The collapse of the S&L's in the early 1990's should be all the proof you need that people react to tax changes. Tax loopholes caused all those investments in bad commercial real estate. Tax simplification eliminated those loopholes, directly leading to the collapse of those S&L's.
Would you use that kind of argument when it comes to stopping crime, Roger? It's no use trying, because people will find other ways to cheat the law?
I think not. The difference is that there appears to be such an incredibly broad consensus in the United States that taxes are evil, and that governments are only going to steal your money and waste it on stupid things. So cheating on your taxes is not seen as a crime, not something you should be ashamed of, but rather something you should be proud of and something that serves the government right.
Well, look at Wall Street. That was the free market and financial capitalism in all its glory. It didn't levy taxes on people, no. But I doubt that its actions are not going to cost people a lot, in the United States as well as abroad.
Why are taxes so poisonous? Why? Governments collect taxes to use that money for the common good. What is so incredibly bad about it?
And the deficit got cut in half how, exactly, between 2004 and 2006? Spending certainly didn't go down.
A probable reason for the decreasing deficit between 2004 and 2006 is that America's loan-powered economy crested about then. Those were the boom years, so less money had to be borrowed from abroad. Those were the days. Now the United States needs to borrow more than ever.
The health of the economy is the most important reason for tax revenues rising or falling. The best way to get the economy going is through tax cuts, not tax increases.
There you go again, repeating your claim that tax hikes are always bad. But not offering any proof.
Even Obama admits it himself. He admits that because of the bad economy, he may not be able to raise taxes immediately.
To me, Obama is not the Messiah. Just because he says or admits something about the economy doesn't make it the truth. If you say something, that doesn't make it the truth. If I say something, that doesn't make it the truth. If Obama says something, that doesn't make it the truth. Each of us have to try to find supporting evidence to bolster our claims, if we want to be taken seriously.
But I absolutely agree that Obama will not be able to raise taxes as he should, assuming he is elected. The reason is that Americans hate taxes so much that it has become a sort of conditioned reflex to oppose tax hikes in every situation. Say 'tax hikes' and millions of Americans will react as if they have been told something absolutely horrible. What is a Wall Street crash? What is a $700 billion bailout that will have to be paid for mostly by loans from abroad? To so many Americans that's nothing, compared with tax hikes. Because so many Americans believe that they themselves won't have to pay for the Wall Street crash or the $700 billion bailout. So many Americans seem to believe that taxes are the only things that they will have to pay for themselves, and taxes are unfair and harmful. And the reason why so many Americans believe it is, I think, that they have been told so for many years now, particularly by the GOP. And the Democratic party has chosen not to voice any real dissent.
So Obama can't do much in the way of raising taxes, because that is so wildly unpopular in America. It is not quite as unpopular and shocking as it would be to most Iranians to be told that girls should be allowed to walk around in Teheran with no headscarfs and in short skirts, but the gut reactions of tax-loathing Americans and immodesty-loathing Iranians are similar. The ideas of tax hikes in the United States and skimpy dresses for girls in Iran go so deeply against the grain of what people believe in the United States and in Iran.
The United States has borrowed and borrowed and borrowed for most of the time since Reagan became President in 1980, and most Americans have not felt inconvenienced by their country's debt. They have not been told, certainly not by leading Republicans, that this debt is any sort of problem. After all, someone else pays. Why is something a problem if you don't have to pay for it yourself?
So Obama will not raise taxes because he
can't. The American people will not let him. That doesn't mean it would not be the best thing to do, if it was possible. It would, but it isn't.
We had a severe financial crisis here in Sweden in the early nineties. It was a housing bubble that threatened our banks. The government bailed us out, because it had to. But how did it do it? Not by borrowing huge amounts from abroad, because that was not possible. Who would be interested in lending huge amounts of money to a small country with then eight million people and a small national currency?
There was only one thing to do. The government had to raise taxes to get the money it needed for the bailout. So it did. It was painful, but it worked. The banks were saved and the economy recovered.
America has the largest economy in the world. Its currency is the world's currency, which is good everywhere. It has been in the interest of other countries, not least China, to buy huge amounts of American debt in order to keep their own currency low and make it easier for their own manufacturers to export their goods to the United States. This has been a solution that both China and the United States were happy with: America got the spending money it needed now that its tax revenue wasn't enough to pay for its needs, and the Chinese made huge export profits. But there is no guarantee that the Chinese will keep up their part of the deal, particularly if America reduces its import of Chinese goods.
He knows tax hikes are poison to the economy. Anybody who's taken Econ 101 knows that.
You say that sort of thing, Roger. But just because you say it doesn't make it the truth. Just because Econ 101 says it doesn't make it the truth. Because Mulder and Scully were ultimately right. The truth is out there. It is not there in beliefs or ideologies or in things you have been told for as long as you can remember. It is out there, in the real world. And refusing to see the real world, and sticking to Econ 101, will ultimately send you plunging.
Ann
