Did Tax Cuts Create U.S. Jobs?

Question: The Bush tax cuts put billions in the hands of corporations and other businesses with the hope that they would create U.S. jobs, especially manufacturing jobs in the United States. Did this actually happen or did much of that money get used to create jobs overseas for cheaper labor rather than pay for expensive American jobs? And approximately what proportion of the tax cuts were used to create overseas jobs?

Paul Solman: Impossible to say. Just last week came this report from reporter Frannie Carr at Boston’s main NPR affiliate, WBUR:

“A solar panel company that received $58 million in state aid to build its factory in Massachusetts is now moving jobs overseas.

Evergreen Solar is shifting some of its production, currently done at a plant in Devens, to China next year, after posting an $82 million loss in the third quarter.

Gov. Deval Patrick calls the move unfortunate, but says some of Evergreen’s operations will remain here.

“I’m disappointed about the manufacturing,” Patrick said, “but I’m delighted that they will continue to grow jobs in Massachusetts and they will be a part of our emerging clean tech sector.”

Ian Bowles, secretary of the state Executive Office of Energy and Environmental Affairs, called Evergreen’s decision disappointing.

State Sen. Mark Montigny is one of the lawmakers who said this proves what he’s been saying all along, that the state should not be spending taxpayer money to woo private business.

“No one should be surprised,” Montigny said. “Many of us have spoken very aggressively on the floor of the Senate against these boondoggles and they continue to happen. The biggest and most egregious right now are the billion dollars going to waste on the bio-tech industry.”

About half of the 577 full-time and 230 contract employees at the Devens factory are involved in putting the panels together, but the company did not say how many jobs the state would lose.”

So I hear (or read) a story like this and wonder: Would the company have closed down entirely without government investment? Been bought by a Chinese firm maybe? Shipped MORE jobs abroad?

Along these lines, an interesting proposal has been floating around for a few years from Ralph Gomory, a famous mathematician, longtime senior executive at IBM, president of the Sloan Foundation for many years (which gave the NewsHour a grant in his last year), and author of a book with the distinguished economist, William Baumol, Global Trade and Conflicting National Interests.

The idea; a tax break for U.S. corporations that create jobs here at home. Here’s his most recent articulation of the proposal.