TheTAZZone - Internet Chaos

Why Do We Believe In Something Even When It Didn’t Work?

As a home health aide I’m finding that many of the clients I care for have children and grandchildren without jobs right now. They’re worried about what’s going to happen to them. I certainly don’t blame them since I too would be worried if it were me. All of the unemployed that they are worried about were laid off in the wake of the Wall St./auto industry fiasco.

In the case of 2 of my clients, they have children who lost their jobs due to a failure to ratify a union contract that didn’t give the workers the promised raises this year and next. The union contract ratification process occurred during the financial crisis. Management said they’d have to close if the workers weren’t willing to compromise. The workers weren’t willing, the plant closed and they’re now unemployed. During the time this all happened, the auto giant that was buying all the parts manufactured in this plant was ordering a custom made Lear Jet for the use of the CEO. The Lear Jet, if actually purchased, would have meant a tax deduction for the company. How many jobs could have been saved with the amount of money they planned on spending on that jet?

Due to governmental deregulation and some serious tax cuts for corporations, the executives and CEO’s of these companies were living high on the hog on the backs of the line workers. It’s called greed and mismanagement. I’m sure that the government believed that deregulation and those tax cuts would eventually impact the economy in a healthy way. They probably believed that all this would stabilize the corporations which in turn would create more and better paying jobs. That’s what the big corporations told them. What actually happened wasn’t more and better paying jobs. Almost everyone I speak to believes that to fix this problem the government needs to extend the wealthy tax cut and deregulate some more. That path didn’t work well when it was first tried, why aren’t we willing to change direction?

Almost every economist agrees that small businesses are the means by which economic recovery occurs. Why hasn’t that happened now? As the wife of a small business owner I can tell you that while corporations are being given these tax cuts, the small businesses have been paying more in taxes and other operating expenses. At a time when major lay offs were occurring, petroleum giants were posting double digit profits in the billions. It’s not just the gas and oil that petroleum giants profit on. It’s the everyday items like tools, CPVC plumbing materials, even the plastic packaging that most everything we buy comes in. In some cases plumbing supplies have tripled in price.

All of these items are more affordable for giant companies that have a greater cash flow thanks to deregulation and tax cuts. Those of us with the smaller companies, even when we pass the increases along to the customer, don’t have the cash flow ability. That lack of cash flow means small businesses can’t add new employees and in far too many cases are having to add to the unemployment problem. The higher prices for products contributes to the lack of business for the smaller business owner. I don’t call that a win/win situation.

If any government wants to spend X amount of dollars on any program, that X amount has to come from somewhere. With the current tax rate, if our business earns $110,000 we must pay a tax rate of 39%. With a business that earns more than $335,000 but less than $10,000,000 that business only pays 34% of their profit to taxes. With the higher amount of money to play with, that business can also reduce it’s tax liability through off shore subsidiaries (which they did) and other tax shelters (which they did) and thereby transfer the burden of that X amount of dollars needed for the government program onto the backs of smaller business. Businesses which can’t afford to pay that much and keep employees, let alone hire new ones.

Most people seem to believe that increasing the tax rate on the wealthy corporations will lead to more unemployment and they want bigger tax cuts for the wealthy. They believe that, despite the tax decreases for big companies that didn’t lead to any new jobs and didn’t stabilize those companies enough so that they could at least keep what employees they had. These same people will be going to the polls to vote into government the candidates that agree with at least keeping the tax cuts for the wealthy and at most increasing those tax cuts. All in the name of generating employment. A move which will put more small businesses in bankruptcy and actually add to the unemployment situation. That scares me, since I’m the wife of a small business owner who may be paying for that mistake.

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