Job Creation

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  1. peoplepower73 profile image90
    peoplepower73posted 11 years ago

    Do you believe that lowering taxes for corporations will create jobs and if so why? or if not why not?

    1. profile image0
      JaxsonRaineposted 11 years agoin reply to this

      It can help. The biggest area it will help is in attracting foreign investment. Right now, the average effective tax rate for new investments in the US is 30%. The OECD average is 23%, and some countries are as low as 10-15%. It's definitely something that people consider before investing.

      If you're hoping for a business with a 4% profit margin, a change of 20% in the tax rate is a huge deal.

    2. undermyhat profile image60
      undermyhatposted 11 years agoin reply to this

      It is not a matter of belief but of economics.  Just as rising household income increases spending, in the aggregate, so too would cutting corporate taxes.  Since corporations act as tax collectors, gathering the taxes they pay from customers, investors, officers, vendors, employees, stock holders, etc..., cutting corpprate taxes to zero would put more money in the hands of individuals - the most efficient users of money.

      People tend to bristle at the statement that "corporations are people," I look around the little corporation where I work(fewer than 500 total employees) and all I see are people.  To cut corporate taxes is to cut the tax burden on the whole of the economy.  How can cutting corporate taxes not create more jobs should be the question.

    3. John Holden profile image60
      John Holdenposted 11 years agoin reply to this

      No, absolutely not, corporations employ exactly the number of people to do the job. They wouldn't suddenly start hiring dead weight.

      1. undermyhat profile image60
        undermyhatposted 11 years agoin reply to this

        Business seek to expand purchasing new equipment, hiring more sales people and project managers are indeed things business do.  Corporations seek to maximize profit. This means increased efficiencies - often updating equipment.  In the aggregate tax cuts produce increased economic activity - that means more jobs.

      2. American View profile image62
        American Viewposted 11 years agoin reply to this

        No, they will not hire dead weight, but they will hire to expand, something they are not willing to do in a high tax climate

    4. Reality Bytes profile image76
      Reality Bytesposted 11 years agoin reply to this

      It may provide an incentive for the corporations to continue to operate within the United States. 

      NEW YORK (CNNMoney) -- On Sunday, the United States gets a distinction no nation wants -- the world's highest corporate tax rate.
      Japan, which currently has the highest rate in the world -- a 39.8% rate on business income between national and local taxes -- cuts its rate to 36.8% as of April 1. The U.S. rate stands at 39.2% when both federal and state rates are included.   March 27, 2012: … /index.htm

      1. Uninvited Writer profile image83
        Uninvited Writerposted 11 years agoin reply to this hasn't worked yet...

        1. Reality Bytes profile image76
          Reality Bytesposted 11 years agoin reply to this

          President Obama's long-awaited business tax plan would lower the corporate tax rate from 35% to 28% while slashing popular tax breaks enjoyed from Wall Street to Main Street, making it unlikely to get far in Congress in this election year.

          The plan would make up lost revenue as a result of lower rates by eliminating popular tax loopholes and simplifying a business tax system that an administration statement called "uncompetitive, unfair, and inefficient."

 … -tax-cut/1

          We would have to implement such a plan before we can achieve results.

          1. Uninvited Writer profile image83
            Uninvited Writerposted 11 years agoin reply to this

            So...the Bush tax cuts meant nothing? Otherwise, unemployment would not be so high.

            1. undermyhat profile image60
              undermyhatposted 11 years agoin reply to this

              You mean the Obama/Bush tax cuts since they were renewed and signed into law by Obama - that can give you some idea of the burden on the American economy.  Those individual states that have instituted their own reforms are creating jobs - Wisconsin, Indiana, Texas.  Those state raising taxes are foundering - California and Illinois are the primary examples.

        2. undermyhat profile image60
          undermyhatposted 11 years agoin reply to this

          It hasn't worked because there are additional costs about to be imposed on business in the form of Obamacare's massive and ubiquitous tax increases.  Obama has been suppressing business activity and killing the Animal Spirits.

          1. Uninvited Writer profile image83
            Uninvited Writerposted 11 years agoin reply to this

            There were not massive tax increases...

            1. undermyhat profile image60
              undermyhatposted 11 years agoin reply to this

              Have you read anything about the Obamacare plan - hundreds of billions in new taxes to include tanning salons, charity hospitals, wheel chairs and other medical devices. 

              Businesses adjust in anticipation of policy changes because slow businesses lose - unless you're GM.

              Sorry - did I not emphasize ABOUT to be imposed enough?

    5. rhamson profile image73
      rhamsonposted 11 years agoin reply to this

      In this case I think that you have to look at the current global situation as to whether lowering taxes could help create jobs.  Do companies have enough confidence in potential growth to even begin climbing out of the survival mode most have been in for the past few years?  The stock market is bristleing with gains and losses but can a company stretch its' neck out there enough to invest in a promising trend or hopeful direction?  Taxes not withstanding the issue of creating jobs is based on growth and solid numbers leading to investment and not gambling on whether or not you are losing more to a tax structure.  Most of that cost is computed into losses anyway.

      1. undermyhat profile image60
        undermyhatposted 11 years agoin reply to this

        Look up "Animal Spirits" as a term in economics.  We live in a time when the Animal Spirits have been wounded near to death.

        1. rhamson profile image73
          rhamsonposted 11 years agoin reply to this

          Well to decline the idea as Keynesian hogwash does not necessarily prove your taxes inhibiting growth theories.  The banks are holding billions and billions of dollars right now because of their concern over growth and the lack there of lately.  I guess they attended that Keynes class of "Animal Spirits" you mention but took it to heart a little to closely.

          1. undermyhat profile image60
            undermyhatposted 11 years agoin reply to this

            Animal Spirits fits well into the Austrian School, as well., in that it suggests that the general climate of the political economy has a profound effect on the actors in that economy.  It si a mistake to dismiss all of Keynes as hogwash, his greatest contributions are the ones with which he was most uncomfortable - mostly the ones describing social behavior but not by mathmatical models.  There are currently trillions of dollars held over seas by businesses because imported profits are double taxed.  There are businesses here sitting on liquid because the general attitude among Democrats is capricious, arbitrary and malicious toward business.  One need only track the pronouncements of Obama to know that businesses should be nervous.

            1. rhamson profile image73
              rhamsonposted 11 years agoin reply to this

              I agree but the thought that corporations can live and breath in a free market system in a free will society and trade with foreign entities they prefer not to abide in owe some responsibility to the wellspring that it comes from.  They would not get the same accordance you suggest in say China or Japan without paying the state taxes they demand.  So why should the US be treated differently?  In other words it is okay to exploit the region and hide your spoils elsewhere.

              1. undermyhat profile image60
                undermyhatposted 11 years agoin reply to this

                You confuse the mechanisms of state with the nation.  Government is not the country.  A business has one responsibility - make money.  If the government does not provide an atmosphere that is conducive to prosperity a business has an obligation to go where it can be profitable, to do other wise is an irresponsible use of scarce resources.  It is not business that owes government but governmentthat that owes the citizen a prosperous, secure and free society.  It is not the government that is the "wellspring" of profit but the people - the government and the people are not the same thing.

                When the people no longer wish to live with a government that is conducive to prosperity than they are free to do so but at the risk of driving businesses out of the country, unless they wish to enslave business. We have seen how well that works.  It is foolish to think that a free man will stay where his property is taken by the agents of the state at a rate greater than he might expect across some imagined boundary.  Businesses and productive people are fleeing California, Illinois and Maryland - why?  Because their prosperity is threatened by a grasping state government.

                This is equally true of nations.  If a business no longer believes it can be profitable at home it will flee.  I have yet to hear a convincing reason for denying that businesses do not pay taxes but instead collect them.  All taxes are, ultimately, taxes on personal income.  The only entity that cannot "pass on" the cansequences of a tax is the individual.  Money is perfectly fungible - if money is taken for taxes it is not avalable for any other use.  Government is the least efficient user of money.  Therefore, it is always better to leave as much money as possible in the hands of those who produced its value in the first place.

                1. rhamson profile image73
                  rhamsonposted 11 years agoin reply to this

                  This is a good conversation but I believe you are confused when you separate the governments from the people.  The reason why there are governments is to provide a basis by which society can cohabitate the region. Without government there would be no arbitration in place for those that would exploit others rights or property.  I agree that this would be in a perfect world but there are many things business' can do that are contrary to the common good of society while driving for increased profits.  Slavery and environmental issues are historically overlooked for the good of profits.

                  I agree if a person living in the safety and freedom of the US declares that he should not owe a tax that pays for the very freedom he has to conduct his business then he should surely seek other accomadations to his liking.  But guess what he does not and tries to buy favor in the corrupt system he wants to flee.  Does that mean that the government has a right to take anymore from him than others?  Surely not.  But because he may manufacture and sell something entirely outside the US while living in the US does not mean that the freedom he is operating in should not have a cost.

                  Absolutely government is there to serve the people but this should have a cost and who should pay it is the question that Obama and others seem to confuse.  Their quick fix it would seem is to go after who has the money and get as much of it as possible.  But the real question should be how much do we spend and how little do we need.  We are so fixated on the getting the money while the cuts have so little to do with the solution.  Once again a perfect world scenario. 

                  The situation of a corrupt goverment which we now operate has little to do with solutions and more with exploitation of the resources at its disposal.  We the taxpayer being the renewable resource are being tapped out while a huge exponentially growing debt is strangeling the country and its security because we the people have to bicker over who we can exploit next to pay it. Obamas quick fix is not the answer but neither is taking away the taxes.

  2. Johnkadu123 profile image70
    Johnkadu123posted 11 years ago

    It all depends if they can ensure internal investment. There is no point in lowering corporate taxes and then allowing the company to outsource its labor. Unfortunately this is the challenge for capitalism. On the one hand the free market philosophy advocates for the release of market forces but on the other hand the need for employment(amongst other things like safety, security and standards) means that there has to be some level of regulation. I suppose it is all about finding the right balance. Trickle-down theories only work if companies try to put something back into the community which is supporting them through tax breaks.

    1. peoplepower73 profile image90
      peoplepower73posted 11 years agoin reply to this

      Johnkadu123: I agree with you about the right balance of regulating  capitalism. I believe companies today only hire people when there are not enough workers to handle the work load, so they increase their staff. Outsourcing jobs does nothing for our domestic employment. I don't believe lower taxes witll increase employment, but it will increase a companies bottom line.

  3. profile image0
    Larry Wallposted 11 years ago

    Corporations to not pay taxes. That is a cost of business or part of the overhead that is considered with determining the price for the product. Thus, in theory, if the taxes are reduced the price of the product should be reduced. This is only effective if there are multiple corporations providing the same service. If the corporation has no competition, then it might keep the tax savings for reserves, expansions, paying higher dividends or to use for salaries and bonuses.

    Simply stated, if there is competition, reducing taxes reduces prices. If there is no competition, reducing taxes may not reduce prices.

  4. secularist10 profile image61
    secularist10posted 11 years ago

    It depends. Nothing is written in stone, despite what the ideologues would have you believe. Some industrialized countries with high corporate tax rates nevertheless have high employment and economic growth, and there are other countries with the opposite situation.

    Taxes are one factor, but there are many other very important factors that influence businesses' decisions about expansion or investment. Are there skilled and productive workers in the city/ state/ country? Are property rights secure and protected? Is there adequate security so that business owners and workers can feel safe in their offices or traveling to and from work? If workers want to bring their children, what is the quality of the schools? What is the quality of the airports, railroads, roads, fiber optic cables, and other infrastructure? What kind of healthcare services are there? Etc, etc.

    Those who think everything comes down to taxes are those who believe tax rates are the only thing that government can meaningfully influence. The fact is that government directly and indirectly influences all of these other factors as well. That is why a high-tax corporate environment can still attract a lot of business (like the US). If they do well in the other areas.

    Unfortunately, as the US has been declining in areas like education and infrastructure in recent years, the relative importance of corporate taxes may necessarily be increasing.

    1. undermyhat profile image60
      undermyhatposted 11 years agoin reply to this

      What country has the magical situation of high taxes, high growth and high employment?  The decline in education and infrastructure are directly attributable to increased federal welfare programs, re-ordered state government priorities and the interference by federal government in local education.  It is not a mystery that education began its decline after the federal government created the Department of Education.  It is also no surprise that roads and bridge began to be neglected after states and the federal government committed ever increasing tax dollars toward transfer payments.

      Tax policy is absolutely linked to economic health.  An increase in corporate taxes will result in decreased profits and therefore decreased spending on expansion, higher, capital purchases and rewards for investors, officers and stock holders.  The US used to be a much more reliable attractor for business investment.  That too is in decline as a consequence of over reaching taxes and regulations in addition to a federal government that is openly hostile to business.

      Besides corporations do not pay taxes, they collect them.

      1. secularist10 profile image61
        secularist10posted 11 years agoin reply to this

        "What country has the magical situation of high taxes, high growth and high employment?"

        There are several. These are the 2005 average personal and corporate tax rates: … ountry.svg

        The source for this data is the OECD. The highest personal income taxes are seen in Belgium, Germany, France, Hungary, Sweden.

        The highest corporate income taxes are in the US, Japan, Canada and Germany.

        Now let's look at economic growth in 2005. Source is the World Bank: … .ZG?page=1

        These are the economic growth rates for the countries listed above:
        Belgium: 1.8%
        Germany: 0.7%
        France: 1.8%
        Hungary: 4%
        Sweden: 3.2%
        US: 3.1%
        Japan: 1.3%
        Canada: 3%

        You can see there is a variety of growth rates, many of them quite high. Finally, let's look at unemployment in 2005. Again, my source is the World Bank: … ies?page=1

        Unemployment, 2005:
        Belgium: 8.4%
        Germany: 11.1%
        France: 8.9%
        Hungary: 7.2%
        Sweden: 7.7%
        US: 5.1%
        Japan: 4.4%
        Canada: 6.8%

        So you can see that there are a number of countries that have this "magical" combination of high taxes, low unemployment and high growth. The US is the most obvious example: high corporate taxes, low unemployment and high growth among industrialized countries. Japan has the lowest unemployment rate in 2005 among all these countries despite having one of the highest corporate tax rates. One of the highest corporate tax rates on earth should surely produce very little growth or even negative growth for Japan, right? Wrong. It has growth 1.3% which is respectable for an economy of its size and maturity.

        A similar analysis could be done for other years.

        The point is that taxes are NOT the be-all and end-all of economic policy. Countries like Germany, Japan, the US and Canada attract investment and produce new businesses constantly because of their fertile environments--infrastructure, education, healthcare, property rights, large consumer markets, stable financial markets (still more stable than many poor countries today despite the financial crisis), etc.

        Tax policy is linked to economic health, but it is only one piece of the pie. Many other things are linked to economic health too.

        And on your social welfare comment, note that countries like Germany, Sweden and Japan have very comprehensive social welfare. And yet they have superior, world-class infrastructure and education as well. So they have more welfare than the US, yet often better infrastructure and education than the US at the same time. Go figure.

      2. secularist10 profile image61
        secularist10posted 11 years agoin reply to this

        Additionally, the statement "corporations do not pay taxes, they collect them" only applies to certain companies in certain industries in certain situations. For instance, a company may try to remain competitive by charging lower prices to customers, even with high costs, for the sake of maintaining market share or undercutting competitors and driving them out of business.

        Or the nature of their market and industry may simply prohibit the company from raising prices no matter what their costs are. As long as they can run a minimal profit, they will remain in business.

        An interesting example is Walmart, which has publicly supported increasing the minimum wage. Why? Because while Walmart, with its large economies of scale, can afford to pay each worker an additional $1 or so per hour, they also know that that extra dollar cost will cripple many of their local mom-and-pop competitors. Thus Walmart actually gains market share and therefore benefits in the long run from a higher minimum wage.

        As usual, the simplistic analysis of libertarian economics only has partial connection to reality.

        1. undermyhat profile image60
          undermyhatposted 11 years agoin reply to this

          Increased prices to customers is not the only way in which corporations collect taxes.  Lower wages, lower dividends, lower capital investment, cheaper benefits, poorer work conditions, etc...are all ways that corporations can be affected by higher taxes.

          The corporate taxes paid by Japanese and German companies on money earned in the United States are not double taxed as are American foreign corporate earnings.  An American company that manufactures and sells automobile in Britain, where Fords remain popular, is subject to both British taxes and American taxes - but only if those profits return to the States.  In most estimates there are $trillions of foreign profits sitting outside the US.  This is not the case for Canada, Japan, Germany, etc.... The US is the world's largest trading partner yet the American economy cannot benefit from that trade as well as others because of taxation policy.

          Admittedly, taxes are not the sole cause of prosperity or decline but they are a constituate part.

          1. secularist10 profile image61
            secularist10posted 11 years agoin reply to this

            That deals with details of policy, not large scale trends and patterns.

            "Lower wages, lower dividends, lower capital investment, cheaper benefits, poorer work conditions, etc...are all ways that corporations can be affected by higher taxes."

            Calling all of these effects "collecting taxes" is a stretch. But aside from that, my previous statement applies to all of these areas as well. For some companies, reducing capital investment will be an option, for others, in different circumstances or different industries, it will not.

            The most we can say about the effect of taxes is that it depends. The biggest factor, truly, is what the government does with those tax monies. If the government funds clean and efficient airports, roads, bridges and ports, educates and trains millions of citizens, fights fires and polices neighborhoods with those monies, then the net result is actually quite positive for business, and for economic activity generally.

            In that way, ironically, if we are going to call the aforementioned effects examples of "tax collection" then we must, in all intellectual honesty, call these business-positive actions of government "tax benefits" or "transfer payments." smile

            1. undermyhat profile image60
              undermyhatposted 11 years agoin reply to this

              All money being fungible, tax dollars are no different than profits, wages, dividends, etc...if the aggregate pool of funds available are drained for taxes than those taxes are, indeed, wages, dividends, capital expansioni, benefits, etc....Because all money is fungible, that money taken for taxes is collected by the corporatioin from reduced otions for those dollars.  It is a fundamental idea.  If a corporation has few funds available for capital investment but are still b eing taxed than it also becomes obvious the harm caused by taxes to job creation.

              1. secularist10 profile image61
                secularist10posted 11 years agoin reply to this

                Then, again, don't look at it as "taxes." Just look at it as "these corporations are investing in the security of their country and local communities, in the education and skills of their current and future workers, in the roads and ports they need to bring their goods to market, etc." Look at it as a legitimate business expense.

                In the absence of taxes or a government entity, private companies would have to pay for these things anyway. And they would pay a MUCH higher cost, proportionally, or it would be so expensive that they wouldn't be able to be in business at all.

                1. undermyhat profile image60
                  undermyhatposted 11 years agoin reply to this

                  So it is your contention that government is an efficient spender of tax dollars?  And that, the money left for businesses to allocate toward expansion, investment, wages, etc... actually produces no increase in government revenue? Just want to make sure I read this properly.

                  1. secularist10 profile image61
                    secularist10posted 11 years agoin reply to this

                    Once again, it depends. Some governments are far more efficient spenders than others. Some administrations are more efficient than others. Some states are more efficient than others.

                    I don't know where you got the second part from.

                    However, what is clear is that the presence of a central, public system of taxation and spending/ redistribution has been essential to widespread prosperity in every single country that has attained it. Spending comes in the form of the things I mentioned above.

  5. joer4x4 profile image60
    joer4x4posted 11 years ago

    I look at it this way. If I were taxed less would have more money to spend on products and services.

    With that said taxes go hand in hand with regulations. Government regulation always generates additional costs for any business. It is the hidden tax passed on to consumers and other business alike.

    1. undermyhat profile image60
      undermyhatposted 11 years agoin reply to this

      It is rather simple.  Just as increasing  household income results in more economic activity and therefore more jobs an increase in corporate profits would result in more activity and therefore more jobs.  All of this occurs in the aggregate since not every household or business would immediately or automatically increase spending but a significant enough number would that jobs would follow.

      Again, I put it to any one, under what circumstances does one come to believe that decreased taxes would not create jobs?  Even if the business applied the tax savings to some nebulous "bottom line" money does not disappear and is perfectly fungible so that money saved in one activity becomes spending in another.

      In a purely economic sense what is the actual difference between cutting household taxes and business taxes?  Isn't the goal of the householder to maximize profit by managing costs, increasing efficiency and finding more lucrative revenue streams?

  6. startupninja profile image59
    startupninjaposted 11 years ago

    @undermyhat I am sorry but your statements are simply not true. The priority of any corporation is the maximization of profit... so in the ideal libertarian free market economy the notion that lower taxes will trickle down to every facet of society through the multiplier effect might actually be true. In reality though, and especially in the US economy, tax revenues directly finance the defense industry which is practically the only manufacturing industry the US has left.
    The military-industrial complex directly or indirectly employs almost as much people if not more as the federal and state governments combined.
    There is one important issue with this industry though, and that is that it has only one buyer i.e. the dreaded government which gets its money from tax revenues &/or loans.
    So basically, lower taxes and no cuts in defense, means that the defense industry is the single largest direct transfer instrument in the US economy... more than education, healthcare, and social welfare combined.
    If you were taxed less, the US would have to adopt a non interventionist foreign policy and it is evident that this is something that is unacceptable for both parties.
    There are quite a lot of examples in this world of highly functioning market economies with proportional tax rates which go up to 90% of income, in which that magical situation that you are talking about of high taxes, high growth, high employment, and I might add availability of security and services to all citizens has been established practice for the past two decades. Moreover, these nations do not identify themselves as socialist, and have a MULTIPARTY system of politics, which shows a level of democracy superior to that of the US.

    1. undermyhat profile image60
      undermyhatposted 11 years agoin reply to this

      I have worked in manufacturing for the last 17 years.  Not one product our company turns out is defense related.  The reports of American manufacturing's death are premature.  I appreciate your ability to generate an opinion.

    2. Reality Bytes profile image76
      Reality Bytesposted 11 years agoin reply to this

      The United States still manufactures more then any nation in the world!  It is not all defense industry, you underestimate us!

  7. peoplepower73 profile image90
    peoplepower73posted 11 years ago

    During the cold war years. I worked for Autonetics, a defense contractor in Anaheim California, that employed 36,000 people.  Many other companies also employed litteraly tens of thousands of people during those years. I used to think of it as we were getting paid to produce goods and services that hopefully were never going to be used.  But we were given money to be consumers to put that money into the mainstream of the economy. The economy seemed to thrive during that period.  In a sense this was government stimulation of the defense industry and aerospace industry.  Many by products came from these companies, because of new technologies and goods.  We all worked for common causes that were created by our government, that is defense against the Soviet Union and NASA to get a man on the moon.

    Today, the paradigm has changed. It's about smaller government; privatising everything, lower taxes on corporations and the super rich; and outsourcing our manufacturing to increase the bottom line. My first paragraph suggests, that  when the country has real causes that everybody can focus on, it creates jobs.

    1. undermyhat profile image60
      undermyhatposted 11 years agoin reply to this

      Government did not put a man on the moon, Rockwell did.  The government provided a mission, money and a vision but the execution was all corporate America.  That has disappeared .  Government chased private corporations out of space and the end result is the death of the shuttle and no return to the moon.  The short sightedness of ossified, bureaucratic, bloated government killed them.  Where is the vision?  The vision of America we are currently offered is one of class warfare, lowered expectations, hatred of business and the rise of a welfare state - thank  you BHO for the negativism - you are certainly no JFK.

      1. peoplepower73 profile image90
        peoplepower73posted 11 years agoin reply to this

        undermyhat:  I agree with you that Rockwell put a man on the moon and as you said the government provided the mission, money, and the vision.  That;s basically what I said in my post.  I don't believe that BHO was the start of the vision that you speak of.  This is a trend that was started many years before him.

        1. undermyhat profile image60
          undermyhatposted 11 years agoin reply to this

          I was speaking to the current vision of BHO.  i absolutely agree that the notion of the "far horizon" and the love of adventure, innovation, ambition has been lost.  Why?  I believe that we have fallen into the same trap that has tied the hands of Europe since the end of WWII - the mundane world of the government preserve.  Risk aversion has disrupted our society and the most risk averse institution is government.  Risk is messy and chaotic, government is all about order and control.


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