Home > Uncategorized > In the Face of Evidence to the Contrary, the GOP Continues Canard that Tax Cuts = More Jobs

In the Face of Evidence to the Contrary, the GOP Continues Canard that Tax Cuts = More Jobs

October 10, 2017

All politicians are guilty to some degree or another of repeating a statement they know is false, but it is unusual for an entire political party to repeat a falsehood for nearly forty years and continue to get elected. How does this happen? The GOP has tapped into the collective consciousness that all taxes are confiscatory and the collective intuition that corporations and the economy at large behave in the same way a household behaves when it comes to managing money. So the GOP has been able to convince the voters that if corporate taxes are cut, the corporations will have more money to spend and they will spend their money on the expansion of their business and thus crete more jobs. They are also able to convince the voters that if everyone’s taxes were lower, they would all be able to buy more and this influx of new money into the economy will make it stronger, creating a positive feedback loop. But while this is appealing— especially if you begin with the premise the government is wasting your taxes— there is no evidence whatsoever that business behave in this fashion or that the economy improves when taxes are cut. Indeed, as Robert Borosage describes in his article in Nation, the opposite is true! Here’s his assessment of the GOP’s latest “tax reform”:

Contrary to Donald Trump’s claims, the rich and big corporations will pocket the vast bulk of the tax cuts, not working people. The tax cuts won’t pay for themselves. They will increase the deficit. By 2027, one in four taxpayers will end up paying more. And for 80 percent of Americans, the tax cut they do get would be so small that it will go virtually unnoticed in most households. For example, the Tax Policy Center estimates that in 2027, the 27 million households with children and incomes under $75,000 will receive an average tax cut of all of $20 when the provisions are in full effect.

Borosage looks into some recent polling number and sees that while the voters understand this on an intellectual level, they still cling to the idea that this magical thinking will play out for the best!

Americans get this. Fewer than one-third think they will end up paying less under the Republican plan, according to a new Politico/Morning Consult poll; about the same number think they’ll end up paying more. By a 41-28 margin, Americans know the rich will end up paying less, rather than more. Yet a plurality, 44 percent, thinks the tax cuts will have a “positive impact on the US economy,” while only 24 percent think the tax cuts will have a negative impact. The big lie still works.

And the big lie works when it comes to corporate taxes as well, despite evidence that corporate tax cuts do NOT expand jobs, they only expand the profits. After describing how the Clinton and Obama tax increases boosted the economy while the Reagan-Bush tax cuts did not do nearly as much, Borosage offers this:

The idea that tax cuts will create jobs isn’t borne out by evidence. Sara Anderson of the Institute for Policy Studies looked at 92 profitable large corporations that already pay at or less than the 20 percent rate promised in the Republican plan thanks to taking advantage of loopholes in the tax code. Those corporations have been laying off, not adding, workers over the past nine years. Corporate profits are at near-record levels, but companies are spending their money buying back stock, financing mergers, or issuing dividends, rather than investing in new jobs or products. A stunning 55 percent of corporate profits of the S&P 500 corporations have been devoted to stock buybacks, which raise the price of the remaining stocks and, not incidentally, boost the value of executive-suite stock options.

So with the Trump-GOP plan the rich will get richer, the infrastructure will continue to crumble, and when the tax revenues are diminished the safety net will need to be cut. This vicious cycle is predictable… but thanks to the election of Democratic Presidents has not been allowed to come into full cycle as yet. Here’s hoping the public and voters will look at the evidence and the predictable outcomes and get a small cadre of GOP legislators to abandon this bad idea before it comes into being…. Because if it IS enacted the demise of public education will accelerate in all but the affluent communities.

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