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Paul Krugman Obliterates the Myth that Low Business Taxes Create Jobs
When Paul Krugman was confronted with the right wing myth that lower business taxes create jobs on ABC’s This Week, the Nobel Prize winner pounced a delivered some economic straight talk.
Video from ABC News:
Here’s the transcript from This Week:
FIORINA: But we’re also trying to overcome something else. And I think it gets to Jennifer’s point. I said there were three structural issues in the economy. One is small business. There are two others.
The rest of the world has also changed. And the two other structural problems in our economy are we now have the single highest business tax rate in the world. Guess what?
With the highest tax rate in the world, we see the same thing around the world that we see in states — states with lower tax rates have more jobs, more people. People leave states with higher tax rates. The data is crystal clear….
FIORINA: — a robust recovery.
KRUGMAN: Nothing you said about business taxes is actually true.
FIORINA: Everything I said…
FIORINA: — about business taxes…
KRUGMAN: — we can have that discussion (INAUDIBLE) place…
FIORINA: — is true.
KRUGMAN: But — but it’s not true. If you look at the actual tax collections…
FIORINA: This isn’t an academic discussion. It’s clear it’s true.
KRUGMAN: If you look at the actual tax collections in the United States on business, they’re lower than — than other advanced countries. And if you look at the alleged finding that high business taxes cause job losses in states, it — it goes away — on even the kick the tires, even slightly and the whole thing falls apart. It’s just not true.
Carly Fiorina got on her I’m a businessperson, so I know the economy high horse, spit out a few ridiculous Republican talking points about America having the highest tax rates in the world, and lower tax rates creating jobs, and when confronted with reality by Paul Krugman, her only response was to try to belittle Krugman as an academic.
If Carly Fiorina has the answers for the economy, then we are all in big trouble. Fiorina was such a failure at HP that her own board of directors, including her mentor at the company, repudiated her leadership, and showed her the door. It is impossible for Fiorina to intelligently discuss the economy, because her professional history tells us that she doesn’t know anything about it.
Here is what the data really tells us. Since 1950 when taxes are lowered at the top, economic growth goes down. The notion that the US has the highest tax rate on business is another numbers manipulated canard put out there by there by the right in order to justify their policy of cutting taxes at the top while raising them for everyone else. It is true that the US corporate tax rate is 39.2%, but the effective tax rate, what businesses and corporations really pay, is 12.1%. After corporations take advantage of loopholes in the tax code, they actually pay less than a third of what they are supposed to.
Paul Krugman isn’t some academic. He is a Nobel Prize winning economist, who knows bullshit when he hears it. Carly Fiorina represents what happens when businesspeople try to enter into politics and fix the economy. Business people understand business, but business isn’t the same thing as running an economy. Due to the lack of a profit motive, the economy can’t be run like a business. George W. Bush has an MBA and his policies brought about the worst economy since the Great Depression. Mitt Romney was a successful businessman, but his record as Massachusetts governor suggests that he knows nothing about creating jobs.
Krugman challenged Fiorina on her claims and she couldn’t back them up. Instead of proving her point with actual data and facts, she resorted to saying it was true because she knew it was true, and tried to insult Krugman.
The Krugman/Fiorina exchange was a perfect example of our fractured political dialogue. Fiorina substituted ideological talking points for facts. Krugman tried to inject the facts. Fiorina got defensive, substituted her feelings for facts, and replied with a personal attack.
Unlike most Sunday morning guests, Paul Krugman didn’t treat Carly Fiorina’s BS as if it was an intellectually valid point. Krugman demonstrated just how easy it is to debunk the mysticism behind right wing economic theory. If Democrats would speak with a unified message, not only would Obama win reelection, but we could also get the Democratic Party to stop buying into the right wing’s economic fool’s gold.
Paul Krugman didn’t offer Fiorina’s talking points equal intellectual weight, and if Democrats want our nation to prosper again, they too must do the same everyday every time the right revives their economic talking points between now and November.