Since the 1970's we've seen meager wage increases in our paychecks as the cost-of-living has gone higher. And if our taxes went up, we wouldn't quit our jobs, we'd work over-time if we could, so as to make up the difference - or what has so often happened over the last 40 years - we'll get a second job, or the wife will go out to get a job to help make ends meet. We rely on "room-mates" to help pay the electric bill so we can make our car payment.
The same thing is so for big businesses, especially for huge multi-national corporations whose only reason for existence is solely to increase profits. If you raised their taxes, they wouldn't just call it quits and shut the factory doors; they'd be forced to innovate and to do some creative marketing to cut costs and increase their sales.
But the Republicans are telling us that if you raise their taxes they won't invest and hire people. Really? Malarkey! It's almost incomprehensible that the Republicans want us to believe that if we give more tax breaks to big businesses, they will create more jobs, when as of right now in 2011, larger corporations already have more cash than they even know what to do with!
And what did they do with the Bush tax cuts of 2001 and 2003? They outsourced more jobs overseas and we had mass-layoffs (and the banking industry, because of deregulation in 1999, caused the housing crisis).
Why aren't you working in 2011? There are 3 reasons: Cheap, cheap, and cheap. Corporation's don't want to pay fair and timely dividends to their investors, fair and equitable wages to their employees, and a proportionately fair share of taxes to their government. Now corporations literally have more money than they even know what to do with it - literally. They have TOO MUCH money, and now they have just been hoarding.
||A feature of hoarding is that it leads to an inefficient distribution of scarce resources (in this case, the cash flow of our money supply in the economy), making the scarcity of cash (wages) even more of a problem. Sometimes hoarding can occur when corporations hold assets thought to be undervalued and build up reserves of it in hopes to profit or save money later (see price controls). The U.S. (the world's largest economy) now may be facing a growth problem because of hoarding, and with no growth, there's no jobs.|
And why is there no growth?
Many companies have cash piling up from foreign earnings in global operations that can't be brought home without incurring taxes, so hundreds of billions in cash remain available - but sits idle in off-shore bank accounts collecting dust. Just the companies on the Standard & Poor's 500 stock index alone are sitting on almost $1 trillion in cash - a record level.
Also, the payout ratio in dividends (the proportion of earnings paid out as dividend income to shareholders) are at their lowest since 1937 - and cash is piling up far faster than most industrial giants can possibly find a prudent use for it. One manager of a dividend fund says, "The likelihood of spending money poorly is increased by having a surplus of it."
And what's more, dividend income is being taxed (capital gains taxes) at historically low rates (15% since the Bush tax cuts). But the Republicans want to do just the exact opposite, and lower these taxes even more...even though we have less government revenues and higher debt because of the last recession.
With the economic "recovery" barely out of the sickbed, many companies are reluctant to invest heavily in expansion. Others want to keep cash handy for potential acquisitions (more "legal" monopolies). So cash sits idle - even as interest rates, after inflation, are so low that cash often produces negative real returns!
An S&P senior index analyst says, "Companies are basically earning more than they've ever made before, but their payouts are nowhere near as high - they're holding their cash really tight. You can call them Scrooges if you want."
I think "scrooge" would be an understatement when we have 30 million Americans struggling to survive. But the Republicans, rather than tax the rich and corporations at an earlier tax rate (the Clinton years), they'd rather cut government services and programs for the poor and elderly. Now what does that tell you, when they'd rather take from those who don't have enough to save those who have too much?
Whatever happened to that old saying, "You gotta spend money to make money"? Maybe if these big corporations spent money (in wages and/or taxes), we could finally see some real growth in the economy. If the big corporations want to hoard, charge them a "hoarding tax". Maybe then they'll build a factory (in America) and hire people (Americans) to do something instead.
Also, the Republicans have argued that businesses need "confidence and certainty in the marketplace" before they can invest, expand, and hire workers (as though there's never any risk involved). As you can see from the chart below, the cash-to-assets ratio more than doubled between 1980 and 2004. The rise between 2004 and 2010 (which was really a recession-driven drop, followed by a rapid recovery) just puts it back at trend. Which suggests that businesses aren't "insecure" in a particularly historic way. They're just not hiring more and not spending more because they don't see a reason to.
So the extraordinary reserves don't suggest an extraordinary absence of confidence, and aren't actually that extraordinary. For many years, while paying low wages and low taxes, big corporations have been hoarding the money supply all along.
If you break it all down to the smallest common denominator, your boss (the CEO) isn't your friend at all. The company you work for has no loyalty to you or the community you live in. You rely on him for a paycheck, that's all. To him you are just a necessary evil, someone whose labor he must pay for because slavery is against the law. He would rather not pay you at all...let alone give you a raise.
And if his business is slow and he lays you off, he doesn't want to pay for your unemployment benefits. And when you get sick, he doesn't want to pay for your healthcare. And when you get old, he doesn't want to pay for your Medicare or Social Security either. He doesn't even want to pay taxes to build the roads to move his goods, he'd rather someone else pay for that too.
Just because something is good for his businesses, it doesn't make it good for you. If he tells you how to vote, I would vote just the opposite way. He's not your friend, so don't trust him. But if he denies you a fair wage or refuses to fix the road, he'll tell you he's not your enemy either. He'll say it's nothing personal against you, it's just business. So don't worry about voting to raise his taxes or joining a union for better wages and benefits. If he complains, just tell him...it's nothing personal, it's just for survival.
It's odd...the CEOs know their money is no good to them after they die, but yet they'll still insist on taking it all to the grave with them, rather than let anyone else have any. That is truly hoarding.