Can a liberal explain to me how permanent tax cuts?

for all businesses will not serve to stimulate long term job growth, and expand the US economy through the prospect of lowering the cost of doing business here?

Update:

So the general answer I am getting from liberals, put simply is "We don't know that business would use the funds to expand"

So using your liberal genius. Let's tax the hell out of them, to make any expansion impossible, just because you don't know what they would do.

I know what they would do. EVERY business has the goal of expanding, because expansion means a larger share of the market, thus a larger profit. If I own a business that operates in one store, and I get a tax cut that enables me to open a second location, I will hire people to staff the second location.

It's simple economic logic. The way you liberals think the tyrannical federal government should have the right to dictate how people choose to utilize their life, time, money, and property is quite frankly, disgusting.

Update 2:

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13 Answers

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  • Anonymous
    1 decade ago
    Favorite Answer

    short answer - trickle-down economics doesn't work.

    more specifically, it is ridiculous and illogical to think that tax cuts for businesses are directly going to lead to more hiring or more production. There is simply no logical connection. Following is probably the best explanation I have found:

    "A tax cut on small businesses is only effective in stretching out and exhausting an already initiated growth. Tax cuts on small businesses do not initiate growth. More often, an economic crisis requires stabilization with an orientation towards the initiation of growth than the expansion of growth. The increase in small businesses during a recession only results in the production of similarly existing goods with little or no changes in efficiency. This ends up being an illusory economic growth."

    "In addition, tax cuts create many disunited multidirectional economic fights by many different businesses. The ineffectiveness of multidirectional fights could not be overemphasized because economic resources get scattered everywhere thereby diminishing their strength to meaningfully reshape any economic meltdown."

    "It is easier to see the ineffectiveness of tax cuts through the provision of lower taxes to businesses that are failing. A failing business requires a lot of restructuring and tax cuts give it an incentive not to restructure. With the tax cut, prices will be brought down and the consumption of the same poor goods is encouraged. When the well of tax cuts is exhausted, more tax cuts would be required to keep the industry afloat. This only leads to a deflationary spiral."

    http://www.associatedcontent.com/article/1734096/t...

    to round out the discussion, there is a big difference between the effective tax rate and the marginal rate that is actually paid after deductions. In fact, the "capture" or payment rate for individual income taxes is way higher than that for businesses.

  • ?
    Lv 4
    1 decade ago

    because (and you do mention "all" businesses) those businesses by and large will not invest the money from those generous tax cuts (which they've been receiving all along) in creating more jobs; they will use them to pay out bonuses and do other frivolous things with- but certainly not create jobs. we've seen this same thing happening with the so-called stimulus money, and so the notion of giving them even more money through tax cuts won't be any different. you don't have to be a bloody liberal to understand that, cuz i sure am not!

    besides, most corporations pay no taxes anyway, and yet the economy still tanked and is continuing to do so for the present. what makes you think giving them more money will result in job growth? small businesses? maybe. but the big guys? forget it.

    tax cuts never trickle down to those who really stimulate the economy, and you have to know that. what SHOULD happen is that these mega corporations should be called to task on taxes, and the bulk of the cost of health insurance (if it ever passes) should then be paid with revenue from these taxes.

  • Steve
    Lv 6
    1 decade ago

    I agree, it would stimulate growth but there would be a price to pay. Unless the government would simply spend less, and I think we both know the possibility of that happening, your taxes would have to go up to make up for the difference. Some argue that businesses not having to pay taxes would lead to cheaper goods and that would make up for the increased taxes. That depends on whether the businesses would pass along their savings to the consumer, which would defeat the "growth" argument, or if they'd just keep the money as increased profit.

    Secondarily, as another answerer pointed out, most businesses don't pay taxes.

  • Rose
    Lv 4
    4 years ago

    No, they just don't think Oprah and Warren Buffet really need to have the Bush tax cuts extended. The ceiling should have been raised from $250,000 to $500,000 or even a million a year income.

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  • 1 decade ago

    When was the last time it worked? Businesses look to save money and earn more for their shareholders. Hiring people is expensive even with tax cuts. The wealthy do not share their wealth with the little guy. They keep it. If they actually gave a damn, they would hire more people now and improve the pool of spenders. If they actually gave a damn, they would look at improving their customer service by having more people available to help the consumer. Instead, they look at cost cutting measures so they can still rake in their millions for the short term.

  • Anonymous
    1 decade ago

    Most businesses do not pay taxes. Most are organized as LLCs, partnerships, S-Corps, LLPs, etc. These are all pass through entities for tax purposes.

    Edit: Alright I'll take the bait. High tax rates do hurt the economy. However, at what level do you see that problem? Our tax rates are the lowest since before the Depression. Two very prosperous periods--the 1950s and the 1990s--both had higher rates of taxation than now. The financial markets and the economy respond well to stability and responsible governance. So if we stop running huge deficits it will be a positive, even if taxes were higher. Taxes are not a disincentive to doing business in the US compared with other advanced industrialized countries.

  • I am no liberal, but I can answer you.

    In their eyes, they are morally concerned about "main street" which are the American people. Their argument is "fighting for the American people by placing cuts on the middle to low income families and increase taxes on the rich and big businesses.

    Personally, I can see how this does hurt businesses because of the costs they have to pay through taxes it can lead to a prevention of job growth and more nad more business can go bankrupt because of it. In addition, it will cause more and more business owners to own multi-national corporations by doing business outside of the U.S. where its cheaper. That then will cause less jobs available here at home.

    But it cant work both ways. I would suggest keeping taxes low on the middle to low income and maybe lower the percentage of taxes on businesses as well...but the problem to this is the fact that it can cause a continuous deficit similar to what the Bush tax cuts had done.

  • 1 decade ago

    You are blending two issues.

    Permanent tax cuts would stifle the economy eventually. Those levers are there to balance out things when things are imbalanced. IF you dont have control on that, inflation will run rampant. It is the same process of inflation control with the world bank and its interest rates. When you want to slow inflation you raise the FED interest rates to loan to banks, who in turn stop lending out. When you want banks to lend in depressions you minimize that interest to zero to encourage lending.

    You would end up with business getting to much pie, there is NOTHING that would stop someone from keeping that money or spending it on things not beneficial to US sales. IE buying buildings in other countries. Buying out the competition in other countries.

    The lowering of cost to do business here is not directly related. Business choose to outsource because of the lower bottom dollar. You see this in businesses that have shareholders to account too. They will do WHATEVER it takes to keep the cost of business low. Tax breaks on US soil would have to be ridiculous massive to support the ongoing discount they get in labor overseas. The fact is as long as regulation encourages them to outsource they will. And since the Reagan era it has been that way. Obama has in the past hinted the fact that he wants to penalize companies who do outsource, but as of yet has not.

  • 1 decade ago

    Permanent tax cuts with irrational spending behavior is a recipe to lose our sovereignty. Also, if you make tax cuts permanent you take away the one fiscal policy tool that can raise money in a pinch. Perhaps if politicians showed a behavior pattern of fiscal restraint, then perhaps it could work. But as long as they spend like drunken sailors, that would never be a good idea.

  • 1 decade ago

    Simple.

    Most tax cuts go toward paying existing employees, not hiring new ones. Only when growth reaches beyond existing capacity, do employers look to hire. Tax cuts add to supply, not the demand for labor.

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