Cosman: Lower corporate taxes no incentive for job growth

I’m sick of the argument that taxes stifle job growth. It’s an easy claim made by most conservatives and CEOs that makes it seem like they’re concerned about the welfare of the general public, when in reality they’re simply trying to pad their bottom line. When it comes down to it, taxes have very little to do with corporations and hiring.

My issue with the taxes/job growth argument is that it makes taxes appear to be much more of a focus for corporations than they actually are. Taxes don’t dictate the actions that corporations take – the market and their competition do. Simply put, a company is going to take whatever action gives it a leg up on its competition. A company is not going to stay put because its taxes are too high. The goal is profit – if a move is going to make a corporation profit, it’s going to take that action regardless of the tax rate.

The same goes for hiring workers. The common argument is that if the tax rate is lowered, a corporation will have more money and hire new workers. My question: Why on earth would it do that? For the good of the country? Is a corporation really going to hire new workers simply because they have more money? No.

If a corporation were operating in a way that generates enough revenue for a profit, why would it raise its costs by adding labor? It makes no sense. If its current business model – with its current number of employees – is effective in making a profit, there is no incentive to hire new workers. None.

The only thing that lowering taxes does is increase that profit, increase the amount of money the CEO takes home at the end of the day. A corporation isn’t going to spend money simply because it has it. That’s not how business works and it’s ludicrous to think so.

Thankfully not all CEOs call for lower corporate taxes. Warren Buffett has been very vocal in his criticisms of the current corporate tax structure. Mark Cuban – a man worth $2.5 billion – calls paying taxes “the most patriotic thing you can do.” He makes the distinction between taxes and hiring clear: “Corporations hire people because [they] need them. [They] don’t hire them because [their] taxes are lower.”

There are too many other problems that need addressing for corporate taxes to still be the center of attention. I find it laughable that much of the Republican Party promotes lowering the corporate tax rate to stimulate job growth. This is the same party that attempted to block a cut in the payroll tax – a tax cut with a very clear and real impact on American workers – earlier this year. That alone is enough evidence that the argument over corporate taxes isn’t actually about helping the American workforce.

I’m not saying taxes don’t have an impact on corporations – though I think it’s a lot less than they’d have us believe. I’m simply saying the seemingly noble claim that with a decrease in corporate taxes will come an increase in hiring is one that sounds good on paper but has no grounding in reality.