To bring back jobs, don’t cut the the corporate tax rate …

Rather, double the corporate tax deduction for workers’ wages earned the U.S. workers.

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Let’s start with an interesting analysis from Nate Silver’s  535.com titled Manufacturing Jobs Are Never Coming Back

“It’s understandable that voters were angry about trade. The U.S. has lost more than 4.5 million manufacturing jobs since NAFTA took effect in 1994. And, there’s mounting evidence that U.S. trade policy, particularly with China, has caused lasting harm to many American workers.”

“Manufacturing in particular embodies something that seems to be disappearing in today’s economy: jobs with decent pay and benefits available to workers without a college degree are vanishing. The average factory worker earns more than $25 an hour before overtime; the typical retail worker makes less than $18 an hour.”

“In 1994 there were 3.5 million more Americans working in manufacturing than in retail. Today, those numbers have almost exactly reversed, and the gap is widening. More than 80 percent of all private jobs are now in the service sector.”

image

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How can that be?  Aren’t we hearing a lot about “re-shoring” and foreign capital investing in U.S. based manufacturing plants?

 

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Well, kinda.

But, there’s a big difference between manufacturing plants and “output” … and manufacturing jobs.

According to the 535 analysis …

“Since the recession ended in 2009, manufacturing output — the value of all the goods that U.S. factories produce, adjusted for inflation — has risen by more than 20 percent.

But manufacturing employment is up just 5 percent. (And, much of that is due to the bounceback from the recession.)

The factories being build here are heavily automated, employing a small fraction of the workers they would have a generation ago.”

image

Again, there’s a big difference between manufacturing plants and “output” … and manufacturing jobs.

Good point.

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So, what to do?

Here’s an idea that I think may have merit:

Rather than the usual proposed bromide of just cutting corporate taxes across-the-board, why not offer employers a double tax deduction for workers’ wages earned in the U.S.  … up to the FICA ceiling?

Think about it ….

Reduces the cost of labor (a bit), shines a light on employment, and only rewards companies that generate income (and pay taxes) here in the U.S.

Might work …

#HomaFiles

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One Response to “To bring back jobs, don’t cut the the corporate tax rate …”

  1. markdavenport70 Says:

    For once, I finish a Home Files post with a resounding YES. The choice for CEOs is between labor and machines. Make labor cheaper and the equation tilts a bit. Really wish we had elected someone who looks at the real world and makes logical choices. Next, remove the link between employment and healthcare…

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