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Kuntz: The path to sub-standard living

BY KATIE KUNTZ | SEPTEMBER 12, 2012 6:30 AM

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The August jobs report released by the Bureau of Labor Statistics on Sept. 7 has done little to increase Americans’ confidence in the economy.

At this point in the presidential campaign, the economy is an extremely important topic, as demonstrated by both parties stumping on the economy in the Iowa City area last week.

But Americans must be wary when listening to campaign promises and plots. 

For example, one plot proposed by GOP presidential candidate Mitt Romney and running mate Paul Ryan asserts that cutting taxes for corporations is the best way to boost the U.S. economy. But this promise might actually prove detrimental to U.S. citizens.

There is no number of tax cuts that could ever make the United States labor market competitive with the outrageously low costs of labor in other nations. And tax cuts now really mean a serious decrease in American standard of living.

The Path to Prosperity, a fiscal 2013 budget resolution drafted and proposed by Ryan, explains the Republican platform belief that the high corporate tax rate in America is a burden to businesses, and it may encourage corporations to move their factories to other countries, for example Bangladesh.

In fact, Tommy Hilfiger and American Eagle are two American businesses taking advantage of the competitive tax rates of a mere 27.5 percent in Bangladesh, according to taxrates.cc. Even more competitive than low tax rates are the low labor standards, including a minimum wage of only $37 a month, as reported by the New York Times.

To put that in perspective, an income of $1,545 a month for an American family of three is considered under the poverty line, according to the Center on Budget and Policy Priorities. That means that an impoverished American family is still making nearly 20 times that of a Bangladesh family (that’s assuming both parents are paid equally) — at least Americans look good in American Eagle T-shirts.

Large corporate tax cuts really don’t make sense. For fiscal 2012, U.S. corporate income taxes accounted for 9 percent of total U.S. tax revenue, according to the Tax Policy Center. A significant cut in revenue would only serve to increase the federal debt, even if not directly, and further damage our economy and quality of life.

The American economy needs serious work, but American labor should refuse to compete with standards of living like those in Bangladesh and should instead encourage international treaties that push other countries to treat workers better. The Romney and Ryan budget not only fails to increase job growth in the short run, it does not support people in the long run.


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