Thursday, March 31, 2011

GOP Tax Cuts Are Not For Thee And Me

At what point in time are the American people going to take a look at our nation's history and realize that eliminating taxes for billionaires and multi-national corporate oligarchies combined with deregulation and non-enforcement of regulation as tools to stimulate the economy doesn't work? Not only does it NOT work, but it has the opposite desired economic effect?

Reference the chart from the Institute for Policy Studies, that demonstrates the distribution of wealth in America as of 2007. Over the last three decades, inequality has grown by almost all measures. Historically, while those at the top of the income distribution have enjoyed far higher average incomes than everybody else, the gap between the top and the bottom has grown enormously in recent years, driven both by slowdowns in income growth at the bottom and middle, and rapid acceleration of income growth at the top. (Interactive chart at When income grows, who gains?)

In recent decades, as Pres. Reagan's "trickle down" economic theory that cutting taxes for the rich, deregulating banks and deregulating Wall Street best stimulates growth has been implemented in state and federal governing policy, the bulk of income growth in America has gone to the top 10% of families.

We've all heard Gov. Perry and every Texas Republican claim that cutting government spending cutting taxes improves the business environment, which in turn creates jobs, improves the standard of living for the working people in Texas and generates enough more tax revenue to meet budget needs for things like public education. Texas Republicans have repeatedly said that continual cuts to government spending combined with business tax breaks result in more jobs being created, higher wages for the average worker, and an overall upturn in our economy. It's at the heart of trickle-down theory Pres. Reagan championed in the early 1980's.

Since taking office in 2001 Gov. Perry has signed every tax cutting Texas budget passed by Republican legislators, who have been in full control of Texas government since 2003, but those tax cuts have not been for thee and me.

Texas citizens, home owners and small businesses pay the one of the highest percentage of taxes in the nation through fees, sales taxes and property taxes while corporations and entire industry sectors pay no taxes.

Texas homeowners continue to pay the third-highest property tax rates in the nation, based on median home value. Texas homeowners carry 39 percent of the tax burden of state government while most corporate businesses — and entire industries, like major oil and gas companies — get off tax-free, and in some cases are given tax payer money as "business incentives."

The most successful lobby in Austin is the insurance industry. The insurance industry in Texas pays 46 percent less in gross premium taxes than the national average has an exemption from the business franchise tax. That franchise exemption alone will cost the state more than $546 million this year. Yet, Texas homeowners pay the most expensive insurance premiums in the nation.

A small business that buys a web server computer to market services and products to customers on the Internet must pay a sales tax when purchasing that web server computer. But, multi-million dollar corporations pay no sales tax on the same web server purchase, or most other business purchases.

Hundreds of special large-business tax breaks are threaded though out the Texas tax code. In 1989, for example, the state created an exemption designed to encourage exploration drilling in the Barnett Shale. There are now close to 14,000 producing wells, but the tax break given to spark the initial start up exploration still remains in the tax code, costing the state nearly $1 billion a year.

Has ten years of ever deeper business tax cuts and tax payer payouts to business and trickle down economics really yielded such great prosperity to the average Texan?
Legislative Budget Board
Assessment of Cutting
Billion in Spending
from the 2011-13 Tx Budget

(parenthesis indicate negative)

Total Jobs lost
2012 (271,746.1)
2013 (335,244.1)

Employment % change
2012 (1.9%)
2013 (2.3)

Private non-farm Jobs lost
2012 (117,060.5)
2013 (146,457.0)

Government Jobs lost
2012 (158,584.6)
2013 (188,787.6)

Gross state product
[Billions of fixed 2005 dollars]
2012 (15.2)
2013 (19.0)

Personal income
[Billions of current dollars]
2012 (12.6)
2013 (17.2)

Disposable personal income
[Billions of current dollars]
2012 (11.2)
2013 (15.2)

Other measures of Texas' standing
Texas on the Brink

Texas’ per capita income of $39,493 ranks the state only 23rd among all the states in income level. Texas added 22,700 jobs in February, for a total of 254,200 gained over the past 12 months, according to the Texas Workforce Commission, but the unemployment rate is still at 8.2% - only slightly lower than the national unemployment rate.

And now, average Texas citizens already burdened by one of the highest effect tax rates in the nation through fees, property taxes and sales taxes will pay yet more as public education for our children is deeply cut and our elderly parents, who suffer debilitating critical care diseases such as Alzheimer's Disease, are thrown out of nursing homes.

And if some schools and nursing homes are to be kept from closing it will be because the Texas legislature slaps new and higher fees -- a tax by another name -- on all sorts of things like auto license plates, driver's license, gun permits, bus and rail passes, state parks, libraries and a long list of other services.

The Texas House Appropriations Committee voted 18-7 along party lines last week to move the draconian 2012-13 HB1 budget bill to the House floor. In addition to deep cuts in K-12 and college education funding the House budget bill includes a 10 percent cut to Medicaid provider rates, a 34 percent cut in nursing home funding and cuts hundreds of thousands of state jobs. The House began debate on this bill today.

And, unemployment is about to roll off the cliff again, if the legislature cuts $23 billion in state spending over the next biennium, according to the Texas Legislative Budget Board.

The Legislative Budget Board (LBB) published a required report titled “Dynamic Economic Impact Statement” on the effect of cutting $23 billion worth of spending from the 2011-13 budget, as proposed in the budget bill the Texas House will take up next week.

Within the LBB numbers (see table left) up to 189,000 teaching and education related jobs may eliminated across Texas -- nearly 14,000 education related jobs in Collin Co.

A CNN Money report puts job losses at an even high level if the HB 1 passes. That report says Texas could see the loss of more than 600,000 jobs.

Perry, Dewhurst, Craddick, Straus and the conservative Texas Public Policy Foundation, which is associated with the American Legislative Exchange Council, are not happy with the LBB's report. The Texas Public Policy Foundation released a statement saying, “Claims that adopting a 2012-13 state budget that is within existing revenues would decimate Texas’ economy misinterpret a central point in the Legislative Budget Board’s analysis.”

But remember, it is the conservative billionaires and corporations who pay no taxes who fund the Texas Public Policy Foundation and American Legislative Exchange Council.

On the national front tax cuts for millionaires and billionaires and deregulation pushed by the GOP from the time President Reagan took office to the time President Bush II left office exploded the national debt and created our current great recession. Now those tax cuts even threaten our public school system in Texas and across the nation.

The debt went up during Clinton's years only because of $2.2 Trillion interest on the
Reagan-Bush debt. Otherwise Clinton would have paid off most the remaining WWII debt.

Job Loss and Creation

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