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There are two reasons businesses want to hire people.

First, "I need more people but I just can't afford them" -Jobs are constrained by money

Second, "I see an opportunity to make a great profit by meeting consumers' demand for some product, and I need to hire people to meet that demand" - Jobs constrained by demand: if there are customers for Gizmos® I'll hire people, if there aren't customers for Gizmos® I won't.

In the current climate, most large corporations aren't really constrained by money. Many have cash just sitting around in liquid assets. Those that don't have assets that can be used for loans. So, if they say the opportunity to meet demand, they'd already be hiring the people to meet it. A tax cut for them won't create jobs, because it won't change demand.

Small businesses ARE constrained by money, they have limited cash flow and limited ability to borrow. So yes, tax cuts for them CAN create jobs.

And, of course, tax cuts for consumers are the best bang for the buck, because consumers buy stuff. Put more money in their hands, they'll buy more stuff, creating demand which creates jobs.

The current Republican Tax plan gives some consumers a small tax break - for now. Not all. If you have significant expenses for healthcare, or education/student loans, or morgage interest rates, or other deductions that are going away - your taxes may go UP. And those who are getting a small tax break, those are all temporary. The doubled standard deduction gets phased out. Tax cut rates, phased out. The Republicans are doing that to get under an arbitrary increase in the deficit - and are trusting future Congresses to make them permanent (thus increasing the deficit even more) but that may not happen. So this bill does NOTHING to boost demand and to some degree reduces it.

The part that is permanent is a HUGE tax giveaway to the large corporations and benefits for very rich people (by sheer coincidence, Donald Trump). Who aren't constrained by money before the tax cut so no jobs will be created.

If we were in a crashing economy, where even large corporations were cash constrained, a tax cut like this might make sense. Reagan and Bush tax cuts were made in troubled economic times. It's questionable how much they actually helped, but it was a time where "We've got to do something" was obvious. But, as Trump tweets every morning, we've got a strong economy. Huge profits. Soaring stock market. Low unemployment. Workers may not be doing so well, the jobs that are available aren't great and don't pay enough, but for the corporations who get the big tax cut - things are GREAT. The tax bill will just move more money out of the hands of most of us and into the hands of the rich guys.

Which is the goal - but not what they're saying. They are LYING.

Posted on November 28, 2017, 8:49 am

Donald Brown

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