Conservative advocate zero-percent income tax. That is nuts
During my lunch, I went over to Human Events to hear what the conservative pundits have to offer. I decided to read a op-ed piece by the former governor of Virgina, Jim Gilmour. His idea to stimulate the economy was to make to corporate income tax was zero. Here is the excerpt from Human Events
"My own personal experience is that American businesses flee overseas to avoid the high American corporate income tax rate. If we want jobs, and not just redistribution of wealth, we should cut the corporate income tax to zero. Save this aimless stimulus bailout money. A zero corporate income tax would cost $275-$340 billion, about one-third of the stimulus spending. The result would be an explosion of new capital investment in the U.S., creating millions of new jobs. Make the tax revenue back from the income tax from those who get the new jobs"
Is this guy crazy? The corporations do not need any more handouts from the governments. When a company earns money, the profits should be taxed to the government as revenue. The government needs revenue to pay police officers, pay for our national defense, and to provide a social safety net for those people.
The reality is that the corporations would use the additional money either to buy back stock to increase equity or to reduce corporate debt. The corporations would not use it to create jobs because the demand side of the equation has not been addressed. His proposal is not job-creator because it provides no incentives to corporations to create jobs. And it does not address the demand-side of the equtation.
In addition, a lot of people have a huge amount of personal debt to pay off before they will start to consume again. That debt burden must be addressed before people will consume again and if people have no jobs, they will not be able to pay off that debt burden. Therefore, there is no additional jobs that would be free because there is not demand for those products.
In conclusion, I believe that Mr. Gilmour ideas on the demand-side of the equitation makes no sense. He relies on ideas that have failed in the past.
I do not see Alex Greenspan, Warren Buffet, or Bill Gross calling for a lower corporate tax rate. In addition, cutting corporate income tax rate to zero without no incentives is not going to result in creating more jobs for people. It allows the corporations do whatever they want and we know that type of think got us in this place orginally.