Next year the country will have a new tax policy. The rhetoric and politics surrounding this debate further show that the great majority of Americans are very ignorant about basic economics. This ignorance allows politicians to persuade voters about economic ideas and policies that are simply wrong.
During the current debate about tax policies, I heard several politicians state that decreasing the corporate tax rate would only help rich people and corporate shareholders. Wait a minute, I thought.
My wife and I are both retired public school teachers, living on our teachers pension. And our pension fund, like all pension funds in America, are major shareholders in American corporations, often the biggest shareholders. In fact, pension funds support all teachers, police, many nurses, local and state government workers, union members, and everyone with a 401 retirement plan.
All of us benefit from increased corporate profits, value, and dividends. About 55 percent of all Americans are invested in corporate equities.
The politicians are lying.
This anti-business political propaganda is based on the economic fallacy of zero sum economics; the idea that there is a fixed amount of wealth, and if one person has more wealth, then others must have less. So, you have an old truck because your neighbor got a new one. Or, if LeBron James didn’t receive $80 million per year, then you would receive some of that money. This is so stupid that it’s hard to see how anyone could believe this. But politicians, like Bernie Sanders, rant on this class envy just to get votes.
No one will pay you or me to play basketball.
And then there are corporations, the usual political boogey man. Corporations are formed to provide the huge economics of size needed to finance and deliver services or products that cannot be made by smaller business.
They provide all vehicles, airplanes, digital services, phones and computers, delivery services, most food, appliances, pharmaceuticals, and so much more. Even in early New Mexico local people got many necessary products from Sears catalogues, plus free toilet paper for the their out houses. They are controlled by laws and must compete with other corporations for your business. Do you really want taxes and laws that punish American corporations and allow foreign companies to take over? You cannot buy an artisanal cell phone at the farmers market.
So when politicians tell you that taxes favoring business are bad, seriously think about it. The new tax plan may not be perfect. But 80 percent of all taxpayers will receive more money under this plan. It increases the standard deduction, increases the Earned Income Tax Credit for parents, and lowers almost all income taxes. It is unfortunate that all of our Senators and Congressmen, except Rep. Steve Pearce all voted against it. They need economics lessons.
Forde lives in Valdez.