Reality-based tax breaks

By now you’ve heard the bitter, widespread debate over whether giving the wealthiest Americans fat tax breaks will ever create jobs.

But everybody agrees on one thing – we shouldn’t just give rich people tax breaks so they can have even more money to do whatever they like with.

Don’t we?

That’s why I was intrigued by this proposal that would tie tax breaks to the actual creation of jobs.

The proposal was floated by Benjamin Barber, a Democratic theorist writing on Huffington Post.

Barber suggests a system of vouchers to make sure they’re creating jobs with their tax breaks.

“Conservatives should certainly welcome the principle of vouchers, which they have been proffering for a long time to the poor for education, groceries and housing – and now, courtesy of Mr. [Paul] Ryan, for Medicare too,” Barber writes, referring to the Republican vice-presidential candidate’s proposal to have the government give future Medicare recipients cash to buy insurance instead of health care. “The premise has been that a voucher prevents "irresponsible behavior" by those being helped, like buying drugs instead of groceries or a golf caddy instead of private schooling for the kids. It's a way to prevent the poor from getting all that "free stuff" Mitt Romney thinks they are always conniving to acquire.

Basically, it’s so simple I’d be surprised if someone hasn’t suggested it before: If you create real jobs, you get a tax break. No job creation, no tax breaks.

While Barber appears to suggest granting the tax cuts first and taking them away if the tax break doesn’t lead to jobs, I’d flip it: base the tax cut on hard proof that the jobs have been created.

Proponents of this latest version of the trickle-down theory should have no problem with the wealthy actually having to prove they’re creating real jobs to earn their tax breaks.

Because nobody wants to give away money for nothing, right?

I think the proposal could be refined to link the quality and number of jobs to the size of the tax cut.

For example, buy a yacht: no tax cut. Enjoy your yacht.

But prove you created a significant number of high-wage jobs with health care benefits and pensions, get a bigger tax cut.

Extending the logic of Barber’s idea, if you outsource jobs, shouldn’t your taxes increase?

Barber has hit on an issue that extends beyond just tax cuts – government officials have been extending all kinds of subsidies to business owners for creating jobs without ever requiring proof that the business owners actually create the jobs, or requiring that the subsidies be returned if the jobs are destroyed.

The very notion that we’ve allowed these huge tax cuts for the wealthy without demanding proof that they lead to real, not just theoretical, job creation, suggests how far we’ve moved away from the sensible fact and data-based world into a realm based on wish fulfillment for the wealthy who dominate our politics. The notion that proponents of the tax cuts want to pay for their extension by eliminating tax breaks that help the middle class, like the home mortgage tax break, also suggest how far our political debate has gone astray. Barber’s proposal suggests a way to get it back from fantasyland.

 

 

 

 

 

Party Like Its 1999

Today’s Census Bureau report on 2010 paints an unvarnished picture of the economic state of the union, and it’s not pretty.

The report confirms the damage done by the Wall Street debacle in 2008. The median income of American households fell by 6.4% from 2007. The median household income is 7.1% lower than it was at its peak, which occurred twelve years ago –in 1999. When you hear people talk about the “Lost Decade,” that’s what they mean.

The number of Americans in poverty jumped to 15.1% in 2010. A total of 46.2 million Americans were in poverty. That’s about 1 in every 6. The poverty rate grew almost 3 million from 2009, when 43.6 million, or 14.3 percent of Americans, were in poverty. The 2010 poverty level is the highest since 1983. More Americans are in poverty today than there were in 1959; but at least the rate has declined from around 23% in 1959.

But even these frightening statistics do not tell the whole story. Buried in the data was the fact that nearly a quarter of American families experienced “a poverty spell” lasting two or more months during 2009.

One measure of America has always been its promise of a better life for each succeeding generation. That principle is endangered too, the report shows. Twenty-two percent of Americans under 18 years old are in poverty. And the number of 25 to 34 year olds living with their parents rose 25% between 2007 and 2011.

Finally, the report contains some interesting demographic data pertinent to the politics of health care reform. Since 1987, the total number of Americans without health insurance has increased 40% - but remains at roughly 16% of the nation. Most Americans still get their health coverage from employers, but that number has dropped to 53% from about 65% in the late 1990s. A third of Americans are covered by government programs – a roughly 30% increase from 1987.

For people who feel like America is headed in the wrong direction, these numbers agree.