OPINION: Tax cuts make jobs

With new local tax breaks for Hewlett Packard, we can see the naivete of President Barack Obama's progressive tax ideology. He explains it like this:

"We need to end the tax breaks for the wealthiest 2 percent of Americans," Obama said April 15, explaining that it would affect only "people like me, who are extraordinarily lucky."

Our president isn't "lucky." He is accomplished and rich as a result of perseverance.

Taxes won't hurt him because he persevered himself into a government job with a government car and house.

To understand the flaw in their tax logic, Obama and other progressive ideologues should place themselves in the chairs of the Colorado Springs City Council. In these seats, advocates of more taxes for the rich would find themselves in a quandary. They would encounter a request by Hewlett Packard, or another request just like it. In reviewing the request, our tax-the-rich ideologues would see the destructive nature of excessive taxation. They'd have little choice but to enact a tax cut for the rich, just as the real City Council did last week.

Hewlett Packard, a gargantuan corporation and important employer in Colorado Springs, is operated by rich people who rank in the wealthiest 2 percent. The executives of HP aren't lucky, they are accomplished. In their ongoing quest for more riches, they create and maintain high-paying jobs.

Most rich people are rich because they create wealth. They're not big fans of taxes, because taxes pose expenses that impede creation of wealth. When the people who manage HP spend money on buildings, employees, office chairs, computers and such, they expect those investments to result in a return that exceeds the expense. If they buy an office chair and the expense generates a tax, it reduces the ratio of return on the chair.

The chair facilitates a return, because it supports a person who produces wealth. But the tax doesn't generate a return. The higher the producer's tax burden gets, the more the ratio of anticipated return on the chair narrows. The taxes make it harder to get richer, which reduces incentive to spend money on ventures that include construction, purchasing, and the hiring of professionals.

Because of that economic fact, wealthy people look for ways to reduce their tax burdens.

In Colorado Springs, the rich people of Hewlett Packard decided they might get wealthier by building a major new data center. The venture would come with enormous expenses of an estimated $260 million. Most of those expenses would generate overhead in the form of sales taxes and city and state business personal property taxes, all of which erode profit. The rich people like Colorado Springs quite a bit, but mostly they like getting rich and staying rich by creating goods and services that improve the lives of their customers.

So, in calculating the anticipated return ratio on the expansion project, the HP executives examined their tax liabilities. They realized that a great number of communities throughout the country would like to help them get richer. Local politicians could accomplish this by helping the company increase its ratio of return. With a simple vote, city leaders in Anywhere, USA, could reduce HP's tax overhead. They would be motivated by an instinctive knowledge that wealthy producers enrich others in their speculative pursuits of greater profits. They enrich some by purchasing their goods, and others by paying them for their time and talent. For a variety of reasons, communities thrive as a result of the rich getting richer.

Knowing other cities and towns would give them tax breaks to help them get richer faster, the HP executives approached the Colorado Springs City Council and asked for tax breaks. City leaders said yes, granting them $4.8 million in incentives - aka $4.8 million in tax breaks for the rich. The incentives will come as rebates on the company's business personal property taxes, sales taxes for building materials, and use taxes.

Much smaller, poorer companies don't get these tax breaks because they don't bring in big money from other regions, and they don't hire big work forces. Hewlett Packard gets tax breaks because the company is big and rich and we can't imagine life without it.

Down at City Hall, the phrase for a big, rich corporation is "primary employer."

While sitting at the council's dais, President Obama and other tax-the-rich ideologues would face rich people who create wealth and spread it around - if they get tax breaks.

Suddenly those rich folks wouldn't look so greedy. It would seem we need them quite a bit. Suddenly tax breaks for the rich would make a lot more sense.

Clearly, tax cuts allow the rich to create jobs by producing wealth. It's an economic fact, illustrated by the HP tax deal. What works for Hewlett Packard, however, would also work for the Mom & Pop Café.

City leaders, we need more employers, big and small, producing more wealth. As you know, based on the Hewlett Packard deal, tax cuts create jobs and wealth.