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More for Them, Less for You
What would you say to a family financial adviser who suggested your wisest investment would be to liquidate your own retirement account and empty out your kids' college fund to buy your wealthy cousin a new Bentley? Would you go ahead and gamble with your life savings in hopes that your cousin would send you a big thank-you check, or would you hire a new financial adviser?
The current crop of Republicans vying for the presidential nomination are all champions of a reverse-Robin Hood methodology that calls for soaking the poor to give more lavish tax breaks to the rich, and calling it "job creation." Former Utah Governor Jon Huntsman, known as the most liberal of the GOP contenders, recently unveiled an economic plan that calls for cutting the top tax rate to 23%, cutting the US corporate tax rate to 25%, and completely eliminating capital gains and dividends taxes-- which would exclusive benefit obscenely rich investors like Warren Buffett. To pay for it, Huntsman's plan would raise taxes on seniors, veterans and working families with children. Rather than being dismissed as radical and/or cruel, this plan has been endorsed by the Wall Street Journal.
Not to be outdone, Michele Bachmann is toying with the idea of not just cutting the corporate tax rate, but eliminating corporate taxes altogether. Rick Perry says a 0% corporate tax rate will "get the economy working again." Sarah Palin is also jumping on the end-corporate-taxes bus. Mitt Romney insists corporations are people. All of President Obama's potential challengers are falling all over themselves to proclaim the biggest obstacles faced by America's private sector "job creators" are America's corporate income tax rate and federal regulations.
If that's the case, America's "job creators" aren't doing their job. While our marginal corporate tax rate of 35% is constantly criticized as one of the world's highest, corporate income taxes barely count for 1 percent of GDP, thanks to all the corporate gimmicks and loopholes in the US tax code. Corporations continue to hoard $800 billion in cash while jobs continue their flight out of the country. And instead of trickling down, all of the wealth has collected at the top. Since 2009, 88% of income growth went toward corporate profits, not more jobs and higher wages.
President Obama's highly-anticipated jobs plan comes just after a jobs report that showed every private sector job created was offset with lost public sector jobs. America's small business owners, the real job creators, say taxes and regulations have nothing to do with the slump in hiring -- rather, the continued loss of public sector jobs is taking money out of consumers' pockets, meaning less demand for small business owners who need customers before they can hire.
It shouldn't surprise American voters that the same presidential candidates chomping at the bit to deregulate corporations and cut taxes for the super-rich are themselves super-rich, or that leading GOP presidential hopefuls are also financed by billionaires who fight regulations tooth and nail. Their "jobs" agenda has nothing to do with creating jobs, but is rather intended to make them more attractive to wealthy donors who will be flooding the GOP field with cash this election season.
And while Obama's challengers continue to bemoan the burdensome environment for the private sector, those employers are actually growing jobs in line with normal expectations during a recovery. The real drag on hiring has been in the public sector, largely due to job-killing budget cuts, handed down by largely Republican administrations. Consumer demand creates jobs, not tax cuts. Republican governors naming a job-killing spending plan a "jobs budget" won't change the fact that their budgets will inevitably kill jobs.
Even in 1785, Thomas Jefferson knew a progressive tax was the most fair when he wrote, “Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.” And today, lifetime registered Republican, corporate CEO and tax guru Henry Bloch of H&R Block says the idea of lowering taxes to create jobs is "baloney." Rather, a common-sense solution to pay for any jobs plan is taxing the same Wall Street bankers who created this mess. Taxing the trading of abstract financial instruments like derivatives and credit default swaps could generate $1.5 trillion in a decade. Though because such a proposal is likely to draw ire from the big banks, it seems unlikely any of the current candidates will talk up the idea.
In these dire economic times, Americans must not choose feeble-minded leaders who boast such a stupefying lack of knowledge on economic issues. The next time we go to the polls, let's pick financial advisers who actually want to see us do well, not sell our livelihoods and futures to the highest bidder.