Tuesday, March 19, 2013

The myth of tax cutting and economic prosperity

Posted By on Tue, Mar 19, 2013 at 10:08 AM

Ernie Dumas this week elaborates on a favorite topic — the inordinate benefit that the wealthy will enjoy from pending Republican tax cut plans, both on regular and capital gains income. It's not fair. It's also not likely to produce the economic miracle Republican leaders envision, if history is a guide.

When Arkansas exempted 30 percent of long-term capital gains from taxation in 1999, effective the next year, and Congress slashed capital gains tax rates in 2001, they were followed by some of the worst job records in modern history, for the state and the nation. On the other hand, when Congress in 1986 required the taxation of capital gains the same as wages and salaries it fueled the big job gains in 1987-89 that became the Reagan economic miracle.

The big Republican justification for tax cuts is that Arkansas is a high-tax state, which keeps business from investing in the state. That is pure baloney. If low taxes stimulated growth and jobs, Arkansas long ago would have been the industrial center of America. For much of its history it had by far the lowest state and local taxes in the country.

As of 2010, we were 47th. That is based on the taxes actually collected per capita by the state and local governments and spent here on services like schools, roads and law enforcement.

But Republicans rely on the helpful Tax Foundation, which shows Arkansas as a high-tax state by using a formula that assigns to Arkansas some of the high taxes collected and spent in Texas, Wyoming, Florida, Tennessee and other states. It says high taxes on minerals, tourism and many businesses in those states actually are passed on to consumer states like Arkansas, which then becomes a high-tax state. I’m not kidding. That’s why the Republicans say we have to cut taxes for our well-to-do and reduce the government’s support of education.

Tags:

From the ArkTimes store

Favorite

Speaking of Tax Cuts

Comments (5)

Showing 1-5 of 5

Add a comment

 
Subscribe to this thread:
Showing 1-5 of 5

Add a comment

More by Max Brantley

Readers also liked…

  • 2nd guilty plea in bribery case over state mental health services

    Arkansas Business reports here on a federal court filing Wednesday that shows a second person has pleaded guilty to a bribery scheme to help a major contractor of the state Department of Human Services.
    • Sep 17, 2015
  • The inspiring Hillary Clinton

    Hillary Clinton's campaign for president illustrates again the double standard applied to women. Some writers get it. They even find the supposedly unlikable Clinton inspiring.
    • Oct 16, 2016
  • Democrats name new House minority leader

    Rep. Michael John Gray of Augusta has been elected leader of the House Democratic Caucus, the minority party. He succeeds Rep. Eddie Armstrong of North Little Rock. He's a farmer and small business owner.
    • Sep 25, 2015

Most Shared

  • Former state board of education chair Sam Ledbetter weighs in on Little Rock millage vote

    Ledbetter, the former state Board of Education chair who cast the decisive vote in 2015 to take over the LRSD, writes that Education Commissioner Johnny Key "has shown time and again that he is out of touch with our community and the needs of the district." However, Ledbetter supports the May 9 vote as a positive for the district's students and staff.
  • Workers stiffed

    How is it going with the great experiment to make the Republican Party the champion of the sons and daughters of toil instead of the oligarchs of wealth and business?
  • O'Reilly's fall

    Whom the gods would destroy, they first make TV stars.

Visit Arkansas

Haralson, Smith named to Arkansas Tourism Hall of Fame

Haralson, Smith named to Arkansas Tourism Hall of Fame

Chuck Haralson and Ken Smith were inducted into the Arkansas Tourism Hall of Fame during the 43rd annual Governor’s Conference on Tourism

Most Viewed

Most Recent Comments

Blogroll

Slideshows

 

© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation