Those Who Are Against Corporate Tax Cuts Are Said To Be Idiots

Simply Because They Are “Retards” When It Comes to Understanding Economics

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It is irrelevant whether you have or have not actually been hired by a poor person. There are relatively more poor people who own businesses and do in fact hire people to facilitate the operation of said business. Owning a business does not instantaneously make you rich and there is no guarantee that it will do so in the future. Most small or medium sized businesses may never provide substantial income to make their owners extremely wealthy. That would require a number of external (social, economic, and political) and internal (ingenuity, drive, focus), as well as luck factors to align serendipitously for the owner to reap such fruitful reward.

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Actually, tax breaks for those who can’t possibly afford to pay taxes are seen as one less obstacle out of many to spurring growth in a highly competitive and intensely capital driven market. Those savings would most certainly result in increased consumer spending, which in turn will be going to sustain or grow business in the form of reinvestments.

This theory that corporate tax cuts would increase employment sounds wishfully plausible, but without practical or empirical proof these statements remain myths. I believe the distorted view laid out in the diatribe by southernsideofme has complicated matters more by this oversimplification.

During the economic recovery from the financial crisis (initiated by a manufactured housing bubble that lacked proper regulatory oversight) money was free to borrow for large public institutions like banks, investment companies and insurance companies. The little to no interest cost to borrow cash can be akin to a tax cut in this instance (don’t have to pay to play scenario), however employment growth was anemic and what little was regained was only due to overarching regulatory oversight.

Anyone who follows the market trends throughout that period could see that companies simply decided to buy-back stocks to prop up stock prices (prices that were contractually tied to senior executive compensation) and were seen as hoarding the money (not investments) which made for plump balances on financial statements. It essentially grew economic inequality at a time when government had reluctantly implemented Too Big To Fail initiatives again to dampen the effect of systemic failure seen on a global scale, which by the way also threatened national security around the globe.

I wouldn’t say that the bailout was entirely a good thing and in the same vein I wouldn’t say business leaders were entirely wrong for making such financial decisions. There were no incentives for the alternative which many presume would be an increase in employment levels beyond levels just before the financial crisis. That wouldn’t be seen as prudent due to advances in business efficiency with labor replacing technology, which in turn led to failures to translate or prepare the existing and new labor market for what new skills would be needed to sustain that technological pacing and competitiveness in the markets.

There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.

— William Jennings Bryan (July, 1896)

Now if we were to think beyond the uninformed general view of tax cuts for the rich creating employment opportunities for the masses and consider what tax cuts for the bottom 90% would do with this then this would be a worthwhile discusssion. Simply, when that huge percentage of the population gets to pay less in taxes, spending would certainly go to consumption and or investment, leading to increases in employment. Tax increases on the rich in certain aspects of fiscal policy would in fact be negligible in terms of increasing employment, I would focus on tax decreases for the bottom 90% which inherently is inclusive of small businesses or the relatively poor. Owen Zidar who is a real economist, who holds a Ph.D., his more detailed analysis and research pragmatically suggests that …

…the stimulative effects of income tax cuts are largely driven by tax cuts for the bottom 90% and that the empirical link between employment growth and tax changes for the top 10% is weak to negligible over a business cycle frequency. These effects are not confounded by changes in progressive spending, state trends, or prior economic conditions. The effects seem to come from labor supply responses as well as increased consumption and investment.

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