Lower Taxes for Whom?

I am probably preaching to the choir, but the claim of giving tax relief to the rich and corporations will help the middle class or poor is patently false, both logically and from past empirical evidence.


The claim is that the savings would be used to create jobs. Since those getting the tax breaks currently are making record profits or already have huge amount of money, if they wanted to invest it to create jobs they could do so now without further incentives, so giving them more is unlikely to change whether they use it that way or not. In fact, in the past they have used such profits to move jobs overseas, to buy up other companies in mergers, which reduces jobs, especially middle management jobs—those of the middle class. The rich, in such times as now, find safe places to invest their monies, such as real estate and expensive goods, neither of which create much employment. Their investment in real estate often in fact creates higher housing costs for the rest of the population.

Then there was the statement by the Administration that companies would use the tax break to automate, which would save them more money, which they could use to raise wages. Let us look at that statement and take it apart. If they did use it to automate, that would mean job losses not gains. And while they could use the money to raise wages, what incentive would they have to do so? Under capitalism, when they have more workers wanting the same jobs, they are more likely to lower wages when there is more competition for the same jobs, not raise wages.

The idea of reducing or eliminating capital gain taxes also goes against basic fairness. The idea that earnings from actual work that produces something is taxed more than income made from doing nothing, simply from the fact that one is rich, seems absurd. Should not unearned income –income made off of the work of others, be taxed higher than the earned income which is earned by ones sweat and toil? The earning income from investments rather than hard work again is mostly in the hands of the very rich, so any breaks there would again be heavily weighted in favor of the extremely wealthy.

There is also the plan to eliminate the estate tax (tax on estates at death). Currently only the very rich pay this, as it is only paid on amounts over $5,400,000 ($10,800,000 for couples). This tax saving would be enormous for the children of multi-millionaires and billionaires who did nothing at all to earn that money, except be born to the right parents.

When the poor or middle class have more money, they do spend it. The money they spend is likely to create more jobs since increased purchase of consumer goods means there is an incentive to produce more goods, which does create jobs.

If one really wanted to help the economy while not raising the debt one would be increasing taxes to those who have the money, the rich, who are richer than ever before in history, and large corporations, who are currently making record profits. Lowering taxes for the middle class and getting money to the poor will create jobs by putting it in the hands of those who need it and will spend it. Basic logic and past empirical evidence bears this out.