Bakst Confusion: Democrat Tax-Cutters?!

ProJo columnist Charles Bakst is confused: how can Rhode Island Democrats want tax cuts for the rich? Playing to stereotypes, Bakst understands why Republicans want them–“Carcieri, who proposes spending slashes that will hurt the poor, asserts that he wants to boost Rhode Island’s economy”–but he’s simply flumoxed by how the representatives of the average working people could, too. So he tried to find out.

Here was Democratic Rep. Paul Moura, a proud, combative liberal steeped in the labor movement, standing in the House and touting the tax-cuts-for- the-wealthy bill. “We have to do this now,” he thundered.
My head would have been spinning, except I’d already talked with two of his top House allies, Majority Leader Gordon Fox and Finance Chairman Steve Costantino. I mentioned the social service advocates standing near the House entrance with signs such as “DON’T HELP THOSE THAT CAN HELP THEMSELVES.”
Costantino said he hadn’t forgotten his roots and hoped to generate revenue and charity to finance social programs: “Ultimately, there’s a responsibility of government to keep high-wage workers in the state . . . so that they can pay for those ‘root’ issues that are so dear to the Democratic Party.”
As if in an echo, Chamber of Commerce president [Laurie] White would say later, “I’m very pleased that we’re recognizing that a strong social service safety net and a competitive tax policy go hand in hand.”
Indeed, Democrat Fox said economic development might alleviate the need for so many social services: “Stay the course; trust us.” Long term, he said, the bill will benefit everyone.

And why is that? Let me help you out, Mr. Bakst. Nationally –somehow [it must be magic!!!]–tax revenue has increased even though the tax rates have gone down under President Bush.

budget receipts April 06.jpg

And we shouldn’t forget that just over 54% of those revenues come from the pockets of the top 5% of wage-earners. The very people to whom this new House bill is trying to appeal.
But I guess that’s just silly math and accounting tricks, right? After all, it’s much more emotionally gratifying to continue to demonize the wealthy and keep trying the same policies that continue to fail:

[There’s] no guarantee this bill will work — or is fair. Kate Brewster of the Poverty Institute at Rhode Island College contends it simply will drain money from state coffers. She often has depressing days at the State House, but on the day the House voted on this bill, she told me, “This is one of the worst.”

Ms. Brewster is a victim of her own inability to think outside of a class-warfare, static economic pie line of thinking.
To turn to the national economy one more time: tax rates went down, tax revenue went up, and spending went up. Now, the Congressional spending boom is a concern to many conservatives, but it should give liberals like Ms. Brewster some hope.
After all, with the time and money at her disposal as an advocate for the poor, she should have no trouble convincing her Democrat friends that some of the new tax revenue generated by a booming Rhode Island economy should find its way to her so that she can help the poor. And who knows, with a growing economy, there may be fewer poor for her to help, as Rep. Fox mentions. And isn’t that what we all really want?

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18 years ago

The four major tax cuts in the 20th century have had a universally salutary impact on the US economy. Laffey pointed out three of them in his presentation: Kennedy’s, Reagan’s, and Bush’s. There was one more – the Coolidge/Harding cuts of the 1920s. Not only did all of these cuts result in strong economic growth, but also they resulted in more tax revenue accruing to the treasury. The evidence is overwhelming both on the economic growth and receipt collection fronts. The higher the marginal rate stands in the first place, the more effective the cuts are – on both fronts. That is why RI stands to benefit enormously from a tax cut. A cut will also send a stong message to the business community that the state is serious about changing its climate toward business attraction. And what businesses to attract? I would argue for a major effort to bring in wind and solar companies and create a pocket within this niche similar to what MA did with technology companies in the 1980s. Steve Laffey has already been in the vanguard of this issue on a national and international scale, yet hasn’t said much about bringing the industry to RI. Perhaps he thought it would be a non-starter because of the tax climate. His prescient work on renewable energy would add a lot of credibility to the state’s efforts. Where is L Chafee on this issue? Maybe he is spending too much time framing his “award” from the Sierra Club and his Toby the Bear collection. Perhaps the problem is that it is easy to get pork earmarks for shellfish research and whatnot but is difficult to reach out to numerous groups to try and attract new industry to a state – particularly if the politician has no real business… Read more »

18 years ago

As the saying goes, the more one studies history the more one learns about the future. If one looks at Laffey’s renewable energy, fiscal sanity, and American Dream presentations, it is clear that they all demonstrate a strong knowledge of and respect for history. The most effective politicians, in my view, are the ones who combine an affinity for history with a working knowledge of economics – and who can relay their thoughts on these subjects with a simplicity and flair. Reagan was perhaps the best example of this in the 20th century. Wilson was an example of a brilliant man with strong underpinnings in most subjects yet could not communicate with the people and as a result did not get his cherished League of Nations. The lesson is that communication and knowledge are equally vital factors. Laffey is blessed with both.
Reagan did not have a business background, but recognized this deficit and brought in top business people into his California administration and then into the White House.
Laffey is a multiple-tool ballplayer so to speak: history, economics, communication skill, and a business background. Our politicians need to be evaluated in a critical light with respect to these factors and, if so, the majority will unfortunately will be found wanting.

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