If lowering taxes makes it cheaper for the corporation to stay where they are, as opposed to going to another State or nation that would be more expensive, what reason would that company have to leave? Do you have a clear answer for that Nat?
Come on, tell us what job is created by raising Federal taxes?
Employee salaries are a business expense. Say the corporation has a dollar in profit. If they want, they can spend that dollar on creating a new job. If not, well they can pay the tax on that dollar and keep the rest. The tax rate is thirty five percent. That means they can spend a dollar on a new job or keep sixty five cents. Now the tax rate is lowered. They can spend the dollar on a new job or they can keep eighty cents. The "opportunity cost" of creating a job instead of booking a profit INCREASES as the tax rate declines. Now, you want to tell me why corporations will create more jobs when the cost of doing so increases as the tax rate declines.
I mean this is some simple ass shit. Like the decline of our manufacturing base. Everyone wants to blame outsourcing, shifting jobs overseas. But it is not the "cause", it is just a symptom. The declining tax rate is the cause. In the early1950's the "effective corporate tax rate" was north of fifty percent. That means if a company saved a dollar by shifting production abroad they could only keep a little less than fifty cents. Now the EFFECTIVE corporate tax rate is closer to twenty percent. They save that dollar now they get to keep damn near eighty cents. Hell some companies, like say, GE, with an effective tax rate of less than three percent over the last decade, get to keep damn near the WHOLE DOLLAR. Now, it's one thing to close down a factory, layoff workers, implement a transpacific shipping arrangement, lose community and employee allegiance, and adopt a far flung supply chain to manage, if you only get to keep fifty cents on the dollar. It is quite another if you get to keep it all.
I mean I don't know where you people live, and I don't know where you work, but if you are looking it is damn easy to see the ramifications of this declining effective corporate tax rate. No companies invest in their people anymore, they attempt to steal them from somewhere else or they ***** and moan and look to the GOVERNMENT to fund their employees training, at say a community college. Sneak in to the backroom of your local Walmart. Check out the mops. Yeah, the damn mops. They are filled with grease, nasty as hell, because they can't even invest in a new mop-head. It's freakin comical. Companies look to cut corners at every turn, packaging sucks ass. The trucking fleets are comprised of dinosaurs that spew out toxic gases, break down constantly, and require an entire staff of mechanics to keep them going. Farmers don't own combines anymore, they RENT THEM.
In a nutshell, when corporate taxes are high companies are forced to look and plan for the long term. When they are low, they are encouraged to "cash out", to seek short term gains at the expense of long term growth. They are discouraged from investing in everything from people to mop-heads, and instead encouraged to take the money and run. Look the fawk around. It is precisely what is happening, precisely what has been happening, and cutting corporate tax rates further will only add gasoline to the fire that is already burning down this nation. Only a sheer fool would believe otherwise.
Except, when a company pays a lower tax rate, that also means that leaves more of their own money to invest in themselves. Not every company simply walks in one day at the start with billions of dollars that they can simply afford to risk and spend on themselves. Risk means finding investors that will share in the idea of your product, but not every small company starting out is able to find that. You have to remember that the main driving force of a vibrant economy is in the creation and risk that begins with small business, with the ability of that business to be able to compete. That means as that business grows and takes on more “risk”, with more of their own money at their disposal, they can be able to afford to turn around and invest in themselves.
1) expansion to build another facility. Maybe now they can OWN another distribution center by having one built off that extra money they have at their disposal. Perhaps instead of paying a rental fee to store their product, they are now able to have one built that they now own.
2) As a company retains more of their own revenue, they can now afford to look into ways they can be more competitive. Now we are talking about advancements in technology, like robotics, that can help
grow and increase their business’s
efficiency in ways they could not previously afford to meet up with that higher demand while producing at a level that helps them to become more competitive. Robotics and higher technology means restructuring that shell of a facility to accommodate with the changes. Plans and newer construction, comes with the ability to afford the cost associated with attaining these higher more advanced pieces of equipment. Now obviously higher technology means you need to pay a higher wage, because your basic electrician is not going to have the necessary skill level in robotics that’s associated with troubleshooting and maintaining that particular piece of equipment, should the system go down. Higher skill levels and higher wages can also mean higher incentives, in drawing those kinds of employees to work in your plant as opposed to working at another facility.
3) Education. Maybe with more of your own money to spend you can invest in internships and reinbursement programs on help retain that higher skill level. Aircraft engineers is just one example comes to mind here, the testing of newer technology that comes out of the “research and development”.
4) That brings “research and development”, which is another cost that can benefit a business into becoming more competitive and efficient as it grows. This can be applied in several different ways depending on the scale and the kind of market you happen to be competing in.
This is just a very brief overview of how a smaller company can grow and build with more of their own money to be able to invest in themselves. You see there are several factors that come with allowing a small business to first be able to initially establish themselves in a market, then take on greater risk to invest in themselves to meet up with the demand as their business grows, while lower federal taxes will afford them the added ability to keep more of their own money to be able to expand and afford ways to be more cost efficient.
