Fox Business' Gasparino Clings To Myth That Tax Cuts For Wealthy Will Spur Job Creation
Research ››› ››› JULIE MILLICAN
In a New York Post column, Fox Business correspondent Charles Gasparino pushed the myth that businesses have "been hoarding cash instead of hiring" because of "the likelihood for higher taxes." In fact, as the Congressional Budget Office (CBO) has noted, "[I]ncreasing the after-tax income of businesses typically does not create much incentive" to hire.
Gasparino Declares Tax Cut Deal Means Businesses Will Finally Start Hiring
From Gasparino's December 15 New York Post column:
Things are finally looking up for the US economy: A growing pool of evidence points to much higher economic growth and even higher stock prices next year.
The causes go well beyond low interest rates, higher capital levels at banks or even the latest pickup in retail sales.
* No tax hikes (probably): Obamanomics was predicated in large part on raising taxes on the "rich," affluent, even if most of those taxpayers aren't so affluent (consider a family of four earning $250,000 in New York City) and are small businesses who hire a lot of people and investors who put money to work in the markets.
In fact, businesses have cited the likelihood for higher taxes as why they've been hoarding cash instead of hiring, and investors have cited higher capital-gains taxes for keeping money out of the markets. But with the Bush tax rates almost certainly extended for two years, businesses and investors can put money back to work. [New York Post, 12/15/10]
Tax Cuts On Businesses Not Seen As An Incentive To Encourage Job Creation
CBO: "[I]ncreasing The After-tax Income Of Businesses Typically Does Not Create Much Incentive" For Them To Hire. From the CBO report:
Deferring the scheduled increases in tax rates in 2011 would help some businesses as well as households. In particular, it would keep lower tax rates in place in that year for businesses that do not pay the corporate income tax (the pass-through entities such as sole proprietorships, partnerships, S corporations, and limited liability companies). However, increasing the after-tax income of businesses typically does not create much incentive for them to hire more workers in order to produce more, because production depends principally on their ability to sell their products. [Congressional Budget Office, January 2010]
Vast Majority of Small Businesses Would Not Be Affected By Allowing Bush Tax Cuts For The Wealthiest To Expire. According to the Tax Policy Center (TPC), 2.5 percent of taxpayers who report business income on their individual tax returns would pay higher rates under the Democrats' plan to extend all of the Bush tax cuts except for the top two income tax brackets. The Joint Committee on Taxation (JCT) similarly stated that "three percent of all taxpayers with net positive income" would see higher taxes under the Democrats plan. Both TPC and JCT added that even among that small percentage, it is not clear how many of those affected are entities that we would consider "small businesses" and how many represent enterprises like law partnerships and real estate investments. [Tax Policy Center, 8/4/10; Joint Committee on Taxation, 7/12/10]