Favorite

Fake economics 

Fake news is a new phenomenon in the world of politics and policy, but hokey economic scholarship has been around as long as Form 1040 and is about as reliable as the news hoaxes that enlivened the presidential campaign.

With the legislature assembling soon to tackle tax and spending issues, the old notion of corporate and personal income tax cuts as the magic bullet for a poor state arrived right on time the other day at the Capitol, as it has for the past 50 years. Economic salvation is always based on the studies of the Tax Policy Foundation, a "think tank" organized right before World War II by America's largest corporations to promote tax and regulatory policies favorable to big business and its owners and executives.

This time, the local purveyor of the scheme is the 2-year-old Arkansas Center for Research in Economics at the University of Central Arkansas's College of Business. Its professors and researchers are funded by the Koch brothers (2016 net worth $82 billion, Forbes) and perhaps other right-wing philanthropists. Americans for Prosperity, the Koch brothers' advocacy front, issued a release praising the center's study, "Arkansas: A Road Map for Tax Reform," when the professors presented it to Republican legislators, who are hungry for expert support for their cherished goal of reducing taxes on big businesses and the well-to-do.

The academicians quizzed rank-and-file Arkansans, studied the tax rates, read the Tax Policy Foundation's annual reports and concluded that Arkansas was an economic wasteland because its income tax and taxes on manufacturers gave it one of the worst business climates in America. Lower those taxes, eliminate the little corporate franchise tax and then raise property and sales taxes on ordinary workers to offset the loss of tax receipts, they said, and industry will fight to get to Arkansas and hire people. Never again, they said, will Arkansas have to spend hundreds of millions to bribe a steel mill and a Chinese paper maker to come to Arkansas.

That made perfect sense to lawmakers and Governor Hutchinson, who want to get another tax cut under their belts before the next election. But you are probably dubious, and you should be. It is all based on phony numbers, hokey analysis and economy theories that fly in the face of most economic scholarship except that of the Tax Foundation, Americans for Prosperity and their sponsors.

First, let's get one small issue out of the way. The UCA economists agreed that the state needed tax receipts to pay for desirable things like highways and UCA, so the cuts in individual income taxes and sales taxes paid by manufacturing companies needed to be offset by hiking property taxes on your homes and businesses and by raising the sales tax and expanding it to cover services like your doctor visit, hairdresser, barber and dry cleaner. The legislature can do all that quickly and by spring Arkansas will become the promised land for corporations and individuals. Well, our constitution prohibits the legislature and governor from raising property taxes, and you can't find five legislators who will vote to tax services. Gov. Winthrop Rockefeller found exactly one in 1969, when he tried desperately to raise taxes to improve the civilization of his adopted state.

The professors' report was based on the Tax Foundation's 2016 business climate index, which purports to record all the tax collections of each state and rank them from 1 to 50 based on its own perverse formula, not on taxes the states actually collected. The Tax Foundation considers a high-tax state one that has a graduated personal income tax and a low-tax state one having no income tax or a flat one. Texas and Alaska are low-tax states because they have no income tax but reap huge sums from stratospheric tax rates on oil and gas production.

Arkansas ranks 38th and the professors said their elixir would bring it to promised-land status next year. Next fall there will be jobs galore. The states that industry and individuals are supposed to be fleeing to are the best 10 tax climates: Wyoming, South Dakota, Alaska, Florida, Nevada, Montana, New Hampshire, Indiana, Utah and Oregon. Wait ... only one, New Hampshire, has a lower jobless rate than Arkansas. Only one, Florida, has more headquartered Fortune 500 companies than poor Arkansas.

Booming states like California and Maryland are at the bottom of the Tax Foundation's business climate index owing to their high graduated income taxes. The comparisons get more absurd.

The bedrock assumption in the professors' and the Tax Foundation's reports is that low taxes and cutting taxes produce growth and that the opposites always produce stagnation.

You don't have to be a scholar but only a casual observer to see the foolishness of the theory. Big tax cuts at both the national and Arkansas levels the past 40 years have nearly always been followed by recessions and stagnation while modest tax increases have usually been followed by growth. Go figure.

The indisputable fact is that state and local taxes are far down the list of considerations for job-creating investment — behind a skilled or educated work force, proximity to markets, raw materials and suppliers, climate, transportation infrastructure, affordable and reliable energy and, yes, things like the levels of bigotry and acceptance.

The Arkansas legislature will buy the professors' theories because that is what they long to hear. Except the part about taxing services and property.

Favorite

Speaking of Arkansas Center For Research In Economics

Comments (4)

Showing 1-4 of 4

Add a comment

 
Subscribe to this thread:
Showing 1-4 of 4

Add a comment

More by Ernest Dumas

  • Fake news

    So fed up was young Edgar Welch of Salisbury, N.C., that Hillary Clinton was getting away with running a child-sex ring that he grabbed a couple of guns last Sunday, drove 360 miles to the Comet Ping Pong pizzeria in Washington, D.C., where Clinton was supposed to be holding the kids as sex slaves, and fired his AR-15 into the floor to clear the joint of pizza cravers and conduct his own investigation of the pedophilia syndicate of the former first lady, U.S. senator and secretary of state.
    • Dec 8, 2016
  • China in charge

    Let's turn to foreign affairs to see how we might calm the flood of anxieties over the coming Donald Trump presidency.
    • Nov 24, 2016
  • A little hope

    It may not be nearly as bad as you expect.
    • Nov 17, 2016
  • More »

Readers also liked…

  • Religion as excuse upends Constitution

    Tirades over religious liberty since the U.S. Supreme Court legalized same-sex marriages nationwide have awakened the ghost of James Madison, the author of the constitutional doctrine on the matter, and it isn't happy that his effort to protect religious inquiry in America is being corrupted.
    • Jul 9, 2015
  • Guns, God and gays

    Many more mass shootings like the one last week in Roseburg, Ore., will stain the future and no law will pass that might reduce the carnage. That is not a prediction but a fact of life that is immune even to Hillary Clinton.
    • Oct 8, 2015
  • AEC dumps ALEC

    No matter which side of the battle over global warming you're on, that was blockbuster news last week. No, not the signing of the climate-change treaty that commits all of Earth's 195 nations to lowering their greenhouse-gas emissions and slowing the heating of the planet, but American Electric Power's announcement that it would no longer underwrite efforts to block renewable energy or federal smokestack controls in the United States.
    • Dec 17, 2015

Most Shared

  • World leaders set to meet in Little Rock on resource access and sustainable development

    Next week a series of meetings on the use of technology to tackle global problems will be held in Little Rock by Club de Madrid — a coalition of more than 100 former democratic former presidents and prime ministers from around the world — and the P80 Group, a coalition of large public pension and sovereign wealth funds founded by Prince Charles to combat climate change. The conference will discuss deploying existing technologies to increase access to food, water, energy, clean environment, and medical care.
  • Rapert compares Bill Clinton to Orval Faubus

    Sen. Jason Rapert (R-Conway)  was on "Capitol View" on KARK, Channel 4, this morning, and among other things that will likely inspire you to yell at your computer screen, he said he expects someone in the legislature to file a bill to do ... something about changing the name of the Bill and Hillary Clinton National Airport.
  • Fake news

    So fed up was young Edgar Welch of Salisbury, N.C., that Hillary Clinton was getting away with running a child-sex ring that he grabbed a couple of guns last Sunday, drove 360 miles to the Comet Ping Pong pizzeria in Washington, D.C., where Clinton was supposed to be holding the kids as sex slaves, and fired his AR-15 into the floor to clear the joint of pizza cravers and conduct his own investigation of the pedophilia syndicate of the former first lady, U.S. senator and secretary of state.
  • Reality TV prez

    There is almost nothing real about "reality TV." All but the dullest viewers understand that the dramatic twists and turns on shows like "The Bachelor" or "Celebrity Apprentice" are scripted in advance. More or less like professional wrestling, Donald Trump's previous claim to fame.
  • Tomb to table: A Christmas feast offered by the residents of Mount Holly and other folk.

    A Christmas feast offered by the residents and future residents of Mount Holly and recipes from the Times staff.

Latest in Ernest Dumas

  • Fake news

    So fed up was young Edgar Welch of Salisbury, N.C., that Hillary Clinton was getting away with running a child-sex ring that he grabbed a couple of guns last Sunday, drove 360 miles to the Comet Ping Pong pizzeria in Washington, D.C., where Clinton was supposed to be holding the kids as sex slaves, and fired his AR-15 into the floor to clear the joint of pizza cravers and conduct his own investigation of the pedophilia syndicate of the former first lady, U.S. senator and secretary of state.
    • Dec 8, 2016
  • China in charge

    Let's turn to foreign affairs to see how we might calm the flood of anxieties over the coming Donald Trump presidency.
    • Nov 24, 2016
  • A little hope

    It may not be nearly as bad as you expect.
    • Nov 17, 2016
  • More »

Visit Arkansas

View Trumpeter Swans in Heber Springs

View Trumpeter Swans in Heber Springs

Magness Lake, in Heber Springs, is a magnet for swans

Event Calendar

« »

December

S M T W T F S
  1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31

Most Viewed

  • Reality TV prez

    There is almost nothing real about "reality TV." All but the dullest viewers understand that the dramatic twists and turns on shows like "The Bachelor" or "Celebrity Apprentice" are scripted in advance. More or less like professional wrestling, Donald Trump's previous claim to fame.
  • Fake news

    So fed up was young Edgar Welch of Salisbury, N.C., that Hillary Clinton was getting away with running a child-sex ring that he grabbed a couple of guns last Sunday, drove 360 miles to the Comet Ping Pong pizzeria in Washington, D.C., where Clinton was supposed to be holding the kids as sex slaves, and fired his AR-15 into the floor to clear the joint of pizza cravers and conduct his own investigation of the pedophilia syndicate of the former first lady, U.S. senator and secretary of state.
  • Stay the course

    I am frustrated and angry with those who claim the only chance of future success is for the Democratic Party, especially in the South and Midwest, to abandon speaking directly to women and people of color and the LGBT community and instead focus on the economy and other "more comfortable" topics in order to win back some of the center.

Most Recent Comments

  • Re: Reality TV prez

    • He won't clean up his act. He won't even try. He's clueless that his style…

    • on December 8, 2016
  • Re: Forget identity politics

    • It is, of course, completely false that Hillary Clinton didn't campaign in black communities. Also…

    • on December 8, 2016
  • Re: Reality TV prez

    • Far from being the people's choice, Trump eked out the narrowest electoral win in U.S…

    • on December 8, 2016
 

© 2016 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation