Whatever happened to Elizabeth Warren?
A couple of years ago, she was the pin-up girl for the crazy left thanks to fatuous statements about “you didn’t build that.”
But now she’s faded into the background and other politicians are getting more attention for their absurd statements (yes, I’m thinking of Hillary and Bernie).
So what accounts for Warren’s decline? Is that because even statists are embarrassed by her use of fake claims of Indian ancestry to climb the career ladder? Is it because the self-styled fighter against corporate fat cats revealed herself to be a hypocritical fraud after choosing to support the corrupt dispenser of subsidies that is otherwise known as the Export-Import Bank?
I don’t know the answer to those questions, but I suspect Senator Warren wants to get back in the spotlight. After all, that’s the only logical explanation for her recent upside-down comments about corporate taxation.
And “upside-down” doesn’t even begin to capture the absurdity of what she said, which revealed she has no clue that there’s not a linear relationship between tax rates and tax revenue. Here are some excerpts from a remarkable report in The Hill.
Sen. Elizabeth Warren (D-Mass.) says the big issue with the U.S. corporate tax code is not that taxes are too high — it’s that the revenue generated from the taxes is too low. …“Only one problem with the over-taxation story: It’s not true,” Warren said at the National Press Club on Wednesday. …Warren laid out…principles for corporate tax reform: Permanently increase the share of long-term revenues paid by large corporations.
Wow.
When I read this story, something seemed very familiar.
And then I realized that I read a very similar statement a few years ago in the Washington Post. Writing about fiscal woes in Detroit, a reporter apparently thought it was a mystery that “tax collections are down 20 percent and income tax collections are down by more than a third…despite some of the highest tax rates in the state.”
What Senator Warren and some journalists fail to understand is that there are cases when tax revenues are very low because tax rates are high.
That’s clearly the case with the corporate tax. The United States has the second-highest corporate tax rate in the entire world.
And to add icing on this distasteful cake, we also have arguably the world’s worst worldwide tax system, combined with one of the world’s worst corporate tax structures.
Which makes this statement from Senator Warren particularly laughable.
“Our tax code should protect jobs and investments at home, period,” she said.
I’m almost speechless. Our tax treatment of business already is punitive and Warren wants to make it even worse (who does she think she is, an OECD bureaucrat?), yet she has the gall to pontificate about promoting jobs and investment in the United States?!?
Sort of like murdering your parents and then asking a judge for mercy because you’re an orphan.
In any event, here’s a video that Senator Warren should watch if she actually wants to understand corporate taxation (though I won’t hold my breath).
P.S. Switching to a completely different topic, I’m the first to admit that economists are easy to mock, especially the ones who think they know enough to fine tune the economy.
But it turns out that we’re not total dorks. If a report from the New York Times is accurate (a risky assumption, to be sure), we actually have pretty good social skills.
But I don’t think this means I suddenly have the ability to go into a bar and successfully chat up some ladies (which would be an untenably risky proposition, anyhow, because the PotL has a fiery temper).
What this actually means is that we economists supposedly have decent verbal and communications skills.
P.P.S. Let’s return to the original topic. I don’t claim to be overly clever or creative when it comes to economic humor, but I think I modified this famous sarcastic statement in a very accurate fashion.
Not as good as my Uncle Fester/sequestration cartoon, but it does capture Sen. Warren’s mindset.
International Liberty 
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Knowing how to fix it is quite different than knowing how to implement the needed changes.
A great deal of our frustration with Congress is that “doing the right thing” conflicts with the Congressmen’s personal agenda. Of course we need a simplified tax code and there are many alternatives that would be a significant improvement, but will it happen? Doubtful.
and then the problem is what? leadership? salesmanship? how do you assemble a corps of people with the talent and skills to first.. sell the reforms to the powers that be… and second… implement the vision… complete with the mechanisms of change? it is a formidable task…and I am not sure anyone has the skills and talent or inclination to do that…
thus… no one knows just how to fix it…
The immediate cost of the program above is no more than what we are currently spending. With a six month severance cost, we can eliminate 1,000,000 federal bureaucrats and much of the fraud and waste. Since tax collection can be separated from cash distribution, withholding will be accurate and no tax filing at all will be necessary, with businesses doing all the tax filing, other than state filing requirements; thereby dramatically reducing the 6 billion hours currently wasted complying with the current tax code.
With $3,000 per adult allocated to personal Health Savings Accounts, those not on Medicaid or Medicare will have enough to buy some form of insurance, creating universal free market healthcare for citizens. For those on either of those programs, a deductible of $3,000 would apply; making those programs much more cost effective.
Note that for the 1,000,000 government jobs lost about, the $50 billion annual cost will remain in private markets, to create jobs that contribute to national productivity.
V-MAX
You are incorrect re “no one knows how to fix it”.
Our current system encourages dependency on government, whether it be welfare, unemployment, disability, healthcare, or entitlements.
Those on the left position themselves as a shield for those programs, which are in fact needed because of the weak economic climate created by those very programs.
Those on the right never will come out and state that they are in favor of eliminating or dramatically reducing those programs, but it is implicit in what they say about free markets and the amoral aspects of redistribution.
The reality check is that there is no freakn’ way to eliminate some form of safety net and progressivity in the tax code.
Given that reality, we need to create new form of safety net that eliminates the nanny state and provides a tax code that is efficient, transparent, and fair.
A basic income set at 100% of the poverty line for all adult citizens eliminates the federal nanny state [States are free to continue their “nanny” programs.]. This safety net will eliminate the need for federal welfare and reduce dependence on the other programs mentioned above, but the critical feature is that it will force everyone to take personal responsibility for their lives.
While the left will argue that people currently on welfare are incompetent to control their own finances; that’s a political discussion the right will look forward to.
Combining a basic income with a flat tax on all earned income is a winning argument for all income groups. The poor will be better off controlling their own finances. The working poor will have a dramatically reduced effective tax rate, with the elimination of payroll taxes. Higher income brackets will have fewer tax deductions, but a lower marginal tax rate and significantly improved after-tax returns on investments.
While the basic income cost will grow with inflation and the average 0.9% growth in citizen population, the 100% of poverty cap meets the Mitchell Rule by growing slower than the economy.
the real question is how do we turn it around… progressive politicians are not reality based thinkers… the ideas and policies they promote will ultimately destroy our economic… social and political system… we are watching Europe implode… the same politically correct ideology and failed welfare state policies that are leading to the demise of the European union… are the cherished notions of our leftist politicos… pragmatism is a dirty word is leftist circles… not the sort of thing that fits into the socialist paradise of the new America… and the voters? largely brain dead… a product of the American educational system… extraordinary wealth… a sense of entitlement… and a loss of morality… it’s all there… we are in trouble… and no one knows how to fix it…………
Seems pointless to be angry at these politicians.
The issue is not why such people exist. In a three hundred million population there is almost every possible imaginable type of person.
The issue is why do voters ferret out these people from obscurity and elect them into high office.
Many years ago Mario Cuomo, then-governor of New York, responded to a question about NY tax rates. The Gov explained that the problem was NOT that New York’s state tax rates were too high … the problem was that national tax rates were too low, and this enabled people to flee high tax states. He wanted federal tax rates much higher so Americans would be trapped in a single high-tax regime (which we actually are, of course).
Corporations making a profit have a proven track record of successful investment. Why would the government take funds from them and give it to a bureaucrat to “invest” when the bureaucrat has no skin in the game and no profit motive to guide his decision making?
It’s tough living in Massachusetts. Warren is just one of two awful Senators.
At a recent Hedrick Smith talk about “Who Stole the American Dream”, there was a petition being passed around that would add another 4% on top of the current rate for those making over $1,000,000. That would make the state tax rate almost 10%. Don’t these idiots realize that when wealthy people leave or don’t locate here, jobs are lost? Not only do the companies these people own or manage depart, but all the services supplying those companies and their employees are no longer required.
[…] Elizabeth Warren’s Anti-Empirical Approach to Corporate Taxation […]
Somebody, lots of people, voted for her. They found a looney that expressed their delusions and propelled her into high office.
“One day, some day of hope, most citizens will be conscripted to work focused on the community rather than themselves and their families. And…will do so with enough enthusiasm to outcompete the remaining seven billion of this planet, so that the American middle class can remain in the world’s top three percent”.
Yes, raising tax rates does not increase tax revenue. Any retail store owner understands that raising prices does not increase profits. There is a delicate balance between volume, costs, prices, and income. The same good management skills apply to government.