October 5, 2011
Question: What’s the number one two-worded phrase, frequently repeated on a daily basis, coming out of the mouths of Republican officials and GOP talking heads? I’m Waitinnnnnnnnnnng! Walla! “Tax cuts!” You win the prize!
It’s their answer to each and every single problem, issue and situation, no matter what it is. On this issue, one level-headed writer once described the GOP thusly: “Got a revenue surplus, cut taxes; got a budget deficit, cut taxes; got a toothache — CUT TAXES!”
Of course, when Republicans are preaching these tax breaks and tax cuts, they aren’t really talking about you and me; the commoners. They’re talking about corporations and wealthy folks. And because of our current and dire high unemployment rate and lack of jobs, Republicans see this as one of their best opportunities ever to aggressively pursue more tax cuts, more tax breaks and other goodies for those corporations and wealthy Americans.
No matter what’s brought up as an alternative to stimulate hiring, Republicans always go for those tax cuts. But that simply is not the answer to employing people, and never has been. The answer lies in the proven theory of supply & demand, pure and simple; which this blog first pointed out nearly two years ago. And though it took what seemed like ages for businesses to finally come out and say so, at least they’ve started.
The chief economist with the National Federation of Independent Business admits that lack of demand is the real problem: “Probably two-thirds of NFIB members are not interested in a loan because economic activity is so weak they can’t really put the money to work.” [Bold added]
And then there this: Business Owners, Investors Say Tax Changes Make ‘Zero Difference’ In Hiring: ‘I’m Not Sure What The Connection Is’. This headline is based on what Ask.com’s founder and Oakland venture capitalist Garrett Gruener said in rebuttal to what the GOP has been advocating.
“The kind of investing I’ve done for the last 25 years isn’t based on how a few points of the income tax rates change,” said Gruener, a Democrat and member of the Patriotic Millionaires. But “somehow, the Republicans have managed to convince 98 percent of the people that they are affected by how 2 percent of the population is taxed.” [Link added]
The Small Business Majority released research on Sept. 20 indicating that a mere 13 percent of small business owners believe government regulations are what burden their business most. Economic uncertainty about the future was the biggest issue for small business owners at 46 percent, while 43 percent said the rising costs of doing business, including the cost of fuel, electricity, heating and cooling, was their top concern.
Small businesses aren’t hiring because the economy is sluggish, sales are weak and they lack access to capital. They don’t want —or need—legislators spending their time drafting bills on regulations. [Bold added]
So what about those tax holidays? You know, the trillions of dollars in profits American corporations keep outside the US in order to not pay taxes on, then insist that if they’re allowed to bring the money home at a ridiculously low tax rate it will be used to invest and hire people? Well, the last time the Republicans and corporate America conned us into doing that it led to layoffs.
Fifty-eight corporations that accounted for 70 percent of overseas profits repatriated under the 2004-2005 tax break collectively saved $64 billion in taxes, then cut 600,000 jobs through layoffs.
Legislation in the Republican-controlled U.S. House of Representatives would let them repatriate those [$1.5 trillion] profits at 5.25 percent, the same tax rate given to them under a similar tax holiday during the Bush administration.
“History shows that many ‘tax holiday’ companies use repatriated profits to reward executives and other shareholders, then lay off workers. Corporate tax holidays have resulted in precious few U.S. jobs.” [Bold added]
So, as the old saying goes, “the next time your conservative brother-in-law tries to tell you that lower tax rates, less regulation and untaxed earnings is the key to stimulating the economy and spur hiring”, shove this bit of info up his ……..! Why up the ……..? Because evidently it’s not doing much good “shoving” it into his head!
Never underestimate the difficulty of changing false beliefs [with] facts.
Economist Henry Rosovsky