Raising Taxes in a Recession: A Terrible Idea
I've posted several times that the idea of raising taxes in a recession is a poor one. It doesn't matter if its to balance out of control spending or worse to pay for boondoggles like the transit tax scam or the gang tax. With Angelenos struggling to pay bills, buy gas and get by the last thing the economy can handle is more taxes. And to top it off your DWP and trash rates were raised significantly again.
Wednesday I had a conversation with a former elected official who now sits on an important local panel. It doesn't matter who they are. With respect to the proposed sales tax increase to pay for Westside transit projects the individual told me "investing in infrastructure is one way to stimulate a stagnant economy."
We've heard many politicians say this but it's never really panned out. Did constuction of the Metro Red Line boost the economy in the late 90s? No, it came from the dot.com explosion and rising property values. Indeed, the current downturn will naturally be well over before the first train is even run.
The best thing the City Council and State Legislature could do is to CUT taxes and fees. That means they'll need to make some pretty painful spending cuts. However very quickly they will see that revenues will increase the more they cut taxes and the more that private investment is stimulated.
It wasn't George Bush or John McCain or even Ronald Reagan who said that "It is a paradoxical truth, that tax rates are too high today, and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates," no, it was President John F. Kennedy who in 1962 significantly cut taxes which led to a long term economic expansion that was stalled by the massive increase in social spending of Lyndon Johnson and his escalation of the Vietnam War.
Arnold. Antonio. Anyone. Want to follow the lead of JFK?
Wednesday I had a conversation with a former elected official who now sits on an important local panel. It doesn't matter who they are. With respect to the proposed sales tax increase to pay for Westside transit projects the individual told me "investing in infrastructure is one way to stimulate a stagnant economy."
We've heard many politicians say this but it's never really panned out. Did constuction of the Metro Red Line boost the economy in the late 90s? No, it came from the dot.com explosion and rising property values. Indeed, the current downturn will naturally be well over before the first train is even run.
The best thing the City Council and State Legislature could do is to CUT taxes and fees. That means they'll need to make some pretty painful spending cuts. However very quickly they will see that revenues will increase the more they cut taxes and the more that private investment is stimulated.
It wasn't George Bush or John McCain or even Ronald Reagan who said that "It is a paradoxical truth, that tax rates are too high today, and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates," no, it was President John F. Kennedy who in 1962 significantly cut taxes which led to a long term economic expansion that was stalled by the massive increase in social spending of Lyndon Johnson and his escalation of the Vietnam War.
Arnold. Antonio. Anyone. Want to follow the lead of JFK?
Labels: dwp rate hike, Gang tax, George W. Bush, John F. Kennedy, john mccain, lyndon johnson, Ronald Reagan, transit tax, trash tax
Posted by Michael Higby @ 8/07/2008 12:00:00 PM
15 Comments:
I lived through 1962, I knew 1962.
This is NOT 1962!
Well hell then it's settled, if the late conservative Republican President JFK did it, then without a doubt Bush should cut taxes immediately and that would fix everything all hunky dory.
Higby,
If ONLY you knew anything about economics and fiscal impacts of infrastructure improvement.
But alas, you spend your time eating Subway sandwiches and bitching and moaning.
Please provide three reasons why anyone would give a shit about what you think.
Could not agree more. What makes it worse is when was the last time the city or county actually cut poorly functioning services and burreaucrats that are no longer serving a purpose? Many departments have programs that were created to address problems from 20 years agos and they did not work then and still do not work now [such as HACLA]. When government cuts recurring costs by actually eliminating government positions [starting with stupid commissions] by 15% - I will support a new tax.
JFK was assassinated for God's sake. So obviously, tax increase = re-election and tax cut = murder.
I have proof that Bart Reed and his bitch boy Jack Hoff are posting anonymously about Mayor Sam's weight to win their arguments.
Stop looking at tits boys.
Bart Reed and his bitch boy Jack Hoff are posting anonymously about Mayor Sam's weight to win their arguments. Hell knoweth no fury like a woman (Jack Hoff) scorned. Jack has a big wide mouth. He has accomplished more than you think.
I like Subway sandwiches, but think it's ok to mention Higby's weight, since he's created a forum here for all his blogging burros to be nasty. If he sets that tone, he'll get it back. (Note, noone makes fun of Wet Spoott's appearance, just his spolling, since he's not AS personal. But if he copies HaikuLA and certain others we may have to reconsider...)
People, there's one thing you must remember about both Jack Hoff and Tony Villar...
They both have a lot less than meets the eye!
So raising taxes in boom times is a good idea in Higby's book?
There were no big box stores in 1962.
Now I've heard it all, is Bitter Bernie crazy or desperate or both? City council definitely have too much time on their hands and are thinking of the dumbest things to pass motions on. This has to be one of the dumbest. Mayor Sam can we have a thread on the dumbest council motions? There's too many to count.
.......Councilman Bernard Parks, who also is running for the county Board of Supervisors, is calling for a measure that would prohibit smoking in any areas where nonsmokers might be affected.
While Parks did not offer specific examples, he said it could apply to a situation in which a person walking on the street is smoking and a nonsmoker takes offense.
"Smoke has no boundaries," Parks said. "You should smoke only where you are hurting only yourself."
Boys, boys, PLEASE-- I'm not worth It! (Ahem) We've gotta put personal fast-food preferences aside and unite under the NO MORE TAXES umbrella. No gang tax, no 1/2 cent sales tax-- if only to piss off the city council! Unfortunately, many taxes go up anyway becuz of inflation and bond measures-- we gotta vote against them too, when we can. (Check your latest itemized property tax bill and compare it to your prop.tax bill of a few years ago-- I promise, you'll be royally bummed out.) To quote one of my 15 city council nemisises (nemii?), the Paul Lynde of the Westside, the eternally light-in-the-Birkenstocks Bill Rosendahl: "IT'S A NO-BRAINER, PEOPLE!" Gawd, I hate it when he says that...
This brilliant argument: The more you cut taxes, the more revenue you raise!
So why don't we cut taxes to 0% and then we'll have infinite revenue!
There's a reason the biggest deficits of the last thirty years were under Reagan and Bush Jr.
The JFK example is ludicrously out of date.
JFK cut marginal tax rates from 90% to 70 something percent. Our current highest tax rate is in the high 30s. In JFK's example, yes, it's possible you might be able to cut taxes and increase revenues because such a startlingly high amount of people's incomes was being soaked up and there was still plenty of money left over for infrastructure investments.
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