Robert Reich: Debunking Myth #8: ‘Corporate Tax Cuts Create Jobs’ – OpEd

I’m tired of hearing Republicans claim that we should reduce taxes on corporations because corporate tax cuts create jobs. It’s untrue. 

Also untrue are the repeated Republican assertions that tax increases on corporations, and regulations requiring corporations to better protect the health and safety of their consumers and workers and the environment, are “job killers.” 

Here’s the truth: Most American jobs are created by poor, working, and middle-class people whose increased spending on goods and services causes businesses to create more jobs. 

If most Americans don’t have enough purchasing power to buy the stuff businesses produce, businesses will lay workers off. If they have more purchasing power, businesses will add jobs. 

In 1914, Ford boosted its workers’ wages. As a result, Ford employees — and the employees of other big firms who felt they had no choice but to raise their wages to compete in the job market with Ford — could afford to buy Model T Fords, enlarging the demand for Model T’s, thus creating more jobs at Ford (and at every other automaker). 

The Great Crash of 1929 ushered in the Great Depression of the 1930s because people didn’t have enough money to buy the goods and services the economy could produce. Which caused a vicious cycle of fewer jobs and even less money in the pockets of average people.

The cycle ended only when the government stepped in through vast public spending on World War II.

So when you hear that corporations need tax cuts in order to create more jobs, or that tax increases on corporations or regulations on corporations are job killers, know that this is baloney. 

The best way to create more jobs is to put more money into the pockets of more workers. 

Which is why we need a higher minimum wage, an expanded Earned Income Tax Credit, and stronger unions that can bargain for higher wages. All these will increase demand for the goods and services businesses produce, thereby creating more jobs. 

Remember, it’s working people who create jobs when they have enough money in their pockets to buy.