As part of his campaign to reclaim his old seat, former Sen. George Allen (R-VA) released an economic plan last week that calls for a massive tax cut for corporations, dropping the rate from 35 percent to 20 percent. Touting the plan, Allen made the media rounds, proudly saying his plan would create 500,000 a jobs a year. Here he is trumpeting his plan on Fox Business yesterday:
Dropping the corporate tax rate to 20 percent would cost about cost about $1.3 trillion dollars over 10 years, according to a ThinkProgress analysis of data from the Tax Policy Center, or about $130 billion per year to create 500,000 jobs. That translates to about $260,000 in lost tax revenue for every job created. The median household income in 2009 was only $50,000. This is hardly surprising, considering that the Congressional Budget Office has found that a corporate tax cut “is not a particularly cost-effective method of stimulating business spending” and “does not create an incentive to spend more on labor.”
Despite that tremendous cost, nearly every Republican is calling for big corporate tax cuts, claiming it’s the only way to create jobs. But Allen, inadvertently, admitted that these cuts would have a lackluster result.