Wednesday, April 15, 2009

Corporate Tax Cuts

I've been hearing snippets of coverage about the "tea protests" over taxes today, which seem to be primarily organized and coordinated by the major right-wing players (certainly not "grassroots" efforts, by any means) and I'm just a bit confused as to what they are really protesting. We all hate paying taxes, but almost all of the people planning to 'teabag' (and boy, they really should have looked that one up before adopting it as a moniker!) are those specifically getting the benefit of the proposed tax cuts. Protesting government budgets? I can't see why they are all up in arms now (except that the Republicans apparently don't like being the minority party). Where was the outrage in the last eight years? I just don't understand how anyone can try to use the old hack "tax and spend" as a criticism. Are they irony impaired?
President Bush has presided over the largest overall increase in inflation-adjusted federal spending since Lyndon B. Johnson. Even after excluding spending on defense and homeland security, Bush is still the biggest-spending president in 30 years. His 2006 budget doesn’t cut enough spending to change his place in history, either.

Total government spending grew by 33 percent during Bush’s first term. The federal budget as a share of the economy grew from 18.5 percent of GDP on Clinton’s last day in office to 20.3 percent by the end of Bush’s first term.

The Republican Congress has enthusiastically assisted the budget bloat. Inflation-adjusted spending on the combined budgets of the 101 largest programs they vowed to eliminate in 1995 has grown by 27 percent
[From dailykos]

I'm as ticked as the next guy about my tax dollars paying for AIG executive bonuses. I don't think the American car industry is worth bailing out, really (although I do understand the economic reasons for doing so). I'm angry that I've paid thousands of dollars to fund a war that I absolutely did not support (although again, I do see the need to make sure our troops are properly armed and protected). If that was the core of this protest, I could understand the ire. But it's not, as far as I can tell.

I simply cannot see what sort of "message" the faux tea party group intends to give. Are they protesting tax hikes? tax cuts? general rates? what is taxed? Obama? Democrats in general? The weather? It's getting all sorts of breathless coverage on the radio and Fox News, about how it could be the start of a "new rebellion"...really? You picked now to try to protest taxes? Now? When things are actually going to be better for most people? (Yeah, I'm expecting my taxes to go up, by the way. I'm not in any way agreeing with this group. As a matter of fact, the people that I know who are actually going to have higher taxes in the next few years are not complaining at all. It's all the people who aren't in that tax bracket who are raising a ruckus. Go figure.)

They certainly aren't looking back and criticizing the actions of previous administrations (both D and R), they have co-opted an image from history and don't seem to have grasped the real implication : the Boston Tea party was a reaction to corporate taxes, and the practice of a "foreign" government levying taxes on colonial trade. It is more of a commentary on business than anything to do with tax rates. IN fact,
the Boston Tea Party was ultimately precipitated by a massive corporate tax cut.

In 1773, the British East India Company, was in serious financial straits. One solution was to bail out the corporation by offering it a government loan. But instead, at the urging of the East India Company's powerful lobbyists and supported by King George III, Parliament passed the Tea Act which almost entirely eliminated the duty -- the tax -- on British tea exported by the East India Company to the American colonies. The actual subtitle of the Tea Act:
"An act to allow a drawback of the duties of customs on the exportation of tea to any of his Majesty's colonies or plantations in America; to increase the deposit on bohea tea to be sold at the East India Company's sales; and to empower the commissioners of the treasury to grant licences to the East India Company to export tea duty-free."
The rationale was that lower taxes meant lower prices, which meant the East India Company would sell a lot more tea. In other words, the British government's solution to the East India Company's financial crisis was, in effect, a tax cut. The tax cut was viewed by the colonies as tyranny against smaller merchants whose business would be severely undercut.

So, "Tea Parties" are the conservative revival of the Boston Tea Party, in which "Sons of Liberty" disguised as Native Americans raided a British ship and dumped crates of tea into Boston Harbor to protest British 'rebates' of taxes to the East India Company. Today's revolutionaries are protesting the new federal budget, or the stimulus plan, or, possibly the very idea that Democrats get to decide how the government spends money, instead of those fiscally responsible small-government Republicans who brought us the biggest deficit in American history.

Makes sense now?

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