Libertarians may hold a variety of positions on the economy depending on whether they are left or right-wing libertarians. The Libertarian contender for President, Gary Johnson professes some of the following positions. I would like to examine some of those positions.
Johnson believes in eliminating corporate income tax. Corporate profits are currently at record levels and continue to expand, while the wages of labor stagnate, as they have for years. Corporations are taking advantage of labor without adequately compensating them for that labor. Corporations and the wealthy use our land, our air, our water, our roads, electric grid, ports, airports, and education system to a far greater extent than do the middle and lower classes, and yet they expect to pay ever lower taxes.
The tax burden is laid increasingly on the poorer classes. Ordinary people have to pay for the wealthy to use our resources. If the wealthy and large corporations want to use our resources and our people, they should be forced to pay for it. The loading of taxes onto the poorer classes is couched in the banal term, “broadening the base”. This translates loosely into exploiting those who do not have the political resources to fight back, and forcing the poor to pay more than their fair share in tax. Corporations and the wealthy should pay their share of taxes based on the resources that they use, including labor.
Corporations and the wealthy use the idea that single entities should pay taxes in the same way that any other single entity does. Thus, they draw a false equivalence between a single laborer and a large corporation. While corporations may multiply or group corporate entities together, individuals cannot.
There is little evidence that lowering or eliminating corporate income tax creates jobs. All it does is enrich a few oligarchs at the expense of the people. Additionally, they offshore corporations to pay even less tax. There is no nation, to my knowledge, that can be used as evidence for the success of lower corporate taxes dramatically improving the economy for a majority of citizens. While a nation like Ireland might be used as an example, the reason that Ireland has done well economically is that they have access to the European Common Market. They also use Beggar-Thy-Neighbor policies by lowering tax rates or offering tax incentives to attract business, which invariably leads to a race to the bottom.
We have one of the lowest net corporate taxes on Earth. GE, the biggest corporation on Earth keeps vast sums overseas to avoid paying federal income taxes. Few individuals are able to shield their income in a similar fashion. Why should ordinary taxpayers pay for corporations to stay in business? Since 1946, corporate income taxes have shrunk from over 5% of GDP to about 1% of GDP. In OECD countries, our effective corporate tax rate is 13.4% compared to 30.5% in Australia, and below the 16.1% average in OECD countries. Our effective corporate tax rate has shrunk from 50% in 1950 to about 21% in 2011. Despite this, and increasing corporate profits, personal incomes continue to stagnate. Personal taxes remain over 40% of revenues despite declining corporate tax. That has not translated into more jobs or higher incomes.
Johnson believes in a “consumption tax”, which just burdens the poor who have no choice but to spend their income on things they need. The wealthy can then “invest” in expensive homes (and pay low property tax), stocks and foreign vacations without paying a bean, and while over-utilizing our resources. Consumption taxes are just slavery by another name. It is fairly typical of authoritarian regimes that the tax burden is laid on the poor, while the wealthy are able to escape paying tax.
Johnson also believes that we should return to the gold standard. We don’t live in the 16th Century. A gold standard is just plain nuts and not worth discussing. There are no serious economists that entertain the idea of returning to gold. For one thing, it prevents the central banks from fighting recessions or depressions by relegating our monetary policy decisions to the quantity of gold we have available. Gold must be transported and stored, which costs money. It can be stolen or lost – ask the Spanish what happened to the gold they gave to the Russians for safekeeping during their Civil War. When gold is in short supply, central banks have to raise interest rates, one of the causes of the Great Depression.
Johnson believes Social Security should be privatized. This means that we give our hard earned money over to Wall Street so that they can bilk us with risky investments and crash the economy. Allowing individuals to determine their own Social Security investments is a recipe for disaster. Most people make terrible investment decisions. Social Security is one of the most successful programs in history. Social Security is not, as Johnson would have it, going bankrupt. It is solvent for the next fifty years. Touch it and die (figuratively speaking).
Economics should not be a zero sum game in which some people take everything for themselves. That just amounts to economic dictatorship. Government is absolutely necessary as a referee. Allowing some people to grab as much as possible creates an unbalanced economy, and ultimately a small number of people who determine policy for the rest of society. Nations with more socially responsible policies have better life outcomes for a greater number of people.
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