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Guest
It’s a mainstay of conservative orthodoxy that tax cuts create jobs.
In fact, the complexity of the tax code does create jobs for high-priced tax attorneys and accountants.
But do tax cuts create “real” jobs?
The answer appears to be "no", for companies big and small.
After all, U.S. public companies pay well below the official 35% tax rate while workers search unsuccessfully for jobs.
In short, the tax cut rhetoric, while effective politics, is lousy economics.
George H. W. Bush wisely pointed out that expecting to balance the budget with tax cuts and defense spending increases was “voodoo economics.”
But along with Reagan’s ascendancy came the rise of huge budget deficits — that Bush helped end when he agreed to raise taxes in 1990.
Despite tax cuts, companies still complain that they pay too much in tax.
General Electric (GE) has become famous for paying no taxes on its profits while keeping a big staff of lawyers on hand to make sure it pays as few of them as possible.
GE is not alone, and the prevailing estimate for the actual U.S. corporate tax rate is 25% — costing the U.S. about $100 billion in lost revenue.
But corporations have absolutely no reason to complain about taxes. After all, they earned record profits and 70% are growing revenue faster than expected.
And companies are achieving that record profitability by squeezing workers.
After all, productivity rose while unit labor costs fell 1.5%.
To get more work out of the same number of workers while paying them less, it helps to have 13.5 million people out of work and the easy ability to hire part-time labor and outsource to countries that pay much lower wages.
So tax cuts have not spurred big companies to create jobs.
But what about start ups?
Not a single one of them would create a job based on tax cuts.
As Dick Cheney famously pointed out — deficits don’t matter, and his supporters are probably profiting from the weak-dollar, commodity-inflation bet.
If Washington was serious about creating new jobs, it would make companies pay the 35% rate — yielding $600 billion in tax revenue.
That would go a long way towards balancing the budget and creating a climate that would spur a boost in capital flows to new ventures.
Do tax cuts create jobs?
No, just deficits.
http://www.forbes.com/sites/petercohan/2011/05/03/do-tax-cuts-create-jobs/
In fact, the complexity of the tax code does create jobs for high-priced tax attorneys and accountants.
But do tax cuts create “real” jobs?
The answer appears to be "no", for companies big and small.
After all, U.S. public companies pay well below the official 35% tax rate while workers search unsuccessfully for jobs.
In short, the tax cut rhetoric, while effective politics, is lousy economics.
George H. W. Bush wisely pointed out that expecting to balance the budget with tax cuts and defense spending increases was “voodoo economics.”
But along with Reagan’s ascendancy came the rise of huge budget deficits — that Bush helped end when he agreed to raise taxes in 1990.
Despite tax cuts, companies still complain that they pay too much in tax.
General Electric (GE) has become famous for paying no taxes on its profits while keeping a big staff of lawyers on hand to make sure it pays as few of them as possible.
GE is not alone, and the prevailing estimate for the actual U.S. corporate tax rate is 25% — costing the U.S. about $100 billion in lost revenue.
But corporations have absolutely no reason to complain about taxes. After all, they earned record profits and 70% are growing revenue faster than expected.
And companies are achieving that record profitability by squeezing workers.
After all, productivity rose while unit labor costs fell 1.5%.
To get more work out of the same number of workers while paying them less, it helps to have 13.5 million people out of work and the easy ability to hire part-time labor and outsource to countries that pay much lower wages.
So tax cuts have not spurred big companies to create jobs.
But what about start ups?
Not a single one of them would create a job based on tax cuts.
As Dick Cheney famously pointed out — deficits don’t matter, and his supporters are probably profiting from the weak-dollar, commodity-inflation bet.
If Washington was serious about creating new jobs, it would make companies pay the 35% rate — yielding $600 billion in tax revenue.
That would go a long way towards balancing the budget and creating a climate that would spur a boost in capital flows to new ventures.
Do tax cuts create jobs?
No, just deficits.
http://www.forbes.com/sites/petercohan/2011/05/03/do-tax-cuts-create-jobs/
