NOT THAT YOU ASKED
A couple of weeks ago I wrote about how the state income tax cuts would work using Walmart as an example. I ended that paragraph by writing that nothing more I could write could better illustrate what Republicans mean when they talk about cutting taxes. Well, it turns out that our new Republican state government has given us a new example of GOP thinking about tax cuts just last week. Since most of you probably don't read any other paper other than this one, I'll tell you about it.
Gov. Hutchinson released his first state budget last week, and it includes a more than 20% cut in funding for local libraries. Two libraries that will be hurt the most are the ones in Marked Tree and Lepanto. Right now you are probably wondering what the heck that has to do with taxes. Here's what. The cuts in library funding are happening to make up for the loss of state revenue due to the cuts in capital gains taxes.
Capital gains is the income a businessman gets from selling part or all of his business. It is also income from investments in stocks, bonds, and other financial instruments. For the most part, the people who get income from capital gains are people with above average incomes. Just the kind of people that Republicans have in mind when they promise to cut taxes.
Republicans still believe in "Trickle Down" economics. That's the theory that if the very rich don't pay taxes, they will put all of that extra money in their businesses where it will trickle down to the rest of us in the form of more jobs and better pay. Why they continue to believe that, if they really do, is a mystery. We tried it under Reagan and again under W. Bush, and both times the economy tanked.
The truth is that the "Trickle Down" theory is a myth. An individual with wealth isn't going to create jobs. He's going to put his money in the stocks and bonds I mentioned earlier, that will increase his wealth, but do nothing for anyone else, except his broker. No business is going to expand, create jobs, and increase pay, even if it pays no corporate tax and its top executives pay no income tax. It all comes down to supply and demand. The only time a business expands is when it can't meet the demand for its product. G.M. is not going to build a new factory to build more cars until the demand for their cars makes it profitable. Besides, every time a state tries to woo an industry that's looking for a location for a new factory they offer them sweetheart tax deals anyway, so why do we need these tax cuts in the first place?
Also, the GOP would do well to remember that the best way G.M. or Walmart can increase sales is to put more money in the hands of the middle and lower classes. You know the people that they usually say pay so little in taxes that they don't need tax cuts. Several Legislators said just that during the recent session, and Gov. Hutchinson said it during the campaign.
What that bunch of economic geniuses don't realize is that the people who pay so little in income taxes, spend every cent they make just to get by. The extra 10 or 20 dollars they might get in each paycheck would mean much more to them than whatever Sam Walton's heirs get from the capital gains tax cuts.
So, if you are one of the many people who depend on your local library because you can't afford newspapers or magazines or a home computer, things aren't looking so good. Because of the cuts in library funding it will be harder to transfer books between locations, and those locations may have to cut operating hours. All because the Governor and the Legislature thought it was more important to cut capital gains taxes on the richest Arkansans than to fund libraries.
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