05.09.11
Up is down - tax cuts for yacht buyers, pink slips for teachers
Via today’s HChron, Teacher layoffs, nursing home closures … and tax break for yacht owners?!
In the bloodiest budget fight in memory, Texas legislators are slashing funds for rock-bottom basic services: schools, prisons, mental health care and nursing homes. The state is broke, say the slashers. We can’t afford luxuries.
But Rep. John Davis, R-Houston, believes we can afford a tax break for yacht buyers.
His astounding House Bill 2187, “relating to the imposition of and a limitation on the sales tax imposed on certain vessels” — which is to say, boats costing more than $250,000 — would cap the sales tax on a yacht at $15,625. That doesn’t sound bad until you do the math: For a $20 million yacht, it’d be nearly a 98 percent reduction in the state sales tax.
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Ridiculous as the pitch is, though, we worry that Texas legislators are falling for it. It’s scary enough that the House Committee on Ways and Means voted to let the bill out of committee and onto the floor. But even scarier is the let-them-eat-cake tone of the committee hearing, as reported by the Texas Observer.
A quarter-million-dollar boat is a trifle, argued Rep. Lanham Lyne, R-Wichita Falls: “It doesn’t take much to get over $250,000.”
“This is not just for rich people,” an industry representative happily agreed. “You can get used yachts as well.”
What a boatload!
Memo to responsible legislators: Sink this bill now.
This idiotic bill and it’s supporters are important because it’s just these kinds of policies, top down, proposed by wealthy elites that got us into our sorry economic state. Paul Krugman has more, The Unwisdom of Elites.
The fact is that what we’re experiencing right now is a top-down disaster. The policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes.
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These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000?
The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs.
So who was responsible for these budget busters? It wasn’t the man in the street.
President George W. Bush cut taxes in the service of his party’s ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority.
Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite.
Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that’s who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit.
Little will change, until we change the policies of the last 30 years that got us into the economic mess we are in. It’s long past time for the wealthy and corporations to start paying their fair share. We will not get out of this until we put people back to work. Corporations won’t hire, so the government must.
Related reading:
Deficit Solution: Get Americans Back To Work.
Budgeting For America’s Middle Class: A Report Card Comparing Federal Budget Proposals