Robert Reich: Why Obama Is Wrong To Want Corporate Tax Cuts
Former Labor Secretary Robert Reich says the two corporate tax cuts being proposed by President Obama are the wrong way to go. One cut is for research and development, and will cost $100 billion over ten years. The other would allow businesses to write off all costs in plants and equipment through the end of 2011 and will cost $30 billion over the same period. Businesses are investing, says Reich, because they don’t have the need because of lack of demand, and consumers aren’t buying because they’re trying to sure up their savings. There aren’t enough profits in small businesses to make the cuts worth much, and large businesses are sitting on more than a trillion dollars of profits already.
In sum, Obama’s proposed corporate tax cuts (1) won’t generate more jobs because they don’t put any cash in worker’s pockets (as would, for example, exempting the first $20,000 of income from the payroll tax and making up the difference by applying the payroll tax to incomes over $250,000); (2) will subsidize companies to cut even more jobs; and (3) will cost $130 billion — money that could better be spent helping states and locales avoid laying off thousands of teachers, fire fighters, and police.
What Obama is really doing, says Reich, is a cynical ploy to take an issue away from Republicans. How can they object to tax cuts? And it’s a supply-side remedy which won’t do much, and is the opposite of what progressives believe.Click here for reuse options!
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