Cut Taxes So Our Corporations Can Be More Competitive?

Republicans insist that we need tax cuts so that American businesses can be more competitive in world markets.  That seems like a reasonable idea until you really think about it.  Let’s say we want a local business making widgets to compete with a business in some other country that also produces widgets.  So we reduce our taxes, and our widget producers drop their export prices.  The other country is not blind.  They see what is happening, so they drop THEIR prices too!

Assuming that other countries will not respond to whatever we do is naively simplistic.
Actions we take that affect world markets will cause reactions by other nations.  Every nation cannot have a trade surplus unless we find a market for our products on some other planet.

Cutting taxes is as futile as devaluing our currency to make our exports more competitive.  They both will cause a “race to the bottom” as everybody else does the same thing. 

The implicit threat is that if we don’t make our nation more “business friendly,” even more jobs will be exported to countries that have lower taxes and lower labor costs.  Killing labor unions is part of the plan too, of course, and Republicans are hard at work on that as well.

What’s wrong with turning our nation into a third-world country, with a small moneyed elite and vast working class just barely surviving if it makes us competitive in world markets?  Everybody will have a job!  If you think that’s a good idea, either you are one of those fat cats, or you need to take a trip to Bangladesh to see where we are headed.

With a crumbling infrastructure and huge government debt, I say businesses and the high rollers need to share the pain the rest of us are feeling.  And I don’t mean just having to settle for Veuve Clicquot instead of Dom Perignon.

The recent extension of the Bush tax cuts was an example of how NOT to fix the problems in this country.  Instead, the cuts should have been allowed to expire and the extra revenue should have been used to reduce the deficit and/or do some long-deferred maintenance on our infrastructure.  Combine that with encouragement of conservation efforts and renewable energy development, and we will have a much more effective long-term plan to create jobs and reduce our current account deficit than giving businesses and the wealthy a tax cut.

That is not going to happen, though, with the current Republican-gerrymandered near-takeover of Congress.  If we voters can’t see that through the fog and BS coming from Republicans and their Right Wing friends on Fox News, then we deserve our fate.  We need to fix this before it gets any worse.

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