Via Mother Jones comes yet more evidence of Paul Ryan’s scary innumeracy, not to mention his ignorance of basic macroeconomics and geopolitics:
In 2010, Rep. Paul Ryan (R-Wis.), now Mitt Romney’s running mate, called the Cayman Islands “the place you hide your money,” arguing that the United States needs to slash tax rates below those of other countries in order to make this country “a haven for capital formation.” But in previously unreported comments, from an interview with American Business Magazine in August 2011, Ryan went even further on the same topic, saying, “let’s make this country a tax shelter for other countries instead of having other countries be a tax shelter for America.”
Approximately 55,000 people comprise the entire population of the Cayman Islands; in fact, there are more corporations in the Caymans than there are people. There is no income tax, capital gains tax, or corporate tax. The only source of revenue for the country—in order that it can run essential government operations—is indirect taxation, which is to say, an import tax (or duty) on virtually everything that comes into the islands. Since little manufacturing occurs there, that means a tremendous amount of goods are imported, many of which (like some automobiles) are taxed with a duty rate as high as 100%.
Here’s another important thing to remember about the Caymans: they are still a British overseas territory, and their national defense, as well as internal security, is provided by the United Kingdom.
The United States population is over 300 million. Its defense budget is staggeringly large: more than twice the combined defense-spending totals of China, Japan, the United Kingdom, France, and Russia.
While the Cayman Islands imports virtually everything, the US maintains a significant manufacturing base (if not as large a manufacturing base as we could and should have). Imagine what would happen to the economy if we did away with income tax, capital gains tax, and corporate taxes the way the Cayman Islands did and had to impose import taxes commensurate with the amount of money required to maintain US defense spending alone (lets set aside all other essential government programs for the time being). Imagine what the cost of a television or cell phone would be; imagine the price tags on everything from t-shirts to teapots; imagine how utterly unaffordable life itself would become.
One begins to see the problem. When things are that expensive—and mark my word, they would be incalculably expensive under Ryan’s ridiculous scheme to do away with all the aforementioned taxes and turn the US into a “tax haven”, thanks to the monster duty slapped on them—no-one buys anything. Our economy in large part depends on consumption—on people buying things.
Sure, we could make almost everything here: that would cut imports from all our trading partners by an enormous amount. (They’re going to love that.) And if we did—if we manufactured everything here so as to avoid having to slap massive import taxes on the goods—well, where is the revenue for our jaw-dropping defense budget going to come from? Remember, we’ve done away with income, capital gains, and corporate taxes so we can be just like the Caymans.
I don’t think Paul Ryan—or, for that matter, his wide-eyed acolytes—would be too thrilled about the United States reverting to being a British overseas territory so as to have the United Kingdom provide defense for it.
I don’t think Britain would be too thrilled about having to provide defense services for America, either.
Honestly, Paul Ryan ought to read a few books before he makes such ridiculous proposals as this. The man whom the GOP touts as being their economics whiz-kid and wonk can’t even think his way to the second move.
He’d be great fun to play chess with—I bet I could beat him in a matter of minutes while blindfolded and blind-drunk.
Come on—ten thousand bucks.
Deborah Newell Tornello was born in England and educated there, as well as in Barbados, Honduras, and the United States. She received a Bachelor’s from the University of Florida College of Journalism and Communications in 1981. She is co-author, with Linda Lindroth, of the book Virtual Vintage: The Insider’s Guide to Buying and Selling Fashion Online, Random House, 2002. She created the blog litbrit in 2006. She lives with her husband, three sons, and several large and loyal attack dogs and trained-assassin felines, in sunny Florida, USA.