As Congress led by Paul Ryan (Republican from Wisconsin and conservative budget czar), Speaker of the House John Boehner (Republican from Ohio) and President Barack Obama face off over spending, the idea that to continue tax reprieve for wealthiest Americans is ludicrous. History has proven that fact.
According to a report by The Wall Street Journal, corporations are hoarding over $2 trillion in cash reserves mostly held overseas to avoid taxes. Why perpetuate the myth that these companies would use their entitlements to create additional jobs? Why haven’t’ they so far? Did anyone inform them we need job growth in this recession?
Susan Madrak who writes for www.crooksandliars.com reported that the Bush tax cuts have cost Americans $2.11 trillion in lost revenue and it only benefited the top 5% of the population. To date, there is no evidence that any of that money was used for job creation. So why perpetuate this theory that giving the wealthy a tax break will create jobs?
What do some economists think?
Howard Gleckman from Tax Policy Center writes that higher income families will simply bank the additional income. The magazine Economist View published that the hole left by the Bush era tax cuts is bigger than the projected cost of Social Security. Alan Binder, “considered one of the great economic minds of his generation”, flat out writes that tax cuts do not create jobs.
If tax cuts are approved by Congress and the President which seems to be unlikely then the monies should be set up like grants and specifically used for hiring. Stiff penalties would need to be imposed on the companies that do not create new hires within the United States. Companies would be fined and the grant would have to be repaid.
Who really creates jobs?
The small and mid-size business owners. Small business owners like our gardener Sergio Gomez, owner of All About Gardens. Over a twenty-year period he expanded his lawn care business to include designing and installing sprinkler systems, landscaping, and home improvement, requiring him to hire additional workforce. His business has grown from the suburbs of Los Angeles to include the high-end neighborhoods of Bel Air and Beverly Hills.
Demand creates Jobs.
The prominent Chinese economist Lin Yifi (Justin Lin) from Peking University got it right. He said the poor man makes money from his labor, while the rich man profits from his capital investment. “Only when the poor have jobs, can they share in the fruits of economic growth.”
Economic growth is needed for job growth. Without demand for manufactured products job creation will continue to be anemic.
Tax cuts do not create jobs or growth. If we continue the Bush tax cuts our economy will remain in the strangle hold of The Great Recession. Several of the wealthy have stated that they support increased taxes for the wealthy, that the rich should pay more. So why does Congress insist on tax relief for the wealthy? The rich do not need to accumulate more wealth while the rest of us suffer.