Some insanely smart people in this country argue that giving tax breaks to companies creates jobs and drives the economy. They continue to advocate for trickle-down economic theory.
I don't get it.
Despite the tax breaks and a rebounding economy, companies are hoarding cash. They are not reinvesting it in jobs or research and development. As the Wall Street Journal and many others have repeatedly reported, they are sitting on trillions of dollars that is doing nothing for the American people.
Now, the Chronicle of Philanthropy is reporting that roughly 70 percent of Fortune 500 companies are keeping their cash giving flat in 2011. So the savings are clearly not getting invested in the community through that vehicle.
Where is the evidence that tax breaks are creating jobs and building our economy?
It is easy to vilify the companies, but that isn't fair. They are acting in the short-term interests of their shareholders. That's how we designed companies to work.
What is interesting is that while companies aren't investing in our nation, corporate leaders as citizens want to be doing more. For example, with corporate giving flat, they are finding creative ways to leverage their products and skills to provide non-cash resources to the community.
A mentor, Charles Coustan, told me years ago that "you can trust an individual but never a company." That to me sums up the problem.
Corporate leaders want to do more but constantly have to compromise their altruism and patriotism to meet the short-term needs of their company. They are split in two -- the passionate citizen and the corporate executive accountable for quarterly earnings.
If we want to create jobs and have companies contribute more to our national wealth, the solution isn't tax breaks but instead changing the incentive system for companies to let executives bring their values to work. We need to reward long-term value and wealth creation and not quarterly earnings.