EDITORIAL from the Korea Times on May 18

Corporate tax cuts Pro-business, pro-worker policies can???t go together After some unlikely meandering, the governing Grand National Party seems set to push ahead with corporate tax cuts next year. The decision came just 10 days after Rep. Hwang Woo-yea, new floor leader, hinted at scrapping personal and corporate income tax cuts scheduled for 2012. The GNP whip seems to have been dissuaded by neo-liberalistic government economists who say, ``Corporate tax cuts will lead to more investment and employment.??? This argument has long proved wrong, not just here but also abroad. According to private economists, the top 0.1 percent of firms in corporate size would take up 60 percent of about $3 billion in saved taxes when the government cuts corporate tax rates from 22 to 20 percent. These globalized Korean companies, including Samsung Electronics and Hyundai Motor, are already overflowing with cash. If they don???t invest, that???s not because of taxes but because of an uncertain business climate and internal circumstances. Now the whole world knows what the eight years of Bush-era tax cuts for wealthy individuals and big business, along with two expensive wars, have brought about: extreme economic polarization and snowballing fiscal deficits to the extent of threatening governmental shutdown. Former Fed Chairman Alan Greenspan recalled his two biggest regrets were his support for tax cuts and failure to prevent housing bubbles. Despite President Lee???s pro-business, actually pro-chaebol, policy there are few signs these family-controlled conglomerates have added many openings to the nation???s labor market. In some ways, these world-class corporations cannot create many jobs even if they want to, as most of their manufacturing is mechanized and computerized in keeping with global trends. For most of the small- and medium-sized firms, which account for 88 percent of employment, corporate tax cuts mean little. The government economists also say corporate tax cuts help to sharpen Korean firms??? international competitiveness. Except for some city states like Hong Kong and Singapore, and Ireland, which faced near bankruptcy, Korea???s corporate tax rate is sufficiently low. In short, tax breaks for businesses are like taking away money from poor people to give it to rich companies, and from future generations to the present one by increasing fiscal deficits in proportion to the lost revenue. Businesses by their nature are for making profits, and would neither make new investment nor hire new workers unless they don???t help increase profits. The government, especially a self-professed pro-working class government like the Lee administration, should be different. It should scrap tax cuts for the rich and even raise them to make resources for the welfare of the absolute majority of people. Neo-liberalistic lawmakers within the GNP say scrapping corporate tax cuts does not go well with the party???s ideological identity, and their party should not fall into the trap of populism. For their reference, a populist is a believer in the rights, wisdom or virtues of the common people, Webster???s Dictionary says. They may say vote-gathering politics are at a low level but what is politics for, if not for the ordinary people?