Any proof that tax cuts for "job creators" actually create jobs?

[chamaeleo]

You're all probably well aware of the theory that potential employers, given more money, will hire more workers. Tax cuts seem to be the simplest (at least, most popular) form of government intervention to catalyze such economic stimulus. You'd think though, that especially after Reaganomics and Bush's 2001 'temporary' cuts, that by now we'd see at least a few cases of actual job creation...but they've proven to be quite elusive. The deluge of liberal opinions and documentation to the contrary tend to flood my search results, but even when I concentrate on right-biased sources, all I hear is that stupid cricket behind my incubator who refuses to starve to death...

I am genuinely interested in learning where, other than offshore, there has been recent job growth that can be directly linked to tax cut enabled job creators.

I feel like I've debated this several times on TWC, and every time I ask for tangible proof of results, the question is entirely ignored. At least if this thread is ignored, it'll be an answer of sorts...one that is mighty consistent with conservative political strategy. I might as well be asking Romney about immigration reform...

Spoiler Alert, click show to read: 

John Boehner says Bush tax cuts created 8 million jobs over 10 years

House Speaker John Boehner, R-Ohio, appeared on NBC's Today show on May 10, 2011. We checked his facts on job creation.

During an interview on NBC’s Today show, House Speaker John Boehner, R-Ohio, offered some job-creation statistics to cast a favorable light on the tax cuts passed under President George W. Bush in 2001 and 2003.

Host Matt Lauer said to Boehner, "You talk about creating jobs. When the Bush era tax cuts were passed in 2001, unemployment in this country was 4.5 percent. Today it's at 9 percent, just down from 10 percent. So why are the Bush era tax cuts creating jobs?"

Boehner responded that the tax cuts "created about 8 million jobs over the first 10 years that they were in existence. We've lost about 5 million of those jobs during this recession."

Several readers suggested that we check Boehner’s statistics. So we did.

Boehner's statement actually has several problems. One is the question of whether the tax cuts actually caused the job growth; more on that later. First, we’ll point out something more basic -- that Boehner’s chronology is off.

The first of the tax cuts was passed in June 2001, so we haven’t hit a full 10 years since the first cut was enacted, and we’re only about eight years past the enactment of the second round of cuts. We’ll give Boehner the most generous parameters possible -- from the signing of the first tax cut in June 2001 until the pre-recession employment peak, which came in January 2008. (When we contacted Boehner’s office, they confirmed that this is the comparison he had in mind.)

We turned to data from the Bureau of Labor Statistics -- specifically, figures from the Current Employment Statistics series, which is calculated using a broad survey of employer payroll data. Here are the numbers:

June 2001: 132,047,000 people employed
January 2008: 137,996,000 people employed
Increase during that six-and-a-half-year period: 5,949,000 people

That’s roughly 6 million jobs -- significantly below the 8 million Boehner cited.

Now let’s turn to the jobs lost during the recession. We once again calculated the numbers in the way most favorable to Boehner -- from the peak of employment (January 2008) to the lowest point (February 2010). Here are the figures:

January 2008: 137,996,000 people employed
February 2010: 129,246,000 people employed
Decrease during the roughly two-year period: 8,750,000 people

That’s almost 9 million jobs lost -- almost twice what Boehner had said on Today.

What’s going on?

When we reached Boehner’s office, spokesman Michael Steel provided a different set of numbers -- numbers that we determined were from a different set of BLS statistics, known as the Current Population Survey.

The numbers from the CPS data are produced by a smaller survey of individuals and families. They are best known for producing the widely tracked national unemployment rate, but the data also include an estimate of the raw number of employed Americans, which is what Boehner used.

Here are the CPS figures for the same periods we looked at above:

June 2001: 136,873,000 people employed
January 2008: 146,407,000 people employed
Increase over about six and a half years: 9,534,000 people

January 2008: 146,407,000 people employed
February 2010: 138,698,000 people employed
Decrease over about two years: 7,709,000 people

So using the CPS figures, Boehner actually underestimated the jobs created after the passage of the Bush tax cuts, rather than overestimating them. And his number of jobs lost in the recession was closer to the CPS number than to the CES number.

In other words, using one set of data, Boehner’s way off, and using another set, he’s closer. What gives?

For the periods studied, the two data sets’ varying methodologies appear to have produced large differences in the number of jobs created and lost. While both statistics have their advantages and disadvantages, the CES numbers are "usually preferred when talking about job growth or loss," said Stacey Standish, a BLS spokeswoman.

And there’s this problem: What if we had used Boehner's 10 year figure rather than the six-and-a-half-year upswing of jobs? Over the full 10 years, employment has actually fallen by more than 1 million jobs using CES numbers and risen by 2.8 million according to the CPS figures. Either way, both figures are well below the job gains Boehner touted for the full 10-year period.

Meanwhile, there are other concerns beyond the statistics. While J.D. Foster, a senior fellow at the conservative Heritage Foundation, said he feels both CES and CPS are valid measures, he wondered whether Boehner had oversold cause and effect. "The real issue is the statement that the Bush tax cuts ‘created’ these jobs," Foster said. "Would the economy have created no jobs during this period but for the tax cuts?"

And Gary Burtless, a labor economist with the centrist-to-liberal Brookings Institution, argues that "the more basic point is that under either measure of employment gain, the proportional rise in employment in the Bush Administration after passage of his initial tax cut was comparatively small."

Burtless put together a comparison of recent two-term presidential administrations’ job growth over the equivalent period -- the 81 months starting in the June after the president’s inauguration. George W. Bush produced smaller job gains than most recent administrations regardless of which employment measure is used.

Employment under Bush grew by 4.5 percent using CES and 7 percent using CPS, whereas employment grew by double digits under presidents Bill Clinton and Ronald Reagan, and also under the combined eight-year administrations of Richard Nixon and Gerald Ford, who finished Nixon's term after he resigned, and John F. Kennedy and Lyndon B. Johnson. Only under Eisenhower was job growth more sluggish than it was under George W. Bush, and even then, it was only the case using one of the two BLS statistics. (Burtless did not compare job growth during the administrations of George H.W. Bush or Jimmy Carter because they served only one term each.)

Where does all this leave us? First, under the most common yardstick for measuring employment -- the CES data -- Boehner's claim is significantly overstated. Second, while Boehner is closer when using a different statistic, it’s only more accurate if he uses a time period much different than the one he stated in the interview. And third, his suggestion that the tax cuts are primarily responsible for subsequent job growth is contentious at best (and the job growth he points to is modest compared to previous administrations).

So the numbers Boehner offers are accurate only with significant adjustments. Overall, we find his statement too flawed to give it a rating higher than False.

http://www.politifact.com/truth-o-me...ed-8-million-/

Spoiler Alert, click show to read: 

A Lost Decade for Jobs
Posted by: Michael Mandel on June 23

Private sector job growth was almost non-existent over the past ten years. Take a look at this horrifying chart:



Between May 1999 and May 2009, employment in the private sector sector only rose by 1.1%, by far the lowest 10-year increase in the post-depression period.

It’s impossible to overstate how bad this is. Basically speaking, the private sector job machine has almost completely stalled over the past ten years. Take a look at this chart:



Over the past 10 years, the private sector has generated roughly 1.1 million additional jobs, or about 100K per year. The public sector created about 2.4 million jobs.

But even that gives the private sector too much credit. Remember that the private sector includes health care, social assistance, and education, all areas which receive a lot of government support. I’ve been talking about the HealthEdGov sector. Take a look at this table:

10-year Job Growth: HealthEdGov Sector Dominates
Industry Change, May 1999-2009
(thousands of jobs)*
Private healthcare 2898
Food and drinking places 1567
Gov educ 1390
Professional and business services 885
Gov except health and ed 843
Social assistance 796
Private education 772
Arts, entertainment, and recreation 188
Gov health 148
Mining 133
Financial activities 130
Utilities -40
Transportation and warehousing -43
Retail -91
Accomodations -119
Wholesale -166
Construction -238
Information -525
Manufacturing -5372
*Gov health and gov educ based on April 2009 estimates
Data: BLS
Most of the industries which had positive job growth over the past ten years were in the HealthEdGov sector. In fact, financial job growth was nearly nonexistent once we take out the health insurers.

Let me finish with a final chart.

http://www.businessweek.com/the_thre.../longjobs4.gif

Without a decade of growing government support from rising health and education spending and soaring budget deficits, the labor market would have been flat on its back.

http://www.businessweek.com/the_thre..._decade_f.html

1. Bush's term experienced significantly less job growth than during most other presidents' tenure.
2. Most growth was in government, education, and health sectors, while manufacturing and construction sectors have since suffered pretty badly.
3. Job creation did happen...overseas. Tax codes were changed in 2001 to offer incentives: actual tax deductions for offshoring jobs. Que?
4. Tax cuts given to the poor and middle class results in the immediate re-innoculation into local economies, where true job creation can occur. Tax cuts given to the upper class might do this too, but it might also be invested overseas, spent on foreign real estate, or hidden in offshore bank accounts. As has been happening for the last 10 years.

Any thoughts from the right? Or, silence as usual?

[Flypurplehamster]

I think that it’s frankly impossible to prove or disprove how many jobs Bush tax cuts actually created, due to the chaotic nature of the economy and how impossible it is to perform experiments on it.

Best way to figure this out: What would you do, as Mr. Richard Employer, CEO of Widgeteers Inc., if taxes were cut on the rich?

A smaller cut gets taken out of your paycheck. And you spend it.

You can’t possibly expect capitalist, individualist people to purposely lower their own pay whenever the government taxes them less.

Those rich people might do many things with that money: buy fancy, probably foreign things, and invest it in businesses, American or otherwise.

And, er, that’s it. That would probably make some jobs, but there’s no reason it should make a whole lot.

[Matthias]

I think a lot of people don't understand that when you cut taxes on personal income, you aren't cutting business taxes, and even the wealthy are less likely to view their personal income as a source of investment for their business, when their businesses already account for that themselves with their profit. It's simply more of their own money, which they can do whatever they want with.

Also, there is no incentive for businesses to invest if there is no demand. Guess who drives demand for most of the economy out there? Why, the lower and middle class. And when they have less and less money to spend, then demand goes down. And yes, the lower and middle class will spend that money a lot faster than the wealthy. And not all consumption is equal. Spending money on pizza will be stimulative, but it also will add to healthcare costs etc. etc. Spending money on repairing roads or creating more effecient infrastructure or energy consumption etc. is much more stimulative in the long run.

If a rich person spends money on luxery goods, it has very little long term stimulative effect, and is sort of a "waste" in terms of long term growth.

[Flypurplehamster]

Wait, didn’t somebody say that like the top 1% have 40% of the wealth? That feels like the bunch you should be appealing to most, as they drive the economy just by spending so much. Also, in America isn’t there pretty much always demand for lots of stuff?

Otherwise, you’re right.

[chamaeleo]

I think that it’s frankly impossible to prove or disprove how many jobs Bush tax cuts actually created, due to the chaotic nature of the economy and how impossible it is to perform experiments on it.

So as an unprovable concept, you're saying wealthy "job creators" essentially have the same mythical, faith-based status as say...God?

OK, I buy that!

Wait, didn’t somebody say that like the top 1% have 40% of the wealth? That feels like the bunch you should be appealing to most, as they drive the economy just by spending so much. Also, in America isn’t there pretty much always demand for lots of stuff?

Otherwise, you’re right.

I could be wrong (but I'm probably not):100 families earning $70,000/yr should theoretically put more back into the domestic economy than would 1 family earning $7,000,000/yr. This is due to the higher proportion spent on locally acquired basics: food, gas, clothing, auto repairs, haircuts, tools, tuition, etc. The millionaire family will have all those needs well covered with but a fraction of their income and will stick the rest into tax shelters, real estate, investments, vacations, and such. So, who really are the job creators?

Taxes in isolation aren't going to improve the state of the union. You need comprehensive deregulation across the board, reduced government spending, and taxes adequate for keeping the state department, defense department, treasury, and justice department running, and extra for paying off the national debt over a duration.

The Republican "solution" is insufficient, but it's closer to what is needed than the other mainstream alternatives.

Deregulation is part of what caused the meltdown, no? And lowering taxes on the wealthy, that's already been tried:

If 22% effective tax rate on the wealthy led to the Great Depression, while Eisenhower's 91% rate (during the peak of union power) allowed the economy to absolutely flourish throughout the 50's...what should we take away from this?

Perhaps we shouldn't further lower the taxes on top earners?

I'm of the opinion that left with more of our money we're going to buy more stuff, invest more, or save more. All of which have benefits to the economy.

Uh...if not buying, investing or saving your money, the only remaining option is charity. You'll need to be far more specific because how much of what you buy, who you invest in, and how you save are all pretty important to differentiate.

DB Ho: I totally agree, targeting production tax cuts for small businesses would be a far better stimulus than what we've got, which is essentially lowering tax rates for high stakes gamblers and allowing them to hide profits overseas.

Just because all the swans you've seen are white does not mean every swan in the world is swan white.

The point of this thread is show us the black swan. Pretty please?

It's problematic, because a tax cut on small shops and medium sized bussiness in general can actually encourage the owner to hire more people(due to the fact that pretty much all his/her revenue depends on a sole source, the bussiness) out of the extra money avaible to increase the investment.

But a tax cut on Big Co. can actually generate the opposite, the stock holders trapassing that extra-revenue to the financial system which effectively: does not create jobs on direct investments, lately it has been all gambling.

Agreed. Our current tax structure is basically rigged against startups and entrepreneurs, not to mention regulatory hurdles.

[Col. Tartleton]

So as an unprovable concept, you're saying wealthy "job creators" essentially have the same mythical, faith-based status as say...God?

OK, I buy that!

I agree. The Bush Tax cuts were insufficient at generating the kind of real steady growth we need as individuals and as a country. I'm not comfortable saying they made anything worse, and I think raising the taxes next January will make things worse. I think raising taxes is more harmful than lowering taxes is beneficial. It has something to do with the psyche and all that animal spirits crap.

I could be wrong (but I'm probably not):100 families earning $70,000/yr should theoretically put more back into the domestic economy than would 1 family earning $7,000,000/yr. This is due to the higher proportion spent on locally acquired basics: food, gas, clothing, auto repairs, haircuts, tools, tuition, etc. The millionaire family will have all those needs well covered with but a fraction of their income and will stick the rest into tax shelters, real estate, investments, vacations, and such. So, who really are the job creators?

Tax shelters are a sign that the taxation locally is not competitive. Lincoln financed the civil war (rather expensive affair actually) on a 3%-5% flat tax (depending on the year)with a huge initial tax write off equivalent to twice the average salary... This system was totally fair because everyone got the same deduction and everyone paid the same rate. That's reasonable to me.
Real estate requires maintenance which supports lots of blue collar jobs. Poorer people do the work themselves (unless forced to hire people at great expense because of regulations) which only benefits suppliers. The wealthy pay for just as much in supplies but also pay for skilled craftsmen and laborers.
Investments offer capital to businesses trying to grow.
Vacations support tourism and the like.

I would call that "job creation" activity.

Deregulation is part of what caused the meltdown, no? And lowering taxes on the wealthy, that's already been tried:

If 22% effective tax rate on the wealthy led to the Great Depression, while Eisenhower's 91% rate (during the peak of union power) allowed the economy to absolutely flourish throughout the 50's...what should we take away from this?

Yes, deregulation in some areas exacerbated existing issues with the system that created the melt down. That was a good thing. We took the training wheels off a bike with flat tires under the direction of someone who couldn't ride a bike. As a result the bike fell over. Then we should have seen why the bike fell over and removed the bad regulations which remained. The equivalent of giving the kid a few pointers.

The problem was that we bailed out the banks because they were "Too Big To Fail." Essentially the same as telling a kid he's too fat to ride a bike without training wheels. All that did, was put the training wheels back on the bike and tell the kid he didn't do anything wrong, it was the lack of government training wheels.

I want companies run by responsible people who can savor victories and hedge against failures through smarts, guts, and skill. I don't want banking to be backed by the tax payer. That's economic fascism. Bush did not understand economics, nor did his advisers, and Barack Obama and his camp are outright socialists.

Perhaps we shouldn't further lower the taxes on top earners?
Uh...if not buying, investing or saving your money, the only remaining option is charity. You'll need to be far more specific because how much of what you buy, who you invest in, and how you save are all pretty important to differentiate.

Was taxation the cause of growth or other things in the economy which were better then than now? I don't see how you can claim that. I don't see a mechanism where higher income taxes directly lead to growth of anything besides the government.

Eisenhower's high taxes were full of write offs, no one actually paid that much. The Federal Reserve caused a recession in 1953, but by 1954 we turned the ship around and continued growing. The reason the taxes were so high, was to pay off some of the massive war debt. That is in my opinion perfectly legitimate. I have no problem paying for military spending through taxes. We took out a "national loan" to spend more on the military than we had, and as a result we eventually had to pay it back when we weren't in the war. That's a totally legitimate use of government deficit spending. I'm okay with deficit budgets for war materials and military related things during war time. Bush not paying for the wars in the middle east with taxes then was reasonable. However if we cut out the fat of government and got it down to the original 4 departments, I think we'd be in a position to raise some taxes and pay down the debt.

I'm not taking a Grover Norquist "All Taxes are bad" approach. I won't really say there are good taxes, but there are necessary taxes. No one likes having their money taken. However as an American citizen I think you're contractually obligated to share the burden of the common defense.

DB Ho: I totally agree, targeting production tax cuts for small businesses would be a far better stimulus than what we've got, which is essentially lowering tax rates for high stakes gamblers and allowing them to hide profits overseas.

The point of this thread is show us the black swan. Pretty please?

Agreed. Our current tax structure is basically rigged against startups and entrepreneurs, not to mention regulatory hurdles.

I think the best solution is to cut the umbilical, take off the training wheels, remove the floaties and life jackets, stop feeding them baby food, and give people the opportunity to fail or succeed on their own merit.

[justicar5]

IThat's economic fascism. Bush did not understand economics, nor did his advisers, and Barack Obama and his camp are outright socialists.

Hahaahahaah..I didn't notice the treason trials and execution of high ranking bankers, nor the massive nationalisation.. must have missed that. They are corporatists, the difference between them and Bush (and current republican candidates) is that between Corporatism and Corpotocracy, not between capitalism and Socialism.

[DimeBagHo]

I could be wrong (but I'm probably not):100 families earning $70,000/yr should theoretically put more back into the domestic economy than would 1 family earning $7,000,000/yr. This is due to the higher proportion spent on locally acquired basics: food, gas, clothing, auto repairs, haircuts, tools, tuition, etc. The millionaire family will have all those needs well covered with but a fraction of their income and will stick the rest into tax shelters, real estate, investments, vacations, and such. So, who really are the job creators?

Roughly speaking, people with lower incomes do spend more of their income than people with higher incomes, who tend to save more. That higher spending contributes more to aggregate demand, so if you want to boost aggregate demand in the short term then dropping more money on people with lower incomes might be a good way to do it.* However, the standard of living in general depends on the quantity of available capital, which in turn depends on savings. So in the long term it is the savings of wealthier people that raise living standards for everyone.**

*Or it might not. In tough times people with low incomes might decide to save more by paying off debts. In which case any extra money you drop on them might disappear into debt payments and have no effect on aggregate demand.

** Sometimes this effect isn't so long term. If you create a hostile environment for capital then it can run away somewhere else very quickly.

[Denny Crane!]

So as an unprovable concept, you're saying wealthy "job creators" essentially have the same mythical, faith-based status as say...God?

OK, I buy that!


I could be wrong (but I'm probably not):100 families earning $70,000/yr should theoretically put more back into the domestic economy than would 1 family earning $7,000,000/yr. This is due to the higher proportion spent on locally acquired basics: food, gas, clothing, auto repairs, haircuts, tools, tuition, etc. The millionaire family will have all those needs well covered with but a fraction of their income and will stick the rest into tax shelters, real estate, investments, vacations, and such. So, who really are the job creators?

Deregulation is part of what caused the meltdown, no? And lowering taxes on the wealthy, that's already been tried:

If 22% effective tax rate on the wealthy led to the Great Depression, while Eisenhower's 91% rate (during the peak of union power) allowed the economy to absolutely flourish throughout the 50's...what should we take away from this?

Perhaps we shouldn't further lower the taxes on top earners?
Uh...if not buying, investing or saving your money, the only remaining option is charity. You'll need to be far more specific because how much of what you buy, who you invest in, and how you save are all pretty important to differentiate.

DB Ho: I totally agree, targeting production tax

cuts for small businesses would be a far better stimulus than what we've got, which is essentially lowering tax rates for high stakes gamblers and allowing them to hide profits overseas.

The point of this thread is show us the black swan. Pretty please?

Agreed. Our current tax structure is basically rigged against startups and entrepreneurs, not to mention regulatory hurdles.

http://gregmankiw.blogspot.co.uk/200...-stimulus.html
http://taxprof.typepad.com/taxprof_b...2/mankiw-.html

Go for it. Its as relevant as any anyone else puts forward with the decency of having a thought you can follow from one end to the other in comparison to the we'll stimulate to the infinity land.

Even that is not actually something I'd advocate, my point was more to try to take an educated look at stimulus or rather what is a multiplier and what effect it has.

There is definitely an effect by any given standard, in this climate it is all ing meaningless. The idea that it can't create jobs is dumb, the only argument is the efficacy.

Lets take this down to the most basic level. Prove they don't create any jobs...you mentioned bush's cuts, prove they didn't create any jobs.

[chamaeleo]

http://gregmankiw.blogspot.co.uk/200...-stimulus.html
http://taxprof.typepad.com/taxprof_b...2/mankiw-.html

Go for it. Its as relevant as any anyone else puts forward with the decency of having a thought you can follow from one end to the other in comparison to the we'll stimulate to the infinity land.

Those were cute, but completely irrelevant to this thread. I'll buy that across the board tax cuts can, under the right conditions, stimulate the economy. But I'm trying to get a handle on why dudes who already enjoy cozy lifestyles will spend tax savings in ways which are more economically stimulating, than would dudes whose lifestyles are more monetarily limited. I'll admit that my thread title is not very accurate.

Even that is not actually something I'd advocate, my point was more to try to take an educated look at stimulus or rather what is a multiplier and what effect it has.

There is definitely an effect by any given standard, in this climate it is all ing meaningless. The idea that it can't create jobs is dumb, the only argument is the efficacy.

Definitely. So to maximize bang for buck, where would you concentrate tax cuts: top, bottom or across the board?

Lets take this down to the most basic level. Prove they don't create any jobs...you mentioned bush's cuts, prove they didn't create any jobs.

Feel free to start your own thread.

[Col. Tartleton]

Taxes in isolation aren't going to improve the state of the union. You need comprehensive deregulation across the board, reduced government spending, and taxes adequate for keeping the state department, defense department, treasury, and justice department running, and extra for paying off the national debt over a duration.

The Republican "solution" is insufficient, but it's closer to what is needed than the other mainstream alternatives.

I'm of the opinion that left with more of our money we're going to buy more stuff, invest more, or save more. All of which have benefits to the economy.

[Kanaric]

I think that it’s frankly impossible to prove or disprove how many jobs Bush tax cuts actually created, due to the chaotic nature of the economy and how impossible it is to perform experiments on it.

/thread

Politicians need to stop talking about creating jobs as they have nothing to do with it and every law passed is mostly rhetoric in action.

[DimeBagHo]

You're all probably well aware of the theory that potential employers, given more money, will hire more workers. Tax cuts seem to be the simplest (at least, most popular) form of government intervention to catalyze such economic stimulus.

That looks like a confused mixture of two very different ideas.

(1) If you just give money to an employer there is no particular reason to think that they will use it to hire more workers. However, if you reduce their production costs by, for example, reducing payroll taxes or sales taxes, then they will be able to lower prices, sell more stuff, and hence require more labour. That is just basic microeconomics.

(2) Keynesians think that it is a good idea to take the edge off recessions by stimulating aggregate demand, and that you can stimulate aggregate demand by dropping money on the economy. Some Keynesians think the best way to drop money on the economy is through increased government spending. Some think the best way to do it is through across the board tax cuts. It is hard to tell whether either sort of stimulus works, let alone which is really best.

[Dr. Tobias Fünke]

That looks like a confused mixture of two very different ideas.

(1) If you just give money to an employer there is no particular reason to think that they will use it to hire more workers. However, if you reduce their production costs by, for example, reducing payroll taxes or sales taxes, then they will be able to lower prices, sell more stuff, and hence require more labour. That is just basic microeconomics.

I think part of the problem is that most Republicans don't campaign on reducing payroll taxes or sales taxes. They campaign on lowering income taxes across the board, since that's what gets the most attention/votes. Since the wealthy tend to have higher taxes as a percentage of their income, the tax cuts effect them disproportionately. So while I agree with you that lowering payroll taxes or sales taxes or whatever might have merit to it, that usually isn't the case. Instead it ends up being, as he said, effectively just giving the employer more money.

[chilon]

That looks like a confused mixture of two very different ideas.
(1) If you just give money to an employer there is no particular reason to think that they will use it to hire more workers. However, if you reduce their production costs by, for example, reducing payroll taxes or sales taxes, then they will be able to lower prices, sell more stuff, and hence require more labour. That is just basic microeconomics.

But the original post is about cutting personal income taxes (if I read it correctly) while you are talking business taxes.

[Phier]

This just shows the over all lack of understanding some people have with "taxes" and what they actually PAY.

You see my father didn't care for the Regan tax cuts, because they ended up costing him money. The cuts also removed a TON of loopholes that let you avoid taxation. Do you really think people were paying 91% taxes in this country? Don't be naive.

[mrmouth]

(1) If you just give money to an employer there is no particular reason to think that they will use it to hire more workers. However, if you reduce their production costs by, for example, reducing payroll taxes or sales taxes, then they will be able to lower prices, sell more stuff, and hence require more labour. That is just basic microeconomics.

Unfortunately that is often tossed on its head given the role Asia plays in manufacturing for US companies.

I was fortunate enough to attend a dinner where the largest manufacturers in Illinois were present. The basic talking point was how things have changed with respect to corporate culture that now puts profit over longterm health of the company and the countries economy - by way of rising markups, with consumer wages not having adjusted accordingly for at least the last 30 years.

Instead of lowering prices and following the above microeconomic model; manufacturers are looking for more profit while continually scaling back. Or at best they have a set workforce number and will not go over that in terms of hiring in the US.

That is the nature of things now. Put profits above the health of the country and the economic models that once sustained things through a balance. They all know it, but they are beholden to profits driven by investor expectations, driven by Wall St.

There was a time when biting the hand that fed you simply did not make sense. But this has become about how much you can pocket before the next economic downturn.

[Denny Crane!]

Just because Bush tax cuts didn't work doesn't mean tax cuts in general are bad. That would be an unfortunate and unjustified logical chain.

Just because all the swans you've seen are white does not mean every swan in the world is swan white.

[Claudius Gothicus]

It's problematic, because a tax cut on small shops and medium sized bussiness in general can actually encourage the owner to hire more people(due to the fact that pretty much all his/her revenue depends on a sole source, the bussiness) out of the extra money avaible to increase the investment.

But a tax cut on Big Co. can actually generate the opposite, the stock holders trapassing that extra-revenue to the financial system which effectively: does not create jobs on direct investments, lately it has been all gambling.

[Dr. Croccer]

Call me silly, but I've always thought the logic behind tax cuts is a bit a batty. I mean, let's say a person pays 20% of his income in taxes. However, if we give him half of his taxes back this will greatly aid the economy. So the logic is that someone with 80% of his total income = recession, but 90% = recovery. It rather assume that people put practically of their money in a vault, and use that fraction to invest in business, or whatever.