Seattle Times reports that "Republican leaders boasted of winning the tax cut, which they said was aimed at aiding smaller manufacturers in rural areas that have struggled while Seattle has boomed." The tax cut would, after 2019, give businesses about $64 million over four years. These tax cuts, of course, will not excite business or create more jobs. Tax cuts just don't work. And there is a simple reason for this. Tax cuts are fine for the short term, but useless for the long term. What they make cheap now, they will make expensive later. This is a lesson learned by the conservative folks of Colorado Springs after an experiment that cut taxes to the bone: "There’s a real cost to saving money." Meaning, being cheap is dear.
Take the streetlights. Turning them off had saved the city about $1.25 million. What had not made the national news stories was what had happened while those lights were off. Copper thieves, emboldened by the opportunity to work without fear of electrocution, had worked overtime scavenging wire. Some, the City Council learned, had even dressed up as utility workers and pried open the boxes at the base of streetlights in broad daylight. Keeping the lights off might have saved some money in the short term, but the cost to fix what had been stolen ran to some $5 million.
But it's not just that. It's not just thieves. It's also the fact that businesses, small and big, do not make investments whose returns are not immediately apparent. They are pressured to be cheap. But the future is always expensive.
But we live in a society that has been socially engineered to worry only about the impact of government debt on the future, and to completely miss the most obvious thing in their world: the economic problem has long been solved. The word that Keynesian and heterodox economists (as apposed to orthodox economists, such as the ones who came up with that worthless UW report) have attached to this state of things is stagnation. In this state of affairs, the unsaid or ignored problem is overproduction. It is ignored because in truth, it's only a problem for a few, the rich. And the reason that it is such a problem for them is because the returns in such an economy tend be small. To revive profits, the rich have been presented with two possibilities: grab the current wealth or make new wealth. Because the latter is more expensive and risky, they opt for the former. Tax cuts, like financial assets, only transfer wealth from the future to the present. Both cheapen the present at the cost of the future.