Tuesday, September 20, 2011

The Economic Develop Questions You Won't Hear: Do High Tax Zones Produce Jobs And Create The "UN-Least Of These"?


As the 2012 Presidential Campaign gets into full gear Americans are drawn to line up on various sides of the line of scrimmage in the "Malcolm X Political Football Game".  The arguments on both sides have the unique characteristic of avoiding the discussion of the aggregate condition of the nation's fiscal order and instead key in on their particular ideological ground that they refuse to yield.

First MY position.
For me tax increases are not off of the table.
My mandate is that they be used in a structured way.   History shows that an increase in taxation, thrown into a system that needs reform is only a temporary satisfaction for the furnace with an insatiable appetite.  Any tax increases need to be preceded by necessary restructuring and cuts to the main areas which are experiencing the most growth - the Big 3 Entitlements and the US Military.  Once there is a 10 year program of REAL cost control (not the corrupt math of Washington DC) then the tax increases "on the rich" should be used as "new revenue" to pay down the debt - thus lowering the interest payments made by the Federal government to service its debt.  This nation needs to live within its means.

Why Are We Debating THIS "Tax Increase On The Rich" and THIS "Jobs Program"?

Some people have short memories on their previous promises that got them into power but long memories on what their adversaries have said.  Though my personal viewpoint is right-of-center I do agree that those who sold us on the notion that tax cuts (alone) are the key to economic growth appeared to be more interested in tax cuts than actual growth.  I have said in the past on this blog that any politician who focuses on tax cuts but does not follow through on the SPENDING CUTS that were supposed to be the offset is a politician that has not served the nation well.  Between the two a "tax and spend liberal" is better than a "tax cut yet still spend conservative".   Ironically today we have "targeted tax cut big spenders" on both sides of the isle.

The biggest flaw for both sides is that they try to make the government tax policy out to be "The Economy".  This is not so.

I have previously argued the analogy that the economy is like a river.  Some times it is raging, other times it slows to a trickle.   Taxes are like a water diversion canal.  This water can be channeled off into a reservoir that can be later re-injected back into the river for stimulus of the water flow.  In other ways this diverted water can be squandered - resulting in only a net loss of flow from the river.

If you carefully inspect today's economy as contrasted to "Bill Clinton's economy" - those who are honest will note that the claims of Clinton as an economic policy wunderkind should be applied to the river analogy.  The economy that was stimulated by the "Silicon Valley Technology/Wall Street Venture Capital" market bubble produced a raging river which produced the conditions that many present commentators point to in their arguments that tax increased did not tank the economy.  Of course - since many are playing slight of hand - they stop short of saying "Tax Increases Stimulated The Economy".

Likewise when they point to the decade of 2000 to note that tax cuts did not stimulate the economy as Republicans have promised - they are accurate in regard to the set that argued that tax cuts alone was the key to economic prosperity.

My issue is with a person who tries to tie these two arguments together (Clinton's tax increases did not harm the economy but instead lead to a thriving economy while Bush's tax cuts failed to produce favorable economic conditions) to justify their present policy.

Two Interviews About The Obama Tax Increase Proposal

Both of these interviews "sell" the progressive version of events.    They both indict the "tax cuts have not produced prosperity, let's now make the rich pay their fair share".  

If you listen carefully to their arguments they keep the subject at the national level.   As I was listening to this and other arguments I noticed that no one dared to go more granular.  

What is the tale of the "High Tax States and Counties and Cities" in producing favorable results?

If someone affirms their argument that tax cuts do not create the promised economic growth while tax increases "generate revenue" for the government - why is it that these same people are loathed to apply this model on a more local level?   

My macro ideology states that: A group of people (regardless of the affiliation - state residency, race or religious dogma) should have the EFFECTIVENESS of the system that they matriculate through measured based on the delta that is observable between where they stand now as compared to where they were at the front end.  While we are all compelled to see the football on the ground and make a head-first dive toward it - failing to retain consciousness about our ultimate goal serves the purposes of the political operatives that seek to divert us.

For me "Organic Competencies" that are evident is an important measure.  Have "the Least of These" become "The UN-Least Of These" after their experience through the system that they are governed by?  Instead of the government receiving more money from the rich people within the tax zone - we should make note of how many new tax payers have been added to the market.

There are noted high tax states, counties and cities - California, New York, Fulton County GA, Cook County IL, Philadelphia, Boston, San Francisco.

Why is it that only rarely do we hear the national taxation debate scaled down to this more granular level as a means of affirming our respective positions?

The truth is that high taxation has a suppressive effect as individuals in pursuit of their own best interests seek to reduce their exposure.  Ironically many of these high tax domains also have large budget deficits.  This is because the twin brother of high taxation is the view of the expanded role of government in "social justice spending".

With all of this said - this is why I argue that the more important measure than the TAX RATE is the RATE OF ORGANIC INCREASE as people live their lives through the public policy framework that they are ensnared in.

Taxing someone from affair and having these funds redistributed in indeed might address a person's ability to live up to a certain standard of living that the greater society has deemed him worthy of.  It does not mean that this person will be able to take that consumer benefit and translate it into productive capabilities in which the proportion of his own uplift to this standard comes from the skills that the institutions that received this external funding has afforded him.

If there is one difference between the progressive and the conservative it is the above point.  The notion of a "Nationalized Social Justice Contract" speaks of a mandate from the wealthy to pay upon this contract via the tax system.  My personal question is - WHAT is the mandate upon "the least of these" with respect to the institutions that are provided for them so that the redistribution via the contract is more temporary rather than a lifestyle?

Unfortunately when this mindset becomes a perpetual struggle - a political movement - we see the present perversion that is the case among the permanently aggrieved.  They are made to look past the promised UPLIFT that would be received if they voted for the progressive machine that was assembling power and instead begin to become engaged in a perpetual fight against the RICH.

The above paragraph is a theoretical exercise until we make note of how other groups of people who are also "the least of these" are making use of this first group's internal inattention and are developing prosperity using the resources from those who are outwardly focused in struggle.

In summary - the present outward drive for resources needs to be turned inward in the spirit of good governance over the institutions that are under control of the community.  Any assistance outside of the cascading rings from the community, city, county,state should be done on an exception basis and not a permanent diversionary channel that is erected.

If paying taxes is patriotic then how do we create more patriots out of "The Least Of These"?

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