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Wednesday, July 14, 2010

At what point are their taxes cut enough that they start creating jobs?
Posted by Jill | 5:13 AM
In October 2004, George W. Bush signed into law a $136 billion package of corporate tax cuts following tax cuts in 2001, 2002, and 2003, the net "benefit" to taxpayers of which was that 1/5 of middle-income households received an average tax cut of $647. The top one percent received tax cuts of almost $35,000 -- 54 times as much as those in the middle. Households with incomes above $1 million received tax cuts of about $123,600 (see link above).

The eight years of George W. Bush saw a massive redistribution of wealth into the pockets of corporations and the wealthy -- and yet when Bush left office in January 2009, having architected a financial near-collapse and the worst recession since the 1930's, the unemployment rate was already 7.6% and growing.

Now, along comes Marco Rubio, angling for a government paycheck in the U.S. Senate, saying that the problem is that we haven't cut their taxes enough:
Today, Senate candidate Marco Rubio (R-FL) released his economic platform, which he claims is a “a clear alternative to the anti-growth, anti-job creation economic policies coming out of Washington.” “We have reached a point in our history when we must decide if we are to continue on the free market, limited government path that has made us exceptional, or if we are prepared to follow the rest of the world down the road of government dependency,” he said.

However, as the Orlando Sentinel’s Jim Stratton pointed out, “after perusing the list, the sharp-eyed reader will likely notice a recurring theme: This Rubio guy appears to be a big supporter of tax cuts. The proposals are sure to please his conservative base, many of whom see tax cuts as a magical elixir, good for pretty much anything that ails you.” Indeed, of the 12 steps that Rubio proposed, six are tax cuts, and another three are directives to stop regulations or taxes from being implemented. Here are some highlights:

– IDEA #1: Permanently Extend The 2001 And 2003 Tax Cuts

– IDEA #2: Cut Taxes On American Businesses

– IDEA #3: Permanently End The Death Tax

If this plan looks like a simple doubling-down on the Bush tax cuts, it is, with an unspecified corporate tax cut thrown on top for good measure. This comes despite the fact that the Bush tax cuts led to “the weakest jobs and income growth in the post-war period,” with monthly job growth the worst of any business cycle since 1945. In fact, the supply side tax cuts of both 1981 and 2001 failed to deliver as much investment growth, GDP growth, household income growth, wage growth or employment growth as the Clinton-era economic policies.

Rubio, and those like him, want us to think that the tax structure is so burdensome on corporations and the wealthy that they simply do not have enough left over after paying expenses to create jobs unless we cut their already-cut-to-the-bone taxes even more. But the more accurate impression is that what they are doing is holding the entire economy hostage until they get everything they want -- with NO guarantees that the jobs that they create (if they even create any) won't be created offshore.

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Blogger Nan said...
We could have a tax rate of zero (which is what it effectively is for many corporations, thanks to their adroitness at finding loopholes and subsidies), and the right wing would still demand lower taxes.

Here in Georgia every Republican candidate is running on promises to simultaneously cut taxes and fix everything that's wrong with the state. They truly believe there is such a thing as a free lunch.