By John Hively
Republicans have long championed the idea that tax cuts for the rich create jobs. We know that’s a lie. The Bush tax cuts for the wealthy created negative private sector job growth for the last ten years. They also helped to send us spiraling into the current slow motion 2nd Great Depression. Let it be stated unequivocally that there is not a shred of evidence that tax cuts for the rich has ever created a single job, but there is plenty of evidence they destroy jobs and redistribute income.
We’ll start this series with how the affluent use tax cuts to steal money out of the pockets of working people.
Say you’re a billionaire and you have a yearly income of a hundred million dollars. Perhaps you take home ninety million dollars after all the deductions you have. You’re only paying fifteen percent federal tax on your capital gains, which is how you derive your income, but those deductions add another five million to your checking account. What happens if the capital gains tax rate is slashed to ten percent? That means you take home ninety-five million dollars.
You might invest that extra five million with a hedge fund, which is a non-regulated investment company. The managers there might invest that money in the futures market for oil. Does that create any jobs? Hell no. But it does bid up the price of a barrel of oil. Say oil is trading at $100 a barrel before the tax cut. After the cut, there are lots of billionaires and millionaires investing in the futures markets with the cash from their new tax break, which bid up the price of lots of commodities; but let’s stick with black gold for simplicity. All these rich people bid up the price of oil to say $150 a barrel.
That means the price of gasoline is going to jump, maybe a dollar or two a gallon, more or less. That extra dollar or two you pay at the pump goes directly to the rich folks that bid up the price of oil. That means money goes from your pocket to the wallets of the rich because of their tax cut. In this way, tax cuts for the rich redistribute income from working people to the affluent.
Of course, it’s worse than this if you’re a working stiff because the wealthy are pushing up the price of goods all through the economy via their investments in the futures markets for farm produce, chickens, beef, steel, whatever. You name it. You’re paying more of your income to the rich for a ton of stuff.
That means you have less cash to spend at your local restaurant, or maybe to buy that iPod, television, Toyota Prius, or any number of things. And whatever company makes the items that citizen’s purchase is forced to reduce labor costs because the demand is less thanks to the redistribution magic of those tax cuts. So companies cut the wages and benefits of their employees, and or reduce their work force through lay-offs, or they offshore jobs. That local restaurant of yours might be forced to lay-off people, reduce employee hours, or even close, thereby eliminating more jobs.
So those tax cuts for rich fat cats are killing jobs, not creating them. And when they destroy jobs via their investments in the futures markets, they also weaken the tax base for schools, local government, libraries, police, roads and so many other things that make our lives better. That also means government employees see their jobs eliminated, their hours sliced, or their hourly compensation held static or pushed down. Those that keep their jobs wind up working more and earning less.
You can’t forget tuition at state colleges and universities are going to spike, so our kids are going to pay more for school because of the tax cuts, which are also smothering their future employment prospects as jobs are eliminated. When it comes to fleecing your pockets, our federal government helps the affluent a lot.
Sure, there might be a few patriotic warriors of the people in congress left, brave men and women of high moral standing like Senator Bernie Sanders of Vermont and Congressman Peter DeFazio of Oregon; but about 98 to 100 percent of the Republicans in Washington and somewhere between 66 and 80 percent of the Democrats are collaborators of the affluent; people like Ron Wyden, Wall Street’s Democratic senator from Oregon and Democratic Congressman Earl Blumenauer, another collaborator of Wall Street from Oregon. Those kind of people help change the rules in favor of the rich.
Take inflation for example. Using current methods, the government says inflation was 1.5 percent for all of 2010. Yet, according to Harper’s Magazine, inflation would have been over 10 percent last year if the government measured inflation the way it did thirty years ago. But it doesn’t. The government has changed the way it measures inflation twenty times since 1980. There might be a sinister reason for this.
Speculation in the futures markets drive prices up, which adds to the inflation rate. And this means that inflation can be used to help gauge how much of your income is being shoveled into the pockets of the wealthy thanks to those tax cuts. Government, you see, is a keen collaborator of the one percent as they financially pillage the middle class. Most of our politicians don’t want us to know what’s really going on. That’s why the government doesn’t include the price of food and energy in the way it determines the yearly amount of inflation, at least not anymore. There’s another way the rich benefit by bidding up the prices of commodities in the futures markets, but I’ll save that for part two of this series. The links below are for other similar articles.