Random Thoughts on tax cuts…and who needs them the most

The theory behind providing tax cuts to businesses is that in doing so the government provides incentive for them to do more to create jobs. Unfortunately, in practice, job creation is more hope than mandate and the theory has failed woefully. This should come as no great surprise to people who have a clear understanding of capitalism. As defined by Merriam-Webster, capitalism is an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

Businesses are not altruistic entities that create jobs for the betterment of the state, country, or mankind. The principle purpose of a business is to make money. Period. Business are vehicles that exist for the purposes of generating profit for the people who “matter”—preferred stock holders and investors, the board of directors, executive team, common stockholders, and employees—in that order. That’s not to say that there aren’t businesses out there that have a "corporate conscience," but they are few and far in between. Provide a thriving business a tax cut and they’re more prone to horde the money, pad the balance sheet, or pencil in some bonuses than to invest the windfall…unless it’s to their benefit, and that rarely translates into new job creation. In short, tax breaks alone without oversight or control provide no more incentive to create jobs—or keep them stateside—than does President Bush saying, “Pretty please with sugar on it: create some jobs, Damn it!”

President-elect Obama campaigned that he would advocate tax incentives for jobs created in the United States. What a concept! Call me selfish, but I’m much more concerned about the availability of jobs here than I am in improving the standard of living of various countries overseas or otherwise.

President-elect Obama’s tax cuts, if implemented, are also supposed to benefit those making less than $250k/year. Admittedly, he waffled a bit on the actual threshold amount, but it’s his philosophy that’s pertinent here. Given the current state of tax affairs, tax relief is needed for the American people and not American corporations. Consider how individuals are taxed today…

• Your income is taxed at the Federal, State, County, and City levels
  
• Your purchases of tangible goods and services you buy:
  - Auto Fuel
  - Food
  - Clothing
  - Electronics
  - Telecommunications (Cable, Satellite, Mobile Phone, etc.)
  - Utilities (Electric, Water, Sewage, Gas, Garbage, etc.)
  - Healthcare (Services, prescriptions, etc.)
  
• Property you buy is taxed at time of sale
  
• Your property you own is taxed annually
  
• Your gains on property you sell is taxed
  
• Your investment gains are taxed
  
• Your travel via Air, Land (Bus), Rail (AmTrak), and Sea (Pick one) is taxed
• Your estate is taxed
  

Taxes are as American as…well…America. The old adage, "the only 'for sure' things in life are Death and Taxes,” is truer than most recognize. In America we get taxed on income, gains, after death, and just about everywhere one spends money in between. Win the lottery--or "too much" dough in a casino--and Uncle Sam will take a piece of that, too! Suffice it to say, I’m definitely “on board” with the forthcoming administration giving the American people a break and taking a hard look at the spending our government is already doing. Just as most responsible consumers do today, our government must recognize that when it's spending more than it's taking in it must adjust accordingly. We can't deficit spend forever, can we?

The realities of compromise on capitol hill don’t always line up with rhetoric and propaganda. Still, I’m hopeful President-elect Obama is able to implement something remotely close to what was promised during his historic campaign. The more and more I think about it, the more I’m certain the American people could really use their own “bailout” in the form of tax relief! Stay tuned…


Peace,
+THINKER