Quote:
Originally Posted by GenuineRisk
The problem I see is that currently corporations are sitting on record high piles of cash that they are not reinvesting. Why should they; they have no reason to, as taxes are low (as few corporations pay anything resembling the actual tax rate). Companies spend money to expand when it's a way to lower tax liability and/or when demand for their products is up. With middle- and lower-class wages at historically low levels, the majority of Americans don't have the disposable income to create demand. With tax rates so low, companies don't have any motivation to spend any of the huge amounts of money they are currently hoarding. Same with the ultra-wealthy; there is only so much money they can spend and then they start to hoard it. And that takes it out of the economy and hurts everyone.
Companies are not going to cut staff if minimum wages are raised. They may try to get the same amount of work out of fewer staff, but they're doing that now anyway, so where's the loss for the average worker? If there is demand for their products, they will hire staff to meet the demand, but to create demand, you need people with money to spend. There are desperately few types of jobs that MUST stay here, and a lot of those are service sector jobs, which are historically very low-paying jobs. But the more disposable income those workers have, the more they can spend, which is good for the entire economy. It's why food stamps are better for the economy than tax cuts. Food stamps get spent (at local, private businesses); tax cuts get hoarded and taken out of the economy.
Without demand, you have no growth. And demand is not created by the wealthy; it's created by the vast numbers of poor and middle class when they have money to spend:
http://www.slate.com/blogs/business_...eate_jobs.html |
saw that slate article yesterday. for years now, we've been told to cut taxes on the top % of people, that it would help create jobs. where are the jobs?
i remember reading in the past that people are actually paying banks to hold their cash. there's no incentive for them to do anything with the money, so it just sits.