My last letter was a reply to Rick Frommer’s inference that it would be inappropriate for Gainesville to fund affordable housing with an impact fee. I spoke because Frommer does not appear to have voiced the same concerns when government subsidies were given to the wealthy and big corporations. The fact he was silent then suggests it isn’t free market intervention, or even the money, but who it helps that he has a problem with. Subsidies for affordable housing could encourage low-income families to live here, and they might eventually vote.
Tom Day’s follow-on letter claims I criticized municipalities that give tax breaks to corporations. Not quite. I criticized the double standard of supporting tax breaks and government subsidies for the rich, but not for the poor. Day calls tax money gifted to the wealthy and big corporations a “tax advantage,” but when tax money is used to assist the poor, conservatives call it welfare. I call that a double standard.
Conservatives say tax cuts for the wealthy create jobs and “pay for themselves” by stimulating the economy. The Heritage Foundation claimed the Bush tax cuts would completely eliminate the U.S. national debt. We all know that never happened. Referring to the Reagan and Bush tax cuts, Mr. Day said, “Anyone who looks at the facts as published by independent and nonpartisan sources will see tax revenues significantly increased after each of those tax cuts.” One of those independent, nonpartisan sources is the Congressional Budget Office. The CBO has consistently reported the Bush tax cuts did not pay for themselves. This indicates help for the rich doesn’t “trickle down” to the poor or stimulate our economy in any significant way.
To understand why, let’s look deeper. Supply-side economic theory suggests tax cuts (invested in U.S. manufacturing) create jobs and stimulate our economy. Day cites the 1964 “Kennedy” tax cuts as an example. It used to work.
However, our world has changed since then, including development of favorable global investment opportunities. Thus, the 1964 tax cut was likely to be invested in U.S. manufacturing, while tax cuts delivered in 1988 and 2003 were more likely to be invested in Japan or China.
Worse, if it increases profit, money managers investing these tax cuts will happily kill an American job, or an entire manufacturing plant, and move it to China. It’s called off-shoring. In practice, it’s a perverse incentive that cripples the American worker, undermines the U.S. economy, creates jobs for the Chinese and enriches the top 2 percent. Chinese workers don’t pay U.S. income taxes, so American workers who still have jobs pay more.
Without regard for long-term consequences, the rich have gotten richer primarily by selling American workers down the river. This investment trend has decimated the middle class and contributed to the disastrous 2007 economic collapse. Mr. Day calls these points “an altered view of reality” and overlooks them.
So where’s the truth? You be the judge. Weigh the evidence, then let your conscience be your guide.