New Jobs From Old Tax Breaks?

It is a very persistent logical fallacy. You’ve heard it many times in the recent past: if we continue to give tax breaks to big business, then they will continue to be able to create new jobs. Or perhaps, you’ve heard it phrased differently: if we eliminate those tax breaks, oh my, then businesses won’t create new jobs.

Let’s start with a reality check. Big businesses have loopholes that bring their effective tax rate down to lower levels than most working Americans. Warren Buffett has noted that his effective tax rate – after corporate loopholes – is lower than his secretary’s tax rate. Go figure.

President Obama has presented the nation with a proposed Buffett Tax that would make a first attempt at balancing this out. Now, of course, we’re hearing the claims of “how are we supposed to create jobs now?”.

Note to America – you might want to look at those job creation numbers in the time that the loopholes have been in effect.

Over the past 2 years, corporate America has had plenty of loopholes, yet they are creating jobs at an ever slower rate. One might ask where the money is going – though we all know that it is not going into the job market. It is going into a pocket somewhere, and it is not the pocket of the average American.

Much of corporate America has been given a “get out of jail free” card. We have assumed, obviously incorrectly and unreasonably, that they have been true to their word in the job creation market. But jobs continue to get farmed out to third world nations. In economic times like this, there should be a “put up or shut up” mentality. Either you create jobs at a certain rate – as you proclaim you will do with these tax breaks in effect – or you sacrifice your breaks and get down to pulling your own weight tax-wise.

In a similar note, we are hearing the complaints from small businesses as well. What is the federal government going to do to help my business, and to help me create new jobs?

That one is pretty simple. Nothing. Why should a small business owner be begging the federal government to help? How about simply providing a level playing field for all in the spirit of true capitalism? As a small business owner myself, I know how important it is to have a good business concept and a product or service that provides value-added benefit to the consumer. As the product or service becomes more popular or desirable, then jobs will avail themselves naturally.

I am starting to think that the United States has lost (or is losing) the concept of it’s own financial ideology. Those who claim to want “less federal involvement” also seem to be the first to stand in line asking the federal government to help them out. And that is the biggest irony of all.

Photo credits: herzogbr