Someone Explain This To Me

I just finished reading an article from the online version of Fortune magazine written by a former congressman and former head of the Democratic Leadership Committee, Harold Ford, Jr.

The article states that the President should do the following:

  1. Don’t raise taxes on companies.
  2. Don’t create new regulations on businesses.
  3. Cut taxes on every form of income.
  4. Cut business taxes.
  5. Pretend that people aren’t trying to obstruct his every move.

Basically, government should cut taxes so that people can create jobs.

How, exactly, does this work? I have never seen any proof that cutting taxes is any incentive to hiring people. If a city gives a tax break to a company looking to move their headquarters, you don’t really create jobs; you transfer them from one place to another. If you cut personal taxes, that doesn’t create jobs. If you cut corporate taxes, you then just increase their profits. What incentive is there for a company to hire people when that costs potential profit? Lowering the taxes doesn’t provide any benefit at all except to investors who stand to benefit from increased stock prices.

Ultimately, companies should produce great products that people want to buy. They shouldn’t need tax breaks or subsidies to make that happen.

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