this state of affairs of tax cuts for large corporations funded by increased deficits; instead, this latter push toward increased deficits should be referred to as tax increases for workers either now or in the future. Sometime since the Reagan administration, the actual meaning of the words tax cuts has shifted so as to not include any offsets or future taxes necessary to repay additional debt incurred today. Future workers will be asked to pay interest and principal on the government debt taken on to fund today’s tax cuts for large corporations. The actual meaning of the words tax cuts has thereby been altered in the political discourse. The result is an Orwellian version of tax policy such that words no longer mean what they used to mean, even to politicians of the same political party.

As to the second element of postmodernism in tax policy—that the wealthy view workers as the “little people”— it may seem hard to believe that the wealthy hold such a view. Yet, famous economic scholars assert that the poor are generally unable to make rational economic decisions by their own terms.²⁵ This is essentially Thomas Malthus’s view brought back to life and into the mainstream. Tax research by scholars all over the world—from England, to Singapore, to Austria and to the United States—have proceeded enthusiastically to argue for new regressive types of Pigouvian taxes to be levied on the working class. Here, Pigouvian taxes refer to taxes levied on specific goods and products with externalities thought to be harmful to the people that consume the product. Scholars are seemingly coming out of the woodwork, even from nontax disciplines, to argue in favor of special taxes on any product that is used predominantly by the poor and also thought to be harmful. The levy of these taxes is intended always to correct the irrational behavior of the poor as a class—but never the wealthy! Of course, no economist has ever discussed the irrational behavior of the wealthy and proposed addressing it through the tax system. Rather, the economic analysis is always presupposed on levying taxes on the poor and also on workers.

      An overwhelming problem with this methodology is that workers cannot and should not be lumped into a class with the poor. The only reason to do so is that the wealthy view the world in this weird way where the categories of working and poor are understood as synonymous. The wealthy often view nonworkers (existing on government transfer payments, for example) as essentially the same as persons working but not earning much due to low wages. For their part, the blue-collar workers of America have no idea that the wealthy draw this false equivalency and view them in the same category as nonworkers. Furthermore, no economist has ever acknowledged the problem that the workers already pay the maximum amount of taxes they could possibly be expected to pay, via all sorts of different categories of taxation: wage withholding, income tax, sales tax, property tax, gasoline tax СКАЧАТЬ