Wednesday, July 6, 2011
Haters on My Tax Argument
As you can probably imagine, the email responses to my article on taxes in Colorado were heated. Sadly, many people felt that because I am an English teacher, I have no right to voice an opinion about tax policy - or that my argument could have merit. Many called me a "union thug," though I am not in a union. Others charged me with corrupting the youth with liberal propaganda - though my piece was in a newspaper and not even during the school year. The reality is I made a simple argument about one temporary tax increase proposal and its effect on Colorado.
I wonder if any people bothered to read the study commissioned by the CSPR whose findings I challenged I read the study. I also called the economist and quizzed him on his conclusions for more than an hour. The "economist" predicted that this 0.5% income tax increase and 0.1% sales tax increase - for an expiring limited three-year window - will cause thousands of wealthy Coloradans to literally pack up and leave the state. Do you seriously believe that? He extrapolated their exodus - including any businesses and personal money they spend - to have a subsequent effect of additional tens of thousands of job losses. Do you seriously believe that? If so, then we can dispense with much conversation - because it is an absurd conclusion that thousands of Coloradans will move out of state to avoid these minor taxes that expire in three years.
I challenged the "study" by the CSPR precisely because of the lack of causation that it was "a proven job killer. This point which was conceded to me by the economist when, after reading the actual study, I called him and had an hour-long conversation with him. During this conversation, he acknowledged my point about the lack of causation. He could, in fact, provide no justification in terms of his algorithms, and he backed away from the assertions made by the CSPR. Thus, I'm pretty confident in my criticism of the study.
After my research, I composed my credible argument by citing specific facts about economic growth and taxes during the past forty years. As I noted in my commentary, tax policy cannot be expected to influence the economy in any predictable way. Case in point about those most responsible for stimulating the economy - In 2004, corporations were given a one-year tax amnesty program to repatriate billions of cash reserves held abroad with the expectation that they would "stimulate the economy" by hiring people. Pfizer brought home more than a billion dollars, and then proceeded to cut 10,000 jobs in the next two years. That was two years before the '08 meltdown. GE did the same thing. They dropped their tax burden to effectively zero and cuts thousands of jobs. After the recent 66% tax increase in Illinois, United Airlines moved 1300 back home to Chicago - many came from their offices in "no-tax" Houston. It's not so simple - and thus my point about a lack of causation is pretty indisputable. Wouldn't you agree?
Colorado is not heading the same way as California or Illinois with a modest and expiring tax increase - for our government spending is still quite limited, and no one in the GOP could identify cuts. Thus, I ask my critics: where are your facts? What is your model? Where is the causation? We can go tit-for-tat on states that add and cut jobs, but as I argued very effectively, that is a fallacy about correlation and causation. The economy is far more complex, and you can't count on companies to hire simply because taxes are low - or stop hiring if they go up. It doesn't work that way. Thus, voters and politicians should consider the needs of the community and stop trying to play the "grow the economy" game.
I made a basic argument about how an incredibly small sales and income tax increase for a couple years in Colorado won't cause a determined number of job losses - especially a 150,000. I stand by my assertion.