Tax Cut Magic

Posted on September 4, 2011 at 6:00 pm by JM Ashby

There’s world salad, and then there’s word salad.

“I propose to eliminate all federal corporate income tax,” Palin had said in a speech to the tea party in Iowa Saturday. “This is how we create millions of high-paying jobs… To eliminate any loss of federal revenues from this tax cut, we eliminate corporate welfare and all the loopholes, and we eliminate all the bailouts.”

Wait, what? Huh? Errr… What?

So we’re going to zero out the corporate income tax, and then to ensure that we don’t lose any revenue while zeroing it out, we’re also going to eliminate loopholes?

Brilliant. Why didn’t I think of that?

There’s just one problem — How can you have loopholes if the income tax rate is zero to begin with? How do you maintain revenue with a tax rate of zero? Magic?

Not surprisingly, clown car co-pilot Michele Bachmann heartily agreed when asked about Sarah Palin’s ideas.

“We could go that route,” Bachmann told CBS’ Bob Schieffer Sunday. “If we went that route then we’d have to have a fundamental restructuring of the tax code. I’m open to having that debate… What we do know is that the current corporate tax rate is killing job creation.”

Yes. The current tax code, which allows some of the largest corporations in the world to pay no taxes, and in some cases even receive a government subsidy, is really killing job creation.

Tell me — If corporation X and Y are already paying no federal income taxes, and we eliminate the federal income tax, does this means they will start hiring again even though their effective tax rate was already zero?

Of course not, because there’s no demand, and the only entity with the power to create demand right now is the federal government. This is why the Republicans will oppose further stimulus until their last breath.

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  • http://www.politicalruminations.com/ nicole

    Republicans will oppose further stimulus until their last breath.

    Probably only until the bastards regain the White House.

  • D_C_Wilson

    I’ve noticed a new phrase that is popping in the comments of people like Bachmann and Rick Perry: “I’m open to having that debate”. Usually they say this in relation to some proposal like eliminating corporate taxes or saying the Social Security is a Ponzi scheme. I think this is the new way of appearing to endorse a batshit crazy idea of the base while leaving yourself open to denying that you were endorsing idea when speaking to the middle.

    ie, “I wasn’t really endorsing that we repeal all child labor laws, I was just saying we should have that debate as to what role the federal government should in deciding whether 12 year olds should be working in coal mines.

    • GrafZeppelin127

      “We need to have an adult conversation about [X].”

      Translation: “We need to keep saying that we want to get rid of [X], keep bad-mouthing it and keep telling everyone how awful it is, even though we don’t really intend to ever do anything about it, because if we did we would lose it as a campaign issue.”

  • http://www.facebook.com/people/Rick-Janes/607039439 Rick Janes

    Until the Wasilla Chilla and Mish El-Bochmann clarified the point, I agreed with the premise that corporations that already pay no taxes, such as GE, should be hiring more US workers instead of cutting jobs or exporting them overseas. However, now I see the subtle distinction: In Bizarro World, it’s not the actual amount of taxes a corporation pays, it’s the corporate tax rate itself that is the problem. Now it’s all cleared up. Add Palin’s name to the list of economic thinkers: Adam Smith, Karl Marx, John Maynard Keynes, Sarah Palin. Perhaps, like Creationism, Palinomics can be offered as an alternative in the classroom to sane economic theory.

    • http://www.osborneink.com OsborneInk

      You’re not far off. There’s a continuum from disbelieving in dinosaurs to believing oil is god’s renewable gift to mankind. Why shouldn’t economic theology be fully integrated into their alternative reality?

    • ProChoiceGrandma

      I enjoyed your comment – had to tweet it!

      http://twitter.com/#!/ProChoiceGramma/status/110619641415602176
      Tax Cut Magic: http://bobcesca.com/blog-archives/2011/09/tax-cut-magic.html Like Creationsim, Palinomics will be taught in schools as alternative to sane economic theory ^RickJanes

      • http://www.facebook.com/people/Rick-Janes/607039439 Rick Janes

        Thanks, PCG; too bad I misspelled ‘creationism.’ (Since updated because I used to be a persnickety proofreader in the days before spell-check and it’s ‘in my blood’ you might say.)

  • http://www.osborneink.com OsborneInk

    No, Ashby, that’s not how it works. See, the Laffer Curve says that if you cut taxes, government revenues will go up. So obviously, cutting all tax rates to zero will give the federal government an infinite supply of revenue. It’s voodoo win all around!

    • http://www.facebook.com/people/Rick-Janes/607039439 Rick Janes

      LOL, OsborneInk — this is the same Laffer Curve that was sketched out on a cocktail napkin one night (naturally) and later disowned by Arthur Laffer himself, who did the original barroom doodle. (Not that Laffer became Paul Krugman — he still clings to neocon economic nonsense; he’s just abandoned the notions that too obviously don’t work, like his Laff-a-bull Supply Side Wreckonomics.)

  • mrbrink

    Brilliant, Ashby.

    This has been the right’s idea of a “generous compromise” for a good few months, now.

    Cut corporate taxes to zero, but eliminate loopholes.

    Who gives a shit about loopholes if the rate is zero?!

    Rubes, that’s who.

  • rtwyatt6

    What repubs really want to do is eliminate corporate taxes and pay for it by eliminating deductions and credits for the poor and middle class. The “low tax” party has been complaining about how half of workers don’t pay taxe but their supporters don’t realize they are talking about them. Most of the candidates like to use the phrase “stream line the tax code or broaden the base”. What that means is eliminating things like mortage interest deductions, child tax credits and the earned income credit for the poor that Reagan called the greatest anti-poverty, pro family idea in history. The repubs are nothing more than an organization who’s only goal is to keep the rich rich and make them richer on the backs of everyone else.

  • Buffalodavid

    When this statement came on the radio yesterday, I seemed to be the only one in the room to hear it.

    It made me doubt my sanity. Other people told me’You’re making that up.” or “You must have heard wrong.”

    So, I’m okay. But Palin’s sanity is still in doubt.