Republican House Representative Jim Sensenbrenner has been going out of his way to somehow blame Democrats for the current economic woes. It doesn't make much sense, since Republicans were running things for six years, but hey, what does that matter? The GOP is desperate, and Sensenbrenner is notorious for proudly displaying his delusions.
But let's take a look at one of the most fervent movements still taking place in the conservative movement: corporate taxes. I was listening to a debate between anti-tax crusader Grover Norquist and progressive writer David Sirota, and the talking points for Norquist were pretty much what he's been saying for decades:
1. Taxing is stealing.
2. Corporate taxes in America are some of the highest on the planet, and are killing our economy.
3. Cutting taxes improves government revenue
While #1 might be argued, #2 is a flat-out lie. While the STATUTORY tax rate on corporations is 35%, that's not what corporations in America ACTUALLY pay. Thanks to massive tax loopholes and numerous deductions, the average tax rate paid by Fortune 500 companies is anywhere form 6% to 15%. The state tax rate is even lower. While the average corporate tax rate on the state level is 7%, but the average tax rate paid by Fortune 500 companies is 2%-3%.
These are INCREDIBLY competitive compared to other nations' tax rates, and when Grover Norquist says the corporate tax rate is 35%, he's being intentionally misleading. He's doing it because the number is high (although not as high as in the fifties and sixties, when the economy was booming), and it scares people. But, again, the corporate tax rate is NOT uncompetitive.
If you want to argue that the corporate tax rate should be lowered across the board, then that's a different issue. That's possible, but only if the loopholes are closed. Supply side economics--based somewhat loosely on the widely disregarded Laffner Curve--developed into the form it is today primarily with the help of Grover Norquist and NO economists (they came later, ironically), which is why the theory that lower taxes can increase revenue is so easily criticized. Suggesting that the 2005 increase in government revenue was due to tax cuts is highly disputable and far too simplified.
