Friday, December 15

Tax Cuts do Not Create Jobs

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Tax Cuts do not Create Jobs

The mantra has been expounded from the rooftops (well, maybe not rooftops, but certainly in every variety of public media) that we need to cut taxes so those who save money on their taxes will hire more people. It sounds like it ought to work, but it never has. George W. Bush enthusiastically supported tax cuts (supposedly for everybody, but the bulk of the benefits went to the very wealthy) and stated repeatedly that they would enable corporations and small business owners to create jobs.

Maybe they were able to create jobs, but that is exactly what they did not do. A few companies did hire new people—in Panama and the Philippines and China. During the Bush years we had a net loss of eight million jobs in this country. The tax cuts have been in place for ten years now, and it is time to admit they did not have the desired effect. Corporations are currently sitting on $1.5 trillion in cash and yet they are not hiring. Banks have another $1 trillion in excess cash, but they are neither hiring nor lending.

If you propose a policy that sounds like it should work, then maybe we should try it. But with ten years in place at a cost to the federal government of around $1 trillion, we can no longer afford to ignore reality. We tried tax cuts. They did not work. We need to do something else. It is astonishing to see politicians railing against the outrageous federal deficit in one minute, and endorsing a trillion dollars of reduced revenue in the next.

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