"Question For Tonight’s GOP Debate: Why Do Corporations Making Record Profits Need Another Tax Break?"
The 2012 GOP presidential candidates will meet in a debate sponsored by Politico and NBC News tonight, which is scheduled to be the first debate involving Texas Gov. Rick Perry. The debate comes on the heels of a dismal jobs report, which showed that zero net jobs were created in August, and as the candidates have begun rolling out their job creation plans.
Each and every GOP candidate — from Mitt Romney and Perry to Michele Bachmann and Herman Cain — has called for a reduction in the corporate tax rate. Romney’s economic plan, unveiled yesterday, calls for lowering the corporate tax rate from 35 percent to 25 percent (at a cost of $900 billion), while Bachmann has called for a cut down to 9 percent (which would cost more than $2 trillion).
The theory behind the GOP’s call for lower corporate taxes is that more cash will free up companies to begin hiring again. However, as we’ve pointed out time and again, corporations are already sitting on record high cash reserves. Corporate after tax profits are currently the highest they’ve ever been since such data began being recorded in 1947. So it is certainly not a lack of funds that is holding companies back. As the Center for Budget and Policy Priorities’ Jared Bernstein noted on ABC’s This Week:
Right now, let me give you a number that I think is extremely compelling. The corporate profits as a share of the economy were higher in the last quarter, 2011 second quarter, than at any other quarter in the history of the data, after tax, after-tax profits, going back to 1947.
So if you’re going to tell me that these corporations, who are profitable by not selling into this country, selling into other emerging economies, just need another tax break to get ahead, or that deregulation, which, you know, it’s the deregulatory zeal that got us into this mess, is somehow going to get us out, it’s — that’s just wrong.
As former Labor Secretary Robert Reich put it, anyone calling for corporate tax cuts to spur job creation, even while corporations are sitting on trillions, “is blind to reality.” Since the GOP field that will be represented at the debate is unanimous in its belief that corporate tax cuts will fix what ails the jobs market, the moderators would do well to press them on this issue.