Thursday, February 3, 2011

Corporate Tax Cuts do Not Create Jobs and They do Not Pay for Themselves

It doesn't matter where you look, when researching the myth that corporate tax cuts stimulate the economy, creates jobs, and pay for themselves, every expert debunks those notions.

Of course I'm not including most Republicans, Tea Party members, or corporate executives, who are only looking out for their own interests. Even former advisor to Ronald Reagan, David Stockman, says that it has to end. He told Keith Olbermann that it was "insanity to give money to the top 2% of wage earners, so they could go buy jewelry at Tiffany's."

Harper's corporate tax cuts and reduction to the GST, which again helps those with disposable income the most, will cost every Canadian over seventeen hundred dollars. And it is the gift that keeps on giving, as it will drain fourteen billion dollars a year from our income, at a time when we have a record deficit and debt.

Stimulating the economy - For every dollar given to unemployment insurance, $ 1.60 is put back into economic activity. For every dollar of corporate tax cuts, only 30 cents goes back. We lose 70 cents on every dollar.

Under Harper and Flaherty our economy has lost 42 billion dollars, that could have gone toward paying down our debt. But instead we have to add additional debt so that we can give more money to the wealthy.

Economist Armine Yalnizyan says that the money should go toward repairing our crumbling infrastructure, but the Canada Action Plan barely touched the surface. Of course when you look at the fact that some of the projects included building a circus school and $ 800,000 went toward financing a single CFL game, what hope is there?
Corporations may be getting a break, but they aren’t responsible for public infrastructure. Governments are. We are. It is a false economy to stick the next generation with an unnecessarily high price tag for what should be happening now – rebuilding the foundation for business, family and community needs everywhere, while the cost of borrowing is at historic lows and unemployment is still high.
Job Creator - Another myth. Corporate tax cuts do not create jobs. According to Alan Blinder, professor and co-director of Princeton University's Center for Economic Policy Studies:
We could get some substantial job creation by simply reprogramming the $75 billion that would be saved over the next two years by not extending the upper-bracket Bush tax cuts and spending it instead on unemployment benefits, food stamps, and the like."
And as Michael Ignatieff says: Education creates more jobs than corporate tax cuts.

If a corporation wants to invest in a region, taxes are only a minor consideration. They look to a good infrastructure, and a promising labour pool. This means healthy, educated and experienced workers. Again according to economist Armine Yalnizyan:
There are many things that drive business investment practices, and while taxes are a consideration they are not the primary factor in investment decisions. The historic evidence shows a commitment to this strategy is a costly faith-based proposition.
Costly indeed. And who bears the brunt of those costs? We do.

Corporate Tax Cuts Pay for Themselves - This is now being called 'Voodoo economics" a term first used by George Bush Sr. when critiquing Ronald Reagan's notion that corporate tax cuts pay for themselves. They absolutely do not. They contribute to economic decline and unmanageable debt.

The only ones touting that line with any conviction are the Tea Party crew and Sarah Palin.

We need to break down these myths about corporate tax cuts. The decline in economic growth matches the decline in the amount of taxes corporations pay and the burden placed on the rest of us to finance them.

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