It’s a Myth That Corporate Tax Cuts Mean More Jobs
By SARAH ANDERSON AUG. 30, 2017
“The arithmetic for us is simple,” AT&T’s chief executive, Randall Stephenson, said on CNBC in May. If Congress were to cut the 35 percent tax on corporate profits to 20 percent, he declared, “I know exactly what AT&T would do — we’d invest more” in the United States.
Every $1 billion in tax savings would create 7,000 well-paying jobs, Mr. Stephenson went on to say. The correlation between lower corporate taxes and more jobs, he assured viewers, runs “very, very tight.”
According to the Institute on Taxation and Economic Policy, AT&T enjoyed an effective tax rate of just 8 percent between 2008 and 2015, despite recording a profit in the United States each year, by exploiting tax breaks and loopholes. (The company argues that it pays significant taxes, at a rate close to 34 percent in recent years, but that includes deferred taxes and state and local levies.)
Despite the enormous savings AT&T has realized, the company has been downsizing. Although it hires thousands of people a year, the company, by our analysis at the Institute for Policy Studies, reduced its total work force by nearly 80,000 jobs between 2008 and 2016, accounting for acquisitions and spinoffs each involving more than 2,000 workers.The company has also spent $34 billion repurchasing its own stock since 2008, according to our institute report, a maneuver that artificially inflates the value of a company’s shares. This is money that could have gone toward research and development or hiring.”
Thus starts an article in the NY Times that briefly analyzes the often ballyhooed connection between corporate taxes and jobs. It is a short article but quite eye opening.
Just to remind you what creates jobs, here is very rich person Nick Hanauer and his famously banned TED talk on what creates jobs:
There will probably be a spike in jobs in the next few months as recovery goes on from Hurricane Harvey. There is a demand, you see – not a trickle down.
Editor’s note: This is my post for Labor Day. This right wing lie is the current accepted meme in the corporate press. I hope this will help a bit in putting it to rest.
May you all remember the history of Labor and prepare for the struggles to come.