Do tax cuts help create Jobs?

One important factors related to tax cuts that create jobs is what type of tax is being cut? If it is a tax that imposes higher costs on the product or service being provided then elimination of that tax results in lower product or service costs. Lower prices result in higher sales and higher market share. More sales result in more jobs regardless of whether we're addressing manufacturing of products or of services being provided.

 

Political Center makes sense that big business are there for the purpose of making money, but in order to make that money they have to higher people to run the business. Only one problem is that these companies are not hiring Americans in this country. They have taken their corporations that received big tax breaks in the United States to foreign countries where they can get a pair of shoes built for twenty five cents. Where labor can be had for fifty cents an hour. The world economy has killed this country and until we take action to level the playing field, we will have great unemployment and if you think it is bad now, just wait a few more years.

The Tea Party Republicans are going to destroy this country with their protection and encouragement of big business to invest over seas.

We got to stop all the loop holes of big corporations. Make it so tough for them to invest over seas that it will eventually pressure them to bring their companies back into this country.

But in reality you will not see Democrats or Republicans do that because right now they all have their hands in the cookie jar.

We have to get the private sector to invest in this country and the Bush tax breaks have not done it. So other means have to be considered. Maybe taxing the big corporations and getting the taxes and invested on the creation of jobs in this country. I do believe that is the formula the Obama administration is going to use to pay for the jobs created to renew our infrastructure.

 

Making money is why ALL BUSINESSES exist......and its why you drag you ass out of bed to go to work.

The aquirement of wealth makes the world go round.

Where are the big tax breaks exactly?

The Tea Party wants to make this country more Business Friendly......while everything the Democrat Party has ever passed in US History, has done just the opposite.

Or drive them from our shores entirely....BRILLIANT!

Taxing all Businesses and Employers big and small........yeah we havent been trying that for the last 50 years.
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Honda and Toyota...plus that Korean company I can't spell... built factories and employed people in the U.S. because they were only allowed to import a set number of cars.... They did not do it out of the kindness of their hearts or because they loved America and American workers...They did it to make money...


just sayin

 

Give tax breaks to companies AFTER they create jobs (in the U.S)....not before.

 

Yes and employ lots of people here doing so and help to grow our economy. And the others are Nissan and Hyundai and Kia.

 

No, tax cuts do not create jobs. Business growth creates jobs. The real advantage of tax cuts is that it gives government less money to spend and, since the government spends stupidly and wastefully, that is a good thing.

 

Out-sourcing of work to other countries can and does produce US jobs. For example many of the parts used in a Chevrolet are made in foreign countries and those parts are assembled here in the United States and the cars are sold in the United States. Those parts produced in foreign countries provide for assembly line jobs as well as jobs at dealerships.

Some would argue to produce those parts here but the resultant increase in the cost would result in fewer sales which reduced the number of assembly and dealership jobs.

 

Shiva TD is correct that some jobs are created from jobs being out sourced to other countries, BUT! the jobs lost in the manufacturing process the ratio is like 10 jobs lost to one gained. Most of the jobs we get in return are in sales which most are minimum wage jobs like the one's Wal-Mart creates. About the only good paying jobs are in transportation like the jobs created by the trucking of these goods and the railroads and ships. But where masses were employed is the manufacturing of steel, auto industry, textiles and computer softwares. Most have gone to China and India. A lot of our technician jobs by electronic companies have all gone to India and the islands of the pacific. If you have problems with your computer, it is not an American tech that answers the phone, it is somebody from India.

There is nothing wrong with global trade as long as long as it is fair trade. But these nations like China don't want to trade fair. They know how greedy Americans are for money. And American corporations are taking full advantage, even at the cost of millions of jobs in the United States. The United States will continue on a free fall as long as we don't protect our industry from out sourcing jobs.

China has become a monster that has to be dealt with, and by applying high tariff taxes on their goods will put the brakes of this one way trade.

 

Having lost my job making auto parts that are now made in China (along with 200 others). I do not see how out-sourcing has created American jobs. And the price of GM products have not went down.

And we were worldwide supplier of the year three years in a row.

 

I can agree in part with both of these posts. Of note sometimes the only way a corporation can secure work is by exporting "jobs" to other countries. By way of example at one point I worked for Boeing and there were cases, such as with China, where the sales of commercial aircraft were tied to the exporting of work to China. China building components for Boeing aircraft resulted in more high paying US manufacturing jobs because without the out-sourcing the aircraft sales would have gone to Airbus.

As I've also noted previously it depends on what taxes are reduced or eliminated that affects employment (jobs) in the US. I would uncategorically state that eliminating the taxes on industry that can lower the cost of US produced goods and services by an average of 20% (an estimate provided by FairTax.org related to replacing an income tax with a consumption tax) would result in a huge increase in jobs.

The reducing of the costs of US produced goods and services by 20% would provide the US with huge international marketing advantage. How many more cars could we export if the costs were reduced by 20%? How many more Boeing airplanes could be sold if the cost was 20% less when competing with Airbus. How many more machined goods or products would be exported if they cost 20% less? How much more capital investment would there be if capital gains in the US weren't taxed at all?

For me it is simple. Our income tax system itself reduces US competitiveness in international markets and that is why we export jobs as opposed to exporting goods and services. Eliminating income taxes by the repeal of the 16th Amendment and replacing them with a consumption tax with a prebate to make them progressive is the ultimate solution if we want to provide jobs. It is so fundamental and yet it is opposed by many. I personally oppose the specific FairTax.org proposal as it is already politically corrupted but the basic principles of a consumption tax (with prebates) as opposed to income taxes is valid.

 

Having read the distortions and bias on claims made at Fairtax.org, I would never state anything "uncateorically" based on that website, and the fact that is your only source should cause any objective person to discount the credibility of your assertions.

 

I've personally attempted to calculate the approximate costs of payroll taxes in a hypothetical supply chain and come up with similar numbers of about 20% being added to the cost of a product. Of course there are assumptions related to labor costs of a deliverable item which could be erroneous and I admit that.

What cannot be denied is that the payroll taxes specifically do add a substantial amount of cost to a product that is tranferred to the end consumer. Stripping out those costs would unquestionably result in lower prices and lower prices would provide a substantial market advantage for US produced goods and services. That marketing advantage translates into more demand. More demand generates more productivity. More productivity requires more workers. There is no question that removing taxation from enterprise would lower costs and that would increase the number of jobs. Even if it was only a reduction of 5% it would still mean more jobs. If the reduction in cost is over 20%, as FairTax.org states, the gain would be huge.

Once again, where tax cuts are made is very relevant to whether jobs are actually created. Cutting or better still eliminating taxes that add to the costs of US produced goods and services is the most viable option in increasing jobs in the US. It is the one thing that our government could do which would actually result in creating jobs and increasing the GDP.

 

Sounds good in theory...but companies charge as much as they can.

They lower cost to increase profits...lower taxes would increase the bottom line...not lower the cost of goods for the consumer.

Nope....limit imports.

 

This is false. Virtually all corporations reduce costs to gain market share. It is better for a corporation to sell 1 million units with a profit of $1/unit than it is for them to sell 200K units with a profit of $3/unit. There are exceptions of course such as the difference between Microsoft and Apple. Microsoft chose to reduce product costs to gain market share while Apple chose to have higher costs which greatly limited it's market share. Apple provides excellent software on their computers but the cost is so high that the vast majority of computers come with Microsoft software. Microsoft earns far more money than Apple which is a niche company that will never gain a significant market share.

Corporations want market share and they go to great lengths to reduce "non-value added costs" to gain market share. They target minimal savings perhaps in the 1%-5% range because that is all they can realistically hope to gain through the elimination of non-value added costs. Taxes are always non-value added costs related to production. Yes, they can benefit society but they do not benefit the corporation because they increase costs which reduces the competiveness and market share of the corporation.

Having worked for and been a stockholder in large corporations for most of my life I can uncaterorically state that they seek a small percentage of profit on the goods and services they produce. They are always interested in reducing the consumer cost of their product to gain market share which expands overall sales. The want to sell a million units instead of 200K and are willing to earn less money per unit to do so. In the end lower costs result in more sales and more sales result in a larger bottom line. It is the bottom line that the corporation is interested in and not the profit per unit.

Post-script - limiting imports results in limiting exports which reduces the number of US jobs. The US became an industrial leader by exporting goods. We have slipped from that because we impose non-value added taxes which reduces demand for US produced goods and services because of cost. We need to eliminate the costs. Of note a product produced in China does not have embedded US taxation in it's production so it has an inherent advantage of costs when compared to US produced goods. This remains a primary argument for a consumption tax because all goods, regardless of where they are made, would be subject to the identical US taxes. Imported goods are basically exempt from most US taxation.

 

"3. The Tariff. Southerners, with their emphasis on staple agriculture and need to buy goods produced outside the South, strongly objected to the imposition of duties on imported goods. Manufacturers in the Northeast, on the other hand, supported a high tariff as protection against cheap British imports." http://eh.net/encyclopedia/article/ransom.civil.war.us

I have reason to think we became an industrial leader by domestic consumption of our own goods, and self-sufficiency.

 

I agree 100% that high tariffs should be imposed on imports (especially) imports from China. Even if it costs more to buy the products here in this country, it would encourage corporations to manufacture the goods in this country creating jobs.

 

Considering that corporations are sitting on tons of money today and not hiring Americans I do not see them hiring if they recieve more money through tax breaks.

It sounds like blackmail without a guarentee..."give us tax breaks or we won't hire". And their is no guarentee they will hire if they get them.

 

Tariffs reduce employment in the US because they are recipricated by other countries. For example if we imposed a 10% tariff on imported goods then China would recipricate with a 10% tariff on commercial aircraft and then would purchase commercial airplanes from Airbus as opposed to Boeing because Airbus would gain a pricing advantage. Either that or Boeing would be forced to move production to a country that could export airplanes to China without the tariff being imposed. In either case US jobs would be lost. This applies across the board. Tariffs are seen as "protectionism" by other countries and those will recipricate with an identical tax on US goods and services. If our exports are reduced then the jobs that relate to exporting of goods and services will be lost.

As I've noted the problem is that we're imposing taxes within the supply chain that increase the cost of goods and services and imported products do not have these US taxes being imposed upon them. The key is to remove the taxation from the supply chain and impose them at the retail level were all products are subjected to the same taxation regardless of where the product or service originates. Chinese goods, for example, would incur the identical taxation that a US good would be subjected to.

Imposing a consumption tax at the retail level is not perceived and "protectionism" by foreign countries as all goods and services are taxed identically. The cost of US produced goods are lowered by the elimination of embedded taxation and overhead expenses in the supply chain, increasing exports because of the lowered costs, and our products can compete with foreign producted goods at the local retail outlets because of the lower prices. The prices of the imported goods do not change because the elimination of embedded taxation does not affect the cost of imported goods.

We need to compete with lower prices for US produced goods and services and not with "protectionist" policies that reduce our exports. As noted the elimination of embedded taxation can reduce the cost of US produced goods and services by 20% or more and that is how this needs to be addressed. A 20% reduction in production costs allows a 25% tax at the retail level without chaning the cost of the US produced product or service for the consumer. The "end item" tax also increases the gross cost of a foreign produced good or service by 25% without imposing a "protectionist" tariff that would be recipricated by the foreign countries on US products and services being exported.

 

Jobs are not created because a corporation has money. Jobs are created by demand for products and services. Currently in the US demand for goods and services are down and there are several reasons for this.

1. Individual debt to income was at a record high of 134% prior to the recession dispite warnings from economists that Americans were carrying too much personal debt. Americans were shocked by the recession and have begun to pay down their personal debt. The last time I had a number personal debt was down to about 120% of annual income. This relates to about 150 million Americans paying down personal debt and is the biggest single factor in reduced consumption which lowers demand and the number of workers to meet demand.

2. The Federal Reserve has intervened related to interest rates resulting in the lowest interest rates in US history. Retirees, that generally have their retirement assets in fixed rate securities, are receiving only a fraction of what they would expect in interest payments on their money. Roughly 50 million retired Americans have had to reduce spending (consumption) because they are not being paid fair market value for their investments in T-Bills and other securities that pay based upon the interest rates.

3. Easy credit which allowed millions of people to purchase homes that they really couldn't afford resulted in a glut of new home construction. When the recession hit these individuals could not sell their homes as there was no demand for them. We ended up with between 2.5 to 3 million excess homes on the market and until those homes are "consumed" it has fundamentally eliminated new home construction. Millions of jobs were lost both directly and indirectly because of the number of excess homes on the market. Adding to this is the fact that qualifying for a mortgage has become more stringent so tens of millions of individuals are excluded from purchasing a home even though prices have dropped by 30%-40%. After three years there remain about 2 million excess homes waiting for qualified purchasers. Too many homes and too few purchasers resulted in most of the 18 million unemployed today and those that are unemployed have reduced consumption.

Consumption is the key to employment and always has been. A corporation is not going to hire people to produce products that won't sell. That would be stupid.

Of note there isn't much that the government can do about any of the above.

The government cannot pay down personal debt. Individuals have to do that on their own.

The government cannot logically intervene in the actions of the Federal Reserve to allow interest rates to return to fair market value and if it did the interest on the national debt would soar to close to $1 trillion/yr.

The government can't do much about the roughly 2 million excess homes that remain on the market. This is going to take time for qualified individuals to purchase the excess homes to the point where demand for new homes returns. Much of this relates to the excess personal debt which disqualifies so many from purchasing a home.

 

How many months of unemployment over 9%? How many months of near or over 400,000 new unemployment claims?

After the bottom of the recession Bush inherited, thanks to his policies unemployment peaked at 6.5%, we went into solid growth and full employment for 52 months. Obama is predicting more of his failed results into 2013.

 

Correction...companies charge as much as the Free Market will allow....and those companies that decide to defy these laws of economics are here today and gone tomorrow.

....perhaps in your Imagination....where Free Markets and Competition do not exist. Do you also believe tax increases have no effect on consumer costs?.
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So a North Korean Economic and Trade Policy is America's key.........
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What the market will allow is as much as they can...same thing

Of course any expense in making a product increases its cost.

And sending billions of dollars more overseas than we take in makes a country poor. And without income...taxes are very hard to collect.

You can squease a turnip real hard...but you still aren't going to get any blood from it.