Michael J. Thompson Stephen Eric Bronner Wadood Hamad - Logos

Michael J. Thompson
benefits were no longer as clear as they once were. The result was a sharp
increase in political pressure toward tax reform which, with the election of
Ronald Reagan in 1980, led to a wholesale redirection of American
government and its tax policies from the weakening of government agencies
such as Housing and Urban Development (HUD) to an expanded federal
deficit and the start of a widening gap in income and wealth that continues
to grow today.
The economic facts were merely an entrée for neoconservatives to argue their
case for the minimal state and the reduction of taxes on corporations and the
wealthy. Tax reform was necessary, but not the sort of draconian cuts in
public services and institutions that served the working poor that were
inevitably enacted. Instead of a reworking of increasingly complex tax codes
and regulations, tax cuts were initiated that helped exacerbate inequalities
that were growing from the impacts of a post-industrial economy. What the
conservatives of the “Reagan Revolution” did was to focus opportunistically
on public dissatisfaction about growing tax burdens created by a system that
was in need of reform and use this public sentiment to trample the welfare
state.
On the whole, the statistical data is clear for anyone who has any casual
acquaintance with the econometric studies and economic data: since 1980,
there is a statistically significant relationship between the level of taxation and
economic growth: as taxes increased, economic performance lessened in terms
of GDP growth. This situation changed from the 1950s, 1960s and 1970s
because there was a reconfiguration of global capitalism. From the 1980s
onward, there was an increased global mobility of capital and the result was
that corporations were able to move spatially to avoid costs. Taxes were
among these costs. By 1990, this was a general theory of business planning
with Michael Porter’s book, The Competitive Advantage of Nations, serving as
one of the central texts coaching businesses in how to avoid the costs of
producing in only one site, especially a site that was not “friendly” to business
in terms of tax rates and regulatory limitations. Corporations were
encouraged to move to places where the tax burden—as well as wages and
other limitations—were less prohibitive to profits. In the United States, this
meant moving many factory jobs out of the northeastern states, where labor
unions were strong and businesses taxes were higher at the state and local
levels, to the south or to other countries (i.e., Mexico).
Logos 2.3 – Summer 2003