Cutting taxes and praying to God that American companies, who have relocated overseas, will return, (because of the goodness in their hearts or they feelings of patriotism), isn’t an economic strategy. It is wishful thinking! The same is true of cutting taxes in the hopes of enticing a corporation to relocate to the state offering the tax cuts.
These two strategies are bad for several reasons: First, when corporations threaten to move their businesses to other states or other countries, unless taxes are lowered and important government restrictions are lifted, that’s extortion. (We might not refer to it as “extortion,” but that’s exactly what it is.) Second, these strategies allow the corporations to dictate the terms in all negotiations; they are holding all the cards and our governments are at their mercy. Third, these strategies make our governments look weak, ineffective, and helpless. In the eyes of our citizens, our governments appear at the negotiations dressed as hobos, with cups in hands, begging for hand-outs. Fourth, they keep our government from demanding that corporations pay their fair share of taxes. Corporations or American interests, at home and abroad, enjoy the protection of a strong defense that is provided by the military, which is supported by the tax payers. Corporate America, which enjoys the lion share of this protection, needs to start paying its fair share of the cost. And finally, these two strategies are totally unnecessary.
In order to understand this last point, we need to begin with a reality check. Let’s honestly assess what Americans gained as a result of the tax breaks to corporations. Here is a small portion of the list:
1. We gained double digit unemployment. It is important to remember that one of the reasons given for the tax cuts to the richest one percent was the belief that it will allow the one percent, who owns many of these corporations, to create jobs. This tax cut, which has been in place since the start of George W. Bush presidency, or the past 12 years, failed to produce jobs. Instead, it was during that time that corporations began cutting American jobs, wages and benefits ― in spite of the fact that their profits were increasing.
2. We gained corporations that were too big to fail and too corrupt to care. Corporate America used the lucrative tax breaks it received to do everything ― except create jobs. Many corporations moved to other countries, several went bankrupt, and others remained greedy and corrupt. Yet in spite of all this, corporate America made huge profits as unemployment increased, so-much-so that economists created the term “jobless recovery” to define it.
3. Our national debt grew at a faster rate, because we did not have the money from corporate taxes. It should be obvious to everyone that our national debt would be lower if the richest one percent weren’t granted a tax cut by President Bush twelve years ago and kept in place by President Obama two years ago. It should also be apparent to everyone that our national debt would have been lower if, instead of giving corporations tax cuts to relocate, we kept the taxes at the higher level and collected them.
4. Our governments have become ruthless, partisan, immoral, and, in some ways, undemocratic. When our government cut entitlements, it means a death sentence to some of our most vulnerable citizens. The deeper the cuts, the larger the number of citizens that are given a death sentence. When someone makes the argument that they are cutting entitlements because it is important to think about our children’s future, they need to be reminded that cutting entitlements bring and end to the future of many children ― it ends their lives. Americans “for” and “against” cutting entitlements has hammered a wedge through the center of this nation ― driven mainly by the greedy need by some Americans for more and more money. This has created a dominant political ideology that is ruthless, partisan, immoral, and in many ways, undemocratic. It is clear that our nation needs a new economic strategy.
“A Strategy that just might work” will be the topic of tomorrow’s blog.
