Re: job creation

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The March 23 letter “Lowering Taxes on Corporations Creates Jobs and Helps the Poor” sounds good in theory, but unfortunately it is not that simple. Regarding government assistance, the analogy of teaching a man to fish instead of giving him a fish is invoked. But what if most of the rivers and lakes are dried up? Too many people who have been fishing all of their lives have been hit hard by this reality. So it becomes necessary to give them fish.

As for the U.S. corporate tax rate being the highest in the world, perhaps the official rate is, but not the rate corporations actually pay. The effective corporate tax rate is 12.6 percent as reported in 2010, making it one of the lowest. And big corporations like GE and Boeing have had years where they have paid no taxes. It’s not the taxes that send operations and jobs overseas but the ultra-cheap foreign labor.

It is argued that if corporations have more money to invest, they will create jobs. However, U.S. corporations are sitting on at least $1.7 trillion in cash and liquid assets. They already have that money. So where are the jobs? It is not more money that is needed but more demand for products and services. Demand is the real job creator.

It has also been proposed that cutting tax rates usually increases government revenues. This is a huge gamble, which Ronald Reagan discovered, causing him to approve massive tax hikes when his tax cuts resulted in increased deficits instead of increased revenue.

Finally, as the cure for our ailing economy, both fewer regulations and lower corporate taxes are proposed. But this has been the policy for close to 33 years now, and we see how well that has worked.

We need to return to the economic policies that gave us a thriving middle class and enabled the poor to enter that middle class. Some will say this prosperity was caused by Europe’s industry being decimated by World War II. This is irrelevant. What really matters is that the New Deal policies ensured that all Americans got a piece of the pie, not just those at the top like today. 


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