The Great American Jobs Scam

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Table of Contents

Introduction
Why the government has failed to generate jobs
Conclusion
Works Cited

Introduction

Unlike in the past, the United States government goes through numerous challenges in trying to distribute its income across the country today. Both the central and state governments have tried different strategies aimed at creating more jobs in the country. Some of these strategies include the establishment of policies aimed at luring corporations to invest in the country. Despite the government developing some of these policies with good intentions, it has not been able to achieve those intentions. Instead, the strategies have turned out to be of significant benefit to corporate owners at the expense of the public. Different factors have contributed to this scam which includes the government’s reluctance to monitor and effectively implement the policies and shifting of the tax burden.

Why the government has failed to generate jobs

One of the reasons why the United States government has failed to generate new jobs is its poor methods of coming up with strategies aimed at helping it generate the jobs. For instance, private companies in the country demanded a reduction in the tax rate to be able to invest in the country thus creating jobs as well as retaining those jobs that were at risk of being terminated. Despite the government taking the initiative of cutting down on the rate of tax that these companies were remitting, it laid down poor strategies to ensure that new jobs were being created. In Massachusetts, Raytheon came up with a tax law referred to as Single Sales Factor (SSF). This law allowed international companies to determine the amount of tax to be deducted from their profits. The move led to Sasso and others initiating a campaign that demanded tax cuts be repaid with jobs creation as well as retention of jobs that were seen to be at risk. The government miscalculated its steps and by May 1996, Raytheon had started laying off some of its employees. Two years after SSF became effective; Raytheon reduced the number of its employees in Massachusetts by 4,100 people (LeRoy 13).

In addition, the government failed to contain a bogus competitor that was initiated by companies to outdo one another in the market. Failure by the government to put into consideration the effects of offering subsidies in some locations also contributed to more people losing their jobs. After two Virginia counties offered to offer subsidies to business organizations, Marriott decided to relocate to the region. It became hard for most of its employees to commute from Maryland to Virginia leading to them losing their jobs (LeRoy 15).

The government has not been able to manage the site location consultants. This can be blamed on its limited knowledge of how this group of people operates. Many people believe that for investors to decide on the location to establish their businesses, they bear in mind factors such as labor force, accessibility of the location, income level of the people in the region as well as security. On the other hand, site location consultants select sites that best meet their interests. They significantly contribute to the increase in the war between the government and corporate in terms of giving subsidies and creating jobs. To ensure that they reap from their services, they help organizations in negotiating for subsidies.

The government fails to understand that site location consultants express their interest in a specific area after they have realized that they will benefit from the area. Rather they are duped into believing that complying with consultants’ requests would help in creating new jobs in the area where the business is to be established. This ends up benefiting the consultants at the expense of the government and the public. When site location consultants declared Kentucky as a favorite location for uniform-making business, they negotiated with the government, and Cintas was given subsidies. The company was exempted from remitting taxes deducted from employees’ payrolls. This led to the emergence of low-wage companies in the region discouraging high-wage companies from establishing themselves in Kentucky. Eventually, most of the potential investors who would have ventured into high-wage industries ended up leaving the region. Rather than more jobs being created in the region, people ended up being rendered jobless (LeRoy 53).

Government policies aimed at helping big-box centers effectively establish themselves in the United States have contributed to a decline in job vacancies. American government came up with policies that gave companies such as Wal-Mart bricks-and-motor subsidies. This relieved them from costs associated with buying construction materials thus making it possible for the companies to establish numerous retail stores across the country (LeRoy 140). By this, the government believed that new supplier jobs would be created. In addition, those employed in the established stores would lead to new jobs through their buying power. However, this was not the case. People that worked in these retail stores earned meager wages making it hard for them to have purchasing power.

The establishment of these retail stores led to shopping malls being eaten away. Most of them were closed down while others relocated to other regions. As it was difficult for people working in these malls to relocate, they ended up losing their jobs. Instead of creating new jobs for Americans, these policies ended up increasing government expenditure thus making it hard for it to generate more jobs.

The tax break that was endorsed in the United States in a bid to create new jobs has eventually backfired. Rather than generating more jobs, the rules have led to the tax burden being shifted from the corporate to the public. Most of the companies in America are paying minimum taxes. Different American states have gone to an extent of lowering their tax rates in an attempt to attract more companies into their regions. An example of these strategies was the implementation of SSF. The U.S government does little to manage tax remittance processes in the country leaving the responsibility to lawyers and accountants (LeRoy 171). This has allowed big companies to evade paying taxes. Research conducted by Citizens for Tax Justice revealed that the state income tax rate for 264 profitable companies in America went down by almost a fifth in three years. This was between 2001 and 2003. It is the main reason why the government has not been able to collect enough money to facilitate creating jobs for the citizens.

Conclusion

A good example that showed that letting companies pay less tax does not help in job creation was George Bush’s initiative of tax cuts in 2002. By this, Bush believed that corporations would be encouraged to invest thus creating more job vacancies. Nevertheless, this was not the case. The companies reaped from the initiative by increasing their profits. On the other hand, the country had to come up with new “jobless recovery” strategies (LeRoy 179).

Works Cited

LeRoy, Greg. The great American jobs scam: Corporate tax dodging and the myth of job creation. San Francisco: Berrett-Koehler Publishers, Inc., 2005.

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The Great American Jobs Scam

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