I understand how political battles sometimes distort the truth. Sadly, however, the left seems unable to stick with the truth even on economic matters. That reality hit me again today when I read an article by Jeffrey Sachs on the CNN website under the headline, "The Ominous Absurdity of Trump's Tax Cuts." Sachs is a professor at Columbia and director of something called the Sustainable Development Center. That makes it sound like he knows what he's talking about. Ten seconds of research reveals that he's a professor of public health. But let's go beyond his credentials.
Sachs argues that the tax cuts are just designed to reward billionaires and other super rich people who flock to the GOP. Let's stop there. If Sachs bothered to look at the election returns, he would see that Hillary Clinton carried mostly all of the extremely high income areas of the country. Even among the super-rich, there was high support for Hillary. For example, Warren Buffet, Jeff Bezos and Bill Gates, the three riches people in the country, were all Clinton supporters. Throw in more billionaires like Soros, Bloomberg and Steyer and you have many more of the super-rich. The Waltons from Walmart are the richest family in the country. They backed Hillary too. I don't know of any poll limited to billionaires, but it sure seems like the majority supported Hillary. So maybe Sachs can stop with the political lies that are supposed to somehow become truths when applied to economics.
Sachs next uses a misleading study by the CBO to argue that American corporate taxes really aren't all that high. According to the CBO, the USA has the highest statutory corporate rate in the world at 39% (that's 35% federal and 4% state.) The USA also has nearly the highest average corporate tax rates in the world, much higher than most other developed countries. So far, the study is correct. Then the CBO goes to what it calls the "effective tax rate". That's how much a company would pay on a dollar of additional income generated by a new investment. This is not empirical data, however. On this basis, American corporate taxes are not out of line with those of other countries. But there are a number of problems with this analysis.
First, companies need capital to make new investments. That capital comes for the most part from income generated from existing facilities. The tax on such income in the USA is the highest in the world. That means less investment. Second, the CBO supposedly looked at all American investments compared to actual taxes paid. The problem is that a huge amount of American investment goes overseas in order to avoid US taxes. The US taxes on the profits those investments generate is zero until the cash comes back into the country, something that rarely happens. So what this means is that the CBO describes American taxes as lower because they average in profits from overseas that can't come back into the USA without being taxed.
Sachs doesn't stop with the misleading CBO study, though. He states that an American tax cut for corporations will necessarily lead to lower taxes in all other countries. Really? There's no basis for this. Sachs just states it as a given. After blasting the supporters of tax cuts for supposedly just making claims without any basis, Sachs actually does just that. We don't know what the Japanese or the Chinese or the French will do to their tax rates.
In short, this is a dishonest hit piece. No surprise it is on the CNN site.
Sachs argues that the tax cuts are just designed to reward billionaires and other super rich people who flock to the GOP. Let's stop there. If Sachs bothered to look at the election returns, he would see that Hillary Clinton carried mostly all of the extremely high income areas of the country. Even among the super-rich, there was high support for Hillary. For example, Warren Buffet, Jeff Bezos and Bill Gates, the three riches people in the country, were all Clinton supporters. Throw in more billionaires like Soros, Bloomberg and Steyer and you have many more of the super-rich. The Waltons from Walmart are the richest family in the country. They backed Hillary too. I don't know of any poll limited to billionaires, but it sure seems like the majority supported Hillary. So maybe Sachs can stop with the political lies that are supposed to somehow become truths when applied to economics.
Sachs next uses a misleading study by the CBO to argue that American corporate taxes really aren't all that high. According to the CBO, the USA has the highest statutory corporate rate in the world at 39% (that's 35% federal and 4% state.) The USA also has nearly the highest average corporate tax rates in the world, much higher than most other developed countries. So far, the study is correct. Then the CBO goes to what it calls the "effective tax rate". That's how much a company would pay on a dollar of additional income generated by a new investment. This is not empirical data, however. On this basis, American corporate taxes are not out of line with those of other countries. But there are a number of problems with this analysis.
First, companies need capital to make new investments. That capital comes for the most part from income generated from existing facilities. The tax on such income in the USA is the highest in the world. That means less investment. Second, the CBO supposedly looked at all American investments compared to actual taxes paid. The problem is that a huge amount of American investment goes overseas in order to avoid US taxes. The US taxes on the profits those investments generate is zero until the cash comes back into the country, something that rarely happens. So what this means is that the CBO describes American taxes as lower because they average in profits from overseas that can't come back into the USA without being taxed.
Sachs doesn't stop with the misleading CBO study, though. He states that an American tax cut for corporations will necessarily lead to lower taxes in all other countries. Really? There's no basis for this. Sachs just states it as a given. After blasting the supporters of tax cuts for supposedly just making claims without any basis, Sachs actually does just that. We don't know what the Japanese or the Chinese or the French will do to their tax rates.
In short, this is a dishonest hit piece. No surprise it is on the CNN site.
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