BANKRUPTCY

Tax deficits. The Neoliberal Success Criterion shows its Absurdity

By Michael Jaeger

[This article originally published in: Freitag 22, May 21, 2004 is translated from the German on the World Wide Web,  http://www.freitag.de/2004/22/04220402.php.]

Tax deficits of 61 billion Euros are expected up to 2007. Further and deeper cuts can be feared after the “Agenda” of 2003. The German government rejects new savings and will accept debts. At the same time this government promises a constitutional 2005 budget in which investment spending will be higher than net indebtedness. To this end, the German government must sell federal property though it hasn’t yet said which property. In any case, the state dismantling has not ended.

When we now hear from the German government that savings alone will not bring us out of the debt trap, this may sound reasonable to some. However there is no talk about a new program to stimulate the domestic economy. The old theme is repeated: the anticipated tax cut for 2005 will be upheld. More taxes are expected from lower taxes. The circular argument (circulus vitiosus) is perfect. The empirical nonsense of the vicious circle is new. The nonsensical is exaggerated: “The more we lower taxes, the more taxes we collect.” This never seems empirically refuted. When the expected tax revenue doesn’t appear, this shows that the tax rates were too high. The nonsense may not be immune to experience as is now coming to light.

On the same day when the tax deficits were forecast, the German economy was described as growing more strongly than expected. The rise in the first quarter of 2004 is the highest since the beginning of 2001. Do taxes fall when the economy grows? They don’t actually decline, the Frankfurter Allgemeiner Zeitung soothes us. “The revenue is increasing but less than predicted.” However this is the bankruptcy of neoliberalism. The economy grows, the unemployment continues and the state becomes more impoverished. The state becomes impoverished although the neoliberal promise of rising tax revenue is partially redeemed. What have we gained from economic growth? Does only the economy itself profit? Active working people are not included in this term “the economy”. Their rights and wages are even reduced.

Isn’t there a point where politics is forced to regard neoliberalism as falsified. Today we see clearly the falsification. Tax cuts are good because they lead to increased tax revenue…We don’t need a “higher” but a sufficiently high tax revenue for expenditures that exist for the sake of the community. Why doesn’t this community discuss what would be high enough? No one believes that “the economy” is too poor to adequately pay for their place in the community.