Wineke: Why would we ever think tax cuts would mean more jobs?
Is the U.S. Senate going to pass legislation offering major tax relief to the nation’s richest citizens while raising taxes on its poorest?
If you put it the way I just did – and the way the proposed legislation actually works – that sounds like a pretty immoral idea.
But that’s what major economic expert groups, both Democratic and Republican, predict would be the result. Congress has its own economic forecast organizations but they haven’t yet presented their analyses – and the Senate seems hellbent to pass the legislation before those forecasts come in.
In their place, I’ve listened to any number of Republican bigwigs, our own Rep. Paul Ryan among them, assure me that cutting taxes for the richest among us will actually help the poorest because it will lead to more jobs and more robust economic growth.
In other words, if we cut taxes on corporations and on the top income earners in the country, they will respond by building factories here and hiring lots of people.
The question I have is this: Why would they do that?
It seems to me that a business needs two things to justify expansion: It needs customers for its products and it needs workers (or machines) to make those products.
If I am a widget maker and I receive tax incentives that put more money in my corporate pocket, I will need to answer those two questions before I start investing that new money in another widget factory.
When we look at current economic statistics, however, we find that manufacturers tell us their biggest current problem is finding qualified workers to produce the widgets they are already making.
That’s one of the dangers I see in Wisconsin’s $3 billion investment in FoxConn. We’re giving FoxConn $3 billion of taxpayer money to build a plant near Racine which, the company says, will employ 13,000 people.
Where are the 13,000 potential workers coming from? The betting seems to be that our technical colleges will revamp their curricula to train or retrain people to FoxConn’s specifications. Then, we have to assume the company will pay wages high enough to convince these workers to drive to Racine.
Well, maybe. But I’m still not sure what they’re going to produce or who is going to purchase the product. There may be answers to these questions, but they sure weren’t debated sufficiently in the state’s rush to subsidize FoxConn.
So it is with the federal tax cut plan.
The only real reason I’ve seen given for rushing this plan – there really have been no public hearings of merit so far – into law is because Republicans control the government and they haven’t been able to pass anything else of substance. Some legislators even admit they have to pass tax cuts because, otherwise, their rich donors will abandon them.
To which I say, “Fine. If you want to use your power to pay off your contributors, you have the power, so go ahead.”
But don’t insult me by saying it will be good for anyone else. You have no data to document that claim.
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