January 24, 2007

Medved carries water for Paris Hilton

Pandagon has a fantastic post up about Michael Medved's insane concern for the oft put upon rich...

Michael Medved didn’t get the memo from the Republicans. You know, the one that states, “Hey, our actual policy ideas are going to be wildly unpopular, so your job as a pundit is to deceive, mislead, distract and obfuscate.” But even if he missed the memo, you’d think he’d get the idea from the lies to get us into Iraq, the attempt to turn Social Security into a cash giveaway to the very rich by calling the plan “personal accounts”, and relabeling the estate tax the “death tax”, which implies that, for instance, all the soliders and poverty-stricken New Orleans residents that have wrongly died on BushCo’s watch have to pay taxes when they die or something.

Medved here actually tries to make the argument to middle class readers that we should carry the bulk of the tax burden and spare the poor, suffering rich. Conservatives are so nostalgic for the 1950s, except for the 90%+ marginal tax rates the wealthy paid back then. In fact, that’s basically the dance they do—they make people long for a time when a male high school graduate could support a wife and a passel of kids by himself, and claim that what people are missing is the sexual repression, the racism, the sexism, and the conformity. Odds are they miss the prosperity.

One more time (from the heart), cutting taxes on the rich doesn't grow the economy... it grows profit taking and not much else. Except for spending at Neimans and frankly we'd like to see less of the obnoxiously rich the next time we go shopping there. Barfly and I both get pissed because they distract the staff who should be paying attention to us.

The article goes on to dissect a few of Medved's key points regarding taxes. It's a little long and drawn out so I'll summarize... don't listen to a failed movie reviewer on tax policy. He doesn't understand anything that can't fit on a bumper sticker. To wit...

Tax hikes hurt the economy. Pelosi proposes to take money out of the hands of people whose investment and entrepreneurship create jobs, and to place it into the hands of government, which creates only job-stifling bureaucracies.

This is just empirically wrong. In the 90's taxes went up on the rich AND the size of government went down. Meanwhile, the economy grew dramatically and the federal government actually paid down debt which resulted in lower interest rates which further drove economic growth.

The rich do not create jobs. Even Milton Friedman didn't believe that bit of bullshit. There is only one thing that will create a job and that's economic growth, namely the knowledge that adding one job will allow a company to make/do more, sell more and make more money. No one hires people just because there is a tax cut, they hire people to satisfy demand.

See how difficult that is?

Posted by mcblogger at January 24, 2007 09:15 AM

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I believe you've misunderstood Friedman's take on job creation. We could debate about your statement that "the rich do not create jobs" but I think we might agree that money does.

Friedman said, "Nobody spends somebody else's money as carefully as he spends his own."

Whether it's through investment or buying and consuming goods and services, money, carefully spent by the people who earned it, is far more effective at causing economic growth than money spent by any governent body, regardess of who the government took it from.

Your singular example of econmic prosperity inspite of a tax increase makes a poor case for assuming that tax increases are benefical.

Other than the government itself, the chief beneficiary of rasing taxes on "the rich" are the tax experts that will be hired to exploit the loopholes in the massive maze that is our tax law.

Posted by: bob [TypeKey Profile Page] at January 25, 2007 09:06 AM

Well, we can go back into the 50's if you'd like to see a period of high marginal tax rates and high economic growth. It's where you put the taxes and what you do with them. Obviously, spending them on a war is not really the best thing. Spending on infrastructure on the other hand, creates some MASSIVE economic benefits.

Further, I don't think Friedman ever lent enough weight to the practical impact of a zero deficit and lower federal debt. The impact on interest rates alone is enough to make the case as it frees up money for use by consumers.

As I stated, no one creates a job simply because of a tax break. There has to be a commensurate increase in business activity to go along with that job (more production to meet higher demand, for example, thus increasing gross receipts and profits). Why would someone hire someone just to make more stuff if there is no one to buy the stuff?

On the point of where you put the taxes, obviously you would want them to encourage growth by reinvestment in a business, rather than just profit taking. That being said, you can't do that with an 80-90% tax on profits anymore than you can create jobs with a zero tax on profits.

Posted by: mcblogger [TypeKey Profile Page] at January 26, 2007 02:04 PM

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