CPA Says Lowering Taxes To Create Jobs Is A Myth

Author: October 27, 2012 12:25 pm

One of the most persistent platforms touted by Mitt Romney and the Right is the “trickle down theory,” the notion that lowering taxes on the wealthy “creates jobs.” It posits that wealthy “job creators” typically take that banked money (saved by lowering taxes) and use it to create more jobs, pay more employees, lower the unemployment rate, and seed the country with a growing job force.

According to at least one experienced tax CPA, that’s a myth.

In researching the veracity of several points of the Romney platform, I had the opportunity to discuss, in some depth, the Romney “trickle down” theory with a longtime tax CPA whose politics tend toward center, as does her geographic location (mid-country/not urban), making her as much of an “everyman/woman” as can be found in these polarized times. While keeping her name anonymous for reasons of professional privacy, her perspective rang sharp with the veracity of experience and inside knowledge of the actual facts of this theory, rather than the hoped-for, naïve, or, more nefariously, purposeful obfuscation of those proffering the platform.


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Regarding the Romney attitude about states vs. federal:

I was worried that no one was hearing that Mitt’s plan is to move things down to the states. Education, healthcare, helping the poor – all of it will be the states’ responsibility. The states are broke – so the states will either not follow through or raise their taxes through the roof. (A state like) California has high state taxes already and can barely offer regular services. Libraries were already a mere memory, roads are decaying, schools are overcrowded, pensions unfunded, etc. Imagine when the big-ticket items are pushed down to the states?

Regarding the deficit:

So now Mitt wants us to believe that the deficit is a very serious situation (it is) but we are NOT going to hit with everything in our arsenal? We are going to gut our spending on social programs, increase military spending, and then cut taxes so that maybe, just maybe, the economy will grow? If it wouldn’t be such a serious disaster for the country I might enjoy watching him try.

Regarding Romney in the White House:

I’d like to see Mitt get into the White House just to see him run in circles trying to apply his CEO mannerisms to Washington, D.C. What people don’t realize is that CEOs are used to getting their way. They are the boss and what they say goes. Period, full stop. With CEOs it really is my way or the highway. Presidents have a much different playing field. All they can really do is propose things and attempt to build consensus. They can lead the proverbial horse to water but they absolutely cannot make him drink. CEO experience will not translate well to politics.

Regarding the “trickle down” theory of “lower taxes creates more jobs”:

I do tax returns for a living. I know tax returns. When Mitt says if we lower rates we will create jobs – I’m not sure what he’s smoking. I have countless returns of individuals who pay the upper rate and I can confidently say that if you lower their rate – they will dance a jig and pocket the money. Not one of them will hire anyone. THESE GUYS WILL NEVER CREATE EVEN ONE JOB – EVER. Small business owners are not in the upper rate. They make a nice living, but a rate cut (for them) will not create any jobs either. Cutting the rates is smoke and mirrors – Mitt says he must maintain the same revenue so he’s going to eliminate things like, well, everything on Schedule A? Even if he eliminates everything on Schedule A, he’s still not going to get there.

So there you have it, perspective from an insider who’s done tax returns for decades (and through various administrations), who works with “upper rate” CEOs as well as small business owners, and whose take is:  “…if you lower their rate – they will dance a jig and pocket the money. Not one of them will hire anyone.”

Let’s hope, then, that the fiddlers, drummers, and penny whistlers standing by to play that jig are the ones left looking for new jobs – along with Romney staffers – after November 6th.

Follow Lorraine Devon Wilke on TwitterFacebook and Rock+Paper+Music; for details and links to her other work, visit www.lorrainedevonwilke.com. To access her archive at Addicting Info click here.

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