8/20/2011

Democrats want to use tax cuts to micromanage business decisions

Democrats seem unable to understand that companies have a better sense of where the most productive investments are. Can Democrats angle for some business support by selectively promising certain businesses tax cuts? Sure. Is it productive for the economy? No. From The Hill newspaper:

Senate Democrats, who are desperate to stimulate the economy but don’t have the money to pass traditional stimulus legislation, will turn to cutting business taxes when they return to Washington this fall.

In doing so, they will try to drive a wedge between business interests and the GOP leadership, who has tried to block almost every element of the Democratic agenda, by pushing a round of corporate tax breaks, say Senate Democratic aides. . . .

Democrats have found themselves at odds with the business lobby for much of their reign in the majority, fighting over healthcare, cap-and-trade and other regulations. And they were disappointed businesses did little to help them in their standoff with House Republicans over raising the debt limit, even though business leaders saw the mere threat of a default as dangerous.

Their new plan could net them the support of groups like the U.S. Chamber of Commerce, which traditionally supports Republicans — both politically and financially.

Their first tax proposal is to make the corporate research and development tax credit permanent. The second is to pass an Advanced Energy Manufacturing Tax Credit. This would create a 30 percent tax credit for companies that manufacture new clean-energy technologies, which Democratic aides say would help create thousands of new jobs around the country.

A third idea is to extend the payroll tax cut Congress enacted in December and expand it to employers, reducing the cost of labor. And a fourth option is to give employers tax breaks for hiring new employees, an idea Democratic members of the Senate Finance Committee panned in 2009 but now seems more attractive. . . . .


So why is it that so-called "new clean-energy technologies" able to produce jobs but wouldn't lowering overall tax rates rather than this targeted politically approved cuts also produce jobs, actually jobs that did more to increase total wealth?

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