The truth about tax breaks & economic recovery…
For years Californians have been bombarded with claims about the so-called economic benefits of tax breaks and other subsidies for corporations. We’ve heard it all: tax breaks create jobs; tax breaks are good for small business; tax breaks keep business in California; etc.
But how TRUE are these claims? And what, if anything, are tax breaks doing to bring about California’s much-needed economic & family recovery?
A new report from the LA Times sheds some new light on an old discussion: as it turns out – tax breaks have a VERY limited propensity to boost the economy.
Economic research suggests that tax cuts, though difficult for politicians to resist in election season, have limited ability to bolster the flagging economy because they are essentially a supply-side remedy for a problem caused by lack of demand.
The nonpartisan Congressional Budget Office this year analyzed the short-term effects of 11 policy options and found that extending the tax cuts would be the least effective way to spur the economy and reduce unemployment. The report added that tax cuts for high earners would have the smallest “bang for the buck,” because wealthy Americans were more likely to save their money than spend it.
In California, tax breaks, loopholes and other subsidies for corporations and the wealthiest earners have bled our state dry – forcing devastating cuts to essential health care and social services, while at the SAME time failing to provide desperately needed jobs for Californians.
Click here to read the full report from the LA Times
