Mar 29, 2004
During a recent speech in Detroit, John Kerry outlined a program designed to create 10 million new jobs in the U.S. Kerry said he would increase taxes on corporations that take jobs overseas and ship their products back to the U.S. He would also eliminate a tax break that allows U.S. corporations to stash their profits overseas to avoid paying U.S. corporate taxes.
Kerry says he would give a 25% tax credit to small businesses that pay for employee health care and a payroll tax credit for any new jobs added by a company in an industry challenged by jobs moving overseas. Kerry would refund the company's share of Social Security taxes for new hires for the first two years of the program.
Finally, Kerry said he would cut the corporate tax rate from 35% to 33¼%.
Of course, no one can say exactly how these tax changes would work since details are scarce. And it all depends on the details as politicians campaigning for office well know. Bush claimed he was closing corporate tax loopholes when, in fact, the loopholes got bigger.
But we can look at history to see how previous corporate tax cuts have worked. In the 1960s, thepercentage of all government revenues paid by corporations amounted to nearly 40% of all federal taxes. Kennedy, a Democrat, gave an enormous "temporary" investment tax credit to the corporations. Under Johnson, Nixon, Ford and Carter, Democrats and Republicans alike, this "temporary" corporate tax credit was extended. There was also an explosion of so-called "corporate tax shelters." In 1977, when Carter took office, corporate taxes were down to only 17% of all federal revenues. By the time Carter left office, they were only 11%. Today corporate taxes provide less than 10% of total federal revenues.
So where are the jobs? If corporate tax cuts actually created jobs, then we should be awash in jobs since one administration after another has been cutting corporate taxes.
In announcing this program, Kerry declared, "Some may be surprised to hear a Democrat calling for lower corporate tax rates." Not at all!