I am going to say something that is very controversial in some circles...

[kentuck]

The taxcuts for the last 11 years have cost American jobs.

Contrary to the general consensus that taxcuts create jobs, to whatever end that is true, they have not created jobs in America.

What they have done is increase the bottom line of those companies and corporations that wanted to move part or all of their operations overseas. The taxcuts gave them the means and the incentive to move those jobs quicker than they otherwise would have, simply because they had the money to move their operations. The taxcuts made the moves possible in some instances. The corporations, with their fat bottom lines, were able to lay-off American workers and hire workers overseas.

Low tax rates are not good for American workers in this "global economy". Perhaps the plants would move overseas anyway, but they would do it at a much slower pace without the revenues to do so. The taxcuts permitted that to happen.

No one has argued this but it seems to me to be common sense.

[msongs]

1. we have a government of cowards who are terminally afraid of corporations nt

[Marr]

2. I remember a time when even mainstream Republicans laughed at the claim that cutting taxes would

increase revenue. It wasn't that long ago, either. Now the whole political establishment parrots that silly horseshit like it's a basic truth of the universe.

[JaneQPublic]

8. Interesting point by a Reagan budget guy on MSNBC...

...last night. Bartlett, I think his name was.

He said the Republicans can't have it both ways: on one hand saying that making tax cuts/budget cuts for Domestic services will improve the economy, while on the other hand claiming that making tax cuts/spending cuts for Defense will tank the economy.

And that is exactly that they're doing now: simultaneously claiming opposite economic forces are at play, to suit their own priorities and those of their big-dollar contributors.

[Marr]

10. D'oh, I posted something in the wrong thread (in case you were wondering), lol.

[mike_c]

3. I don't think that is controversial at all....

There is DEMONSTRABLY no evidence that cutting taxes has resulted in any job growth-- in fact, the evidence is just the opposite. Taxes on corporations and the wealthiest Americans are at their lowest points in many decades, yet job growth is utterly stagnant and has been for much of the time those taxes have been at historic lows.

Taxes on "job creators" have been at all time lows for over a decade now. Where are all the jobs?

The notion that lowering taxes on the wealthy stimulates job growth is a myth sold by the wealthy themselves and their lackey politicians. They're laughing at us all the way to the bank.

[bluestateguy]

4. I am always reminded of Prop 13 in California

The supporters urged renters to support the lower property taxes that would come from Prop 13 because, they reasoned, landlords would have lower property taxes and then pass those savings on in lower rents to tenants. Indeed, Prop 13 passed by a big margin and likely a lot of renters voted for it.

So uh, how about those lower rents?

Nope. Landlords pocketed the tax cuts for themselves and just kept on raising rents.

[abelenkpe]

13. Really?

They actually said prop 13 would lower rents?

Wow.

Why anyone has ever believed that by giving the wealthy tax breaks they would magically feel magnanimous to those less fortunate and start helping people out is beyond me. What happens instead is the person receiving the tax breaks just comes to expect the bounty, rationalize that they deserve it and look down on those who don't benefit as unworthy losers.

[bluestateguy]

21. Some landlords justified it as paying themselves back

for all the years of high property taxes.

After three years of post-Prop 13 rent increases (1981), my relative asked his landlord if and when rents would be reduced.

"You know, if you're not happy living here, you can always leave," the asshole landlord replied.

He left.

[southernyankeebelle]

5. You have said only the truth. Corporation Morals have left this country long ago.

To think that we send these crooks to congress. Especially the republicans. People in the lower middle class especially vote against their own good. You can tell them til your blue in the face but they won't believe a word you are saying. I don't know how it will change. Until this country hits rock bottom then maybe it will turn around for the dems. Liberals are looked down on..

[Gregorian]

6. Not just tax cuts, it's SELECTIVE TAX CUTS that created this problem.

And wars on credit.

[NNN0LHI]

7. Tell you why you won't find a large audience for this here

99% of the people like myself who agree this is the truth have lost their homes, internet connections, computers, everything. They are gone. Been gone.

All that is really being represented here at DU any more are the high rollers who can weather such economic storms. Or poor people like you, myself and a few others who were lucky enough to get past two terms of Reagan with an intact pension and medical benefits. Rest hit the skids years ago.

Nice OP though.

You know I agree with you. But we are in the minority here now.

Don

[abelenkpe]

14. Awwww, I'm not a high roller

Was so loaded down with student loans that I missed the housing bubble. Have resigned myself to never being able to retire, and am watching as my career (second one actually) gets offshored forever. Then my kids and I will join the others with no internet access, etc.
Wish it wasn't so.....

[DaveJ]

22. My retirement fund might barely pay for internet access

But by then, if retirement is privatized they will make us work on the internet we buy, to pay for indentured servitude. That will just about cover the bill for water and air which will also be privatized.

[Blanks]

11. It seems to me that what happens...

...is the executives save a bunch of money for the companies by sending jobs overseas.

Since they are such geniuses they get huge bonuses (which are in some sort of stock option so they pay capital gains tax on the bonus instead of income tax).

We were told that we should reduce capital gains tax so people will sell shit; and this is what we got.

It wouldn't benefit the executives if we had a 91% tax bracket like we did under Ike. Then they wouldn't benefit from shipping the jobs overseas.

I think we should go back to those rates adjusted for inflation. Retroactively would be even better.

[NNN0LHI]

12. +1000

[abelenkpe]

15. Cant compete against other countries

that are offering 40 percent in tax incentives for US companies to offshore.

Lower taxes here are only part of the problem. (And capital gains should be raised, too) Other countries are using their taxpayer dollars to bribe US companies into opening offices in their country and lay off US workers. Why does no one do anything to stop that?

[valerief]

16. That's just common sense, not controversial. Anyone who can't see that must be a

Texas legislature against critical thinking skills.

[The Wizard]

17. Front loading tax breaks

encourages sending money off shore. Tax breaks on the back end can and have encouraged job creation. Trickle down means the wealthy elites get golden parachutes and the rest of us get golden showers.

[David Zephyr]

18. Well said. Just look at the crumbling infrastructure and electrical grid.

Well said, Kentuck.

[mathematic]

19. That's a rejection of Keynesian economics

The tax cuts occurred during recessions, where they would stimulate aggregate demand, etc.

I understand your argument. For a firm, there is an initial cost to moving jobs followed by a continuing benefit. You say that the tax cut gave them the capital to overcome this initial cost and so offshoring was accelerated. This is not the correct way to look at it. A firm can use its own resources or it can borrow to finance the offshoring. As a business proposition, it's only the initial costs, continuing benefit, and the prevailing interest rates that determine the profitability of offshoring. Since a firm's resources enter this calculation as an opportunity cost there's only a very small difference between using its own resources and borrowing. Basically, if it's profitable enough to do at all the firm will be able to borrow the money to do it.

Your argument makes more sense if you replace "low tax rates" with "low interest rates". Higher interest rates would make investments with a high initial cost much less appealing. The fiscal policy during the last decade was the sort of thing that would raise interest rates. Increasing gov deficits overall and in particular during recessions "should" pressure interest rates up. Unfortunately(?), monetary policy was focused on preserving low rates & easy money and if the fiscal policy had any upward effect it was certainly countered by the monetary policy.

Interestingly, it seems like the tax cuts would actually have the opposite effect to what you've suggested. In summary, tax cuts during a recession, according to Keynesian economics, would reduce the severity or duration of a recession. This would result in higher interest rates. Due to the high initial cost, higher interest rates would make an offshoring investment decision less appealing.

[kentuck]

20. Obviously we didn't get higher interest rates....

And it is much easier to borrow when your balance sheet is way in the black.

I don't think Keynesian theory works in this example?

The proof of the pudding is in the eating. We have not created more jobs with lower taxes. We have only run up huge deficits and demands to cut government, almost like it was a conspiracy.

The government actually gave tax breaks to move companies overseas, on top of the already low taxes. I fail to see any disincentive.

[mathematic]

23. We didn't get higher interest rates due to aggressive monetary policy

Nothing to do with tax rates.

What new tax breaks were given to move companies overseas? My argument was based on the lower individual taxes, since that's what I figured you were talking about when you said "the tax cuts for the last 11 years". I don't recall any relative increase in domestic corporate taxes last decade but it's possible I forgot about something.

There are certainly types of corporate tax changes that could impact an offshoring decision but anything lowering domestic taxes would reduce the incentive to offshore.

[kentuck]

24. You're talking in circles..

Of course, it had nothing to do with Keynesian economics. The interest rates have been low for a very long time, with these monetary policy experiments. They don't work.

And what do you mean by this statement; "that's what I figured you were talking about when you said "the tax cuts for the last 11 years". I don't recall any relative increase in domestic corporate taxes last decade but it's possible I forgot about something."

Are you talking about taxcuts or increases in taxes??

Could you clarify your comments? Yes, many companies got tax breaks to move their jobs off shore. I'm surprised you had not heard that??

[mathematic]

25. No circles here

Tax cuts during a recession, like the tax cuts from the last decade, are keynesian policies. These policies are supposed to end the recession. Interest rates decrease during recessions and increase during recoveries. I brought it up because the offshoring decision depends on interest rates and tax cuts do not result in lower interest rates. This is a good reason why your "common sense" reasoning about tax rates and offshoring isn't correct.

The part you quoted from me IS my clarification. Your OP talks generally about "the tax cuts for the last 11 years". I didn't think you were talking specifically and exclusively about corporate tax changes. My post was under the assumption that you were talking about individual tax changes. This is important because corporate tax changes could have an effect on offshoring. However, your OP did not say something like 'corporate tax changes over the last 11 years have resulted in more offshoring'.

A relative increase in domestic corporate taxes could either be an increase in domestic corporate taxes or a decrease in foreign taxes (like a tax break for moving jobs offshore). A relative decrease could be decreasing the domestic corporate tax rate or increasing foreign taxes.

And you're not the only one surprised that I hadn't heard that companies got new tax breaks to move their jobs off shore. I'm quite surprised I haven't heard of them either. So what are these new tax cuts for offshoring that were passed in the last 11 years? Presumably these are "the tax cuts for the last 11 years" you were referring to in your OP?

Actually, in writing this response I did remember one notable new corporate tax policy during this time period that favors offshoring. (I suppose that's just how memory works.) I don't want to influence/bias the ones you were thinking of though so I'll wait until you tell me what you had in mind before I bring it up.

[kentuck]

26. Here is a recent article you may find interesting?

http://www.publicnewsservice.org/index.php?/content/article/27457-1

<snip>
Rockefeller: Tax Breaks for Job Outsourcing? "Really Stupid"

July 16, 2012

CHARLESTON, W.Va. - Sen. Jay Rockefeller is co-sponsoring a bill that would reverse tax breaks for companies that ship jobs overseas. The Bring Jobs Home Act would give companies a tax credit for bringing work back to the United States and end loopholes that give them breaks when they relocate workers to other countries, Rockefeller says.

"We now give tax incentives for people who move offshore. That's just about the dumbest thing I've ever heard."

Corporations that go overseas now receive a tax deduction for moving expenses, and they are also allowed to defer taxes on money made by their foreign operations. The Bring Jobs Home Act would change that to a 20 percent tax credit for the cost of bringing the work home.

<snip>
More information about Senate Bill 3364 is available at www.govtrack.us.

[mathematic]

27. Those breaks have always been there

But this is a good example of how relative tax changes can affect offshoring. Moving expenses, just like any other expenses, are deductible. That's not a loophole. Expenses are meant to be deductible. The proposed change would be an example of making foreign work more expensive. The tax credit, on the other hand, is a reduction in taxes for domestic work, sorta. It still might not work out because it only addresses the initial cost of moving jobs (from foreign to domestic) and not the ongoing differences in cost between american and foreign workers.

Deferring taxes is definitely a loophole. The ability to defer taxes gives an incentive for companies that do a lot of international business to have their operations based outside of the US. Also, I suspect there's a lot of funny business going on with how prices are accounted for between a company's subsidiaries in order to avoid US taxes. The worst part of deferring taxes brings me to the one example I did remember from the last decade that made offshoring more favorable: the repatriation tax holiday in '04. Companies were allowed to bring foreign income back to the US tax free. It was a terrible idea that only encouraged the foreign cash hoarders like Apple to stockpile their overseas money while waiting for another repatriation tax holiday.

To tie this all back to the original points, corporate tax policy does have an effect on offshoring, I can only think of one significant change to corporate tax policy in the last decade (the temporary tax holiday of '04) that would increase the incentive for offshoring, and the individual tax changes from the last decade had either no effect or reduced the incentive for offshoring.

[Prophet 451]

28. Tax cuts CAN create jobs

But they need to be targeted at the right people. The trick is to aim your tax cuts at the poor and lower middle-class. The rich tend to sit on their money while the poor and lower middle tend to spend it.

[Sirveri]

29. Tax cuts on the rich should almost always cause job losses.

Simply put if we let them take more money out of their company they will happily do so, and all the money they extract for themselves comes at the expense of their workers or upgrades. That means pay cuts for the workers, either in the vein of actual pay cuts or by laying off workers and forcing the rest to work harder for the same amount.