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Tech Bit: Asking for evidence

Dear Republicans,

Present evidence that lowering taxes for wealthy businesses provides any economic stimulus whatsoever or shut the hell up.

We now return to our regularly scheduled program.


On 1/27/09, 6:05 PM , carnifex said...

These are politicians, so most of them seem to believe that repetition of statements is proof.

On 1/27/09, 11:57 PM , Jason said...

Well, there is a link. It also seems to make logical sense as well. When you raise taxes on a business, it only has a few choices. It can either raise its price, hurting consumers and probably hurting the company as well, or it can cut corners on the product, either on materials, future R&D, or by firing employees. Of course, the third choice would simply be to move its operations to another country, which we've already seen in many cases.

Similarly, it is not as if our corporate tax rate isn't high. We have the 2nd highest rate overall, only behind Japan. Plus, in 24 states the corporate tax rate exceeds Japan's rate, given how high some state's corporate rates are. Ireland, Iceland, and the Baltic nations are perfect examples of how lowering corporate rates can provide not only economic stimulus but also increase the competitiveness of exports, something our economy desperately needs.

Anyways, Ive gone on too long but to shorten it up... if you provide economic stimulus for wealthy businesses you will allow them to lower the price of their good or increase their workforce, both of which would help stimulate the economy.

On 1/28/09, 5:50 AM , Techskeptic said...

Its not impossible that a TechBit is not really the right place to explain my position regarding tax policy or any complex subject and I wont do it again.

Your link is simply about who shares a tax cut. I have not read the actual study but one thing is clear. If you have a company of say 500 people with a typical structure (5 executives, 10% middle management) if 70% of the tax break goes to 90% of the people working there then it is split between 450 people, each receiving small fraction of the overall break.

That is the whole problem with that: big deal, so they get 25 bucks each.

My gripe was that "reduce Corporate Taxes" has become republican dogma. Its now the defacto knee jerk response to any change whatsoever. Its short sighted, short term band aids. I'd much rather get rid of our debt in 40 years so that my daughters taxes can be lower for real reasons.

There is not a soul on the planet who thinks that lowering taxes would be bad. But its a matter of priorities. Should we be lowering taxes when our debt is out of control? Should we be lowering taxes when our infrastructure is in such a non-competitive position? Should we be lowering taxes when the only energy solution that removes us from foreign oil requires government investment for success (that includes nukes)?

I dont care "if it makes logical sense" lots of things seem to make sense but when implemented don't work or have adverse effects. I am asking for evidence that lowering taxes improves the economy. We have tried lowering taxes, over and over again, we are now seeing one of the worst recessions ever. I'm not saying its cause and effect, I'm saying that I dont see evidence that it improves the economy as claimed. That is different than a study that points out who gets the benefits of a tax break.

What would then? Maybe I'll do a post on how investment in technology (specifically infrastructure, energy and productivity tool) and reduction of debt is the only real tangible path to an economy boost.

We want to build an economic engine that produces. We want to switch from a four banger to a V8. Switching to higher octane fuel is just like praying that your ford fiesta will become a Ferrari by changing the gas you use.

On 1/28/09, 5:51 AM , Techskeptic said...

I forgot to thank you for visiting. thanks for coming by!

On 1/28/09, 1:07 PM , Anonymous said...

"Should we be lowering taxes when our debt is out of control?"

How about the opposite question, should we allow unrestrained government spending when our debt is out of control? I've only recently come across your blog, but it seems that you're being partisan and not looking at the negatives of government spending. If your concern is about the debt, then you should be arguing against anything that increases the debt.

"Maybe I'll do a post on how investment in technology (specifically infrastructure, energy and productivity tool) and reduction of debt is the only real tangible path to an economy boost."

If you do such a post, then please elaborate upon how the government is suppose to pick the right technology. It can be argued that investment in roads is what lead to suburban sprawl and investing in energy is essentially a subsidy to the rich utility companies so that they don't have to do the R&D themselves. So assuming that government can run a project better than motivated entrepreneurs, how do you know that government won't be throwing all it's money at ethanol or some other worthless endeavor?

On 1/28/09, 2:37 PM , Techskeptic said...

Thanks anonymous for your input.

I think you have set this up to be more black and white than it is. When we think of lowering taxes, its a short term benefit. If taxes are lowered without also reducing spending to a point where there is a surplus then debt can not be paid off. Its the exact same thing as increasing debt. I don't hear specific proposals on reducing spending, and when we hear some you can expect the same response our governor (Patterson in NY) got from both parties...."don't cut my stuff".

However, if you increase debt by investing in things that will bring greater income in the future, then the increased income will allow for the new (and old) debt to go away. I don't promote any short fixes. To me, the worst thing we did was cut taxes when we had a surplus. The taxes should have been cut when debt was under control and not before.

So simply cutting out anything that may increase short term debt is not a fruitful endeavor, if we can put money towards things the give my kids a chance to have a lean, mean economy.

As for what to invest in? Everyone has their pet projects and people smarter than me and more knowledgeable in their fields, may battle that out and get paid for it. I just hope that battle gets done in a data driven fashion.

For me, the goals are to generate prosperity while increasing safety. Energy independance and abundance is one, the only path is to get off fossil fuels. Next is electronic and power infrastructure, more distribution.

I'll tell you one way to avoid the issues you bring up about government running the show in some places. Listen to the experts. We just had 8 years of gut based governance. Leaders and voters must demand evidence and more importantly oversight. 350 billion was just given away with virtually no oversight, no one to check and ask "what specifically will you do with 25 billion" etc. The car folks got it to some degree, the banks..not so much.

It also doesnt have to be willy nilly funding. Darpa and other agencies have offered challenge based development. Its a good method that promotes creativity and competition. I think even McCain suggested something like that.

There are tons of ways to have government push development forward without being a monolithic suffocating entity.

I will certainly agree there are tons of ways to fuck it up too.

On 1/28/09, 2:42 PM , Techskeptic said...

BTW, of course I am partisan, everyone is. however it is our job to listen and debate so that we can change our minds. But it goes more to the idea around the post. "Reduce taxes" is republican dogma, and as long as it continues to be used that way, I'm going to have a partisan response to it.