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Letters to the Editor

Taxes, jobs

October 31, 2011

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To the editor:

A few quick comments about the interrelated issues of corporate taxation and domestic job creation:

1) While the nominal 35 percent maximum tax rate for U.S. corporations may be higher than that of other industrial countries, in point of fact it 2) is a marginal rate, payable only on the top portion of a company’s income, with all the preceding income taxed lower. The effective tax rate (i.e., what they in fact pay) is much lower.

3) But because of all the exclusions, exemptions, deductions, depreciations, deferments, offshore shelters, non-taxable government subsidies, etc., few sane corporate managements ever pay the 35 percent on even part of their revenues.

4) Contrary to the current Republican mantra, in a global economy with free flow of capital all over the world, there is absolutely no connection between allowing U.S. companies and investors to pay lower taxes and keep more money for themselves on the one hand, and creating jobs in the U.S. on the other. They can and do use that extra cash to create jobs in India, China, Guatemala, Haiti, Nigeria, Korea, etc., because they can make more money in those places than at home. No U.S. law prevents them from doing so.

5)  One might conclude that following the Republican mantra would actually increase unemployment in the U.S. rather than lower it.

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