Cutting Taxes = More Jobs

anecdotal, yet simple:

in my hometown, chattanooga, tn, Volkswagen is building an assembly plant. the conservative estimate is that it has created 3,000 new jobs. read again, 3,000 MANUFACTURING jobs.

for Volkswagen to build that plant city officials had to agree to all sorts of tax breaks. Otherwise the car company was going to choose a lower tax haven.

in that sense, cutting taxes directly created more jobs.

(side note: the auto plant is and will remain for the foreseeable future non-unionized).

also, it was recently announced amazon.com is building 2 distributing centers in chattanooga and nearby cleveland. both of the local governments had to agree to long term tax break for amazon.com. this should bring around 2k jobs.

both instances, offering tax breaks provided incentives to firms to create new jobs. in addition, the city will see an aggregate increase in tax revenue.

Unfortunately that isn't sarcasm. That is the GOP's stated policy:)

I'm not saying the rich don't help the economy. And I'm not spiteful of the rich. My rich friends are pretty darn cool. And the government DOES have the power to stimulate the economy. The Recovery Act put a poop-ton of construction workers back to work in my state. In turn they spent money at local stores, and so on...

Hypothetically speaking, which scenario will better stimulate the economy:

$200 billion in tax cuts for the top 1% of the population

or

$200 billion in tax cuts for the other 99% of the population?

Not Proven wrote: In fact they can prove that the rich will only save the money and not hire another person nor invest the money. So it's just a free gift to the rich.

Most people don't save money by hiding in under a mattress.

When money is saved the person savings the money earns a little bit of interest (dividend, etc.) income. The interest paid is paid by a bank and investment firm etc.

The firms paying the interest make money on the saved money by lending it to someone who is willing to invest in something, such as, hiring people or buying products.

Hiring people and buying products create jobs.

Whether tax cut money is directly invested or saved the result is the same. Jobs are created.

Also, any money the government pays to service the national debt owed to the Fed is retired from the system. So for all taxes that go to that purpose does not go back into ours or any other economy.

That being said, I am a proponent of letting all the Bush tax cuts expire. This will hurt me personally. My wife and I bring in approx 130k per year, and we will end up with $1000 less net per month. It will also make many lower end people who pay nothing in taxes pay something in taxes. It will be a severe shock to the base economy and I want that.

We are doing nothing to address the real problems with our economy. Unless we bring about a real collapse we'll never come back stronger. We'll just be a staggering zombie slowly rotting away. I'd rather flush the toilet, default, and then have the ability to rebuild on a solid foundation.

Ed

This thread is silly. Just like the "Obama is a coward thread." If Obama was a coward, instead of the brazen, arrogant, one-dimensional ideologue who exhausted all of his political capital alongside Nancy "gravitational Pull-osi" and "Dirty Harry" Reid, Americans wouldn't have voted to change the composition of Congress to the extent they did, forcing his hand now. But the political apparatus exists to keep all of us trivializing issues and fighting, while both parties continue to suck the American taxpayer dry and have their select spheres of financial influence, subsidies, pet projects, and lobbying groups. And as much as I don't affiliate with the Tea Party or Ron Paul's unrealistic desire to return to a gold standard, at least there's a revolt brewing against the current, status-quo Washington apparatus, which is a good thing.

What amazes me is that everyone's pissed off about taxes, while very little mention is made of the Fed. It is the Fed who is creating "asset inflation," which primarily helps the wealthy and misallocates capital (it's dejavu all over again), while also raising the price of energy, corn and soy, cotton, etc... a regressive tax on those who can least afford to accommodate it with higher gasoline, food, and clothing prices. That's where people should be directing their ire, because it is predominantly the Fed who is responsible for the tech bubble, the housing bubble, and now the sovereign debt bubble.

In the grand scheme of things, this "tax debate" is just ridiculous. The more you raise taxes on anything, the less of it you get, and the same is true of capital. Normally, I would be ok with a higher tax rate this far into a "recovery," but it could be disastrous in this economic environment. Bill Clinton and JFK both understood this simple concept. Extending the cuts, along with the Fed's counterfeiting operation, may even work in the short-run, which would, ironically enough, help Obama, despite his incessant grandstanding and demagoguing. I suppose then that he will take all the credit for it as having been his idea.

EdP wrote:

We are doing nothing to address the real problems with our economy. Unless we bring about a real collapse we'll never come back stronger. We'll just be a staggering zombie slowly rotting away. I'd rather flush the toilet, default, and then have the ability to rebuild on a solid foundation.

Ed

This is correct. We are politically unwilling to deal with the massive structural issues that plague our economy and intent on zombifying the banks. The Fed's balance sheet is loaded up with so much toxic crap and they are not "liquifying" the real economy. We are pursuing the path of debt-deflation.

Mr. Obvious wrote:

You are wrong. Everybody knows about the Laffer curve. If you cut tax rates, government revenues actually go up. So if you cut the tax rate towards 0, the tax revenue naturally increases towards infinity.

asdfasdfas wrote:

You might want to read up on the Laffer curve since you have no clue what it is about. The Laffer curve does NOT say that lowering tax rates increases revenue.

Mr. Obvious wrote:

You might want to check your sarcasm detector there, chief. I don't think it is calibrated correctly.

asdfasdfas wrote:

Unfortunately that isn't sarcasm. That is the GOP's stated policy:)

Sagarin wrote:

The more you raise taxes on anything, the less of it you get...

Well at least we've come full circle on this one! Excellent exchange folks, I enjoyed immensely.

Sir Lance-alot wrote:

Well at least we've come full circle on this one! Excellent exchange folks, I enjoyed immensely.

As I said, "But the political apparatus exists to keep all of us trivializing issues and fighting..." No one is better at this than you Lance, so bravo for a job well done.

Rational Economics wrote:

...is that RICH PEOPLE keep their money saved in banks, which in turn lend it out to everyone else.

NOT IF THE RICH PEOPLE SAVE THEIR MONEY IN SWISS BANK ACCOUNTS AND FOREIGN OFFSHORE BANKS.

Rational Economics wrote:

Government spending is generally money consumed, not saved or invested. Worse, government actions are often directly antagonistic to the productive efforts of private enterprise. The government confiscates resourses that businesses need to make the economy more productive, and uses the loot to fund activities which make the the economy less productive. Everyone loses, except government.

You have no clue. The government pays for the roads you drive your car on, education, research to find cures to diseases like cancer, the national parks, the money your parents live on if they are over 65 years old, etc.

Lay off the rich. They work hard investing their money and creating jobs for you folks. Try making it on your own!!!

For it to be a gift from the government the government has to give money it already has to the Evil Rich Bastards. It's not doing that. What it is doing is taking less money from the ERBs at a lower rate than at a higher rate. Therefore the present rates are NOT a gift to the ERBs.

What someone else does with their money whether its investing it, hiring workers, or spending it is none of your damn business. You have no right to someone else's money either directly through theft or indirectly by getting the government to extort it from them and give it to you.

If you really are rich and think you're paying too little in taxes you are free to make donations to the government.

This is a moronic, dead wrong, myopic and overly simplistic post. By way of a lower tax rate, the rich are getting a major discount on the infrastructure put in place and maintained by our government. Without that infrastructure, the rich would not be making the same wealth that they are making. There is a huge disparity between the rich and middle class regarding the amount of the infrastructure used and benefitted from -- the lower tax rate is, indeed, a gift.

Fat and happy wrote:

Lay off the rich. They work hard investing their money and creating jobs for you folks. Try making it on your own!!!

This is a lie regarding 98% of the rich. Moreover, I am not rich, but I create my own job -- I am self-employed. The vast majority of the self-employed are not rich. The rich create jobs to a certain extent, but raising their marginal rates from 35% to 50% is not going to reduce any job availability. Keeping it at 35% is not going to create any new jobs. Do you really think the rich are thinking, "Oh good, now that I know that my taxes are not going up, I will take all that extra money and hire some employees!"

All that is in addition to the fact that keeping the lower rates right now is utterly irresponsible fiscally.

Do you really think the rich are thinking, "Oh good, now that I know that my taxes are not going up, I will take all that extra money and hire some employees!"

Yes, they will think that if hiring more employees will help their business, and in turn them, make more money. This is why low taxes are good. Why would I ever want to make more money if the government is just going to take away the money that I worked so hard for. I should just go on welfare, then I would never have to work. If you take away the incentive to earn more money, you have lost at capitalism.

I think people need to understand that with capitalism, there will always be classes. There is no avoiding it. But, look at our lowest class in the USA. They are way, and I mean WAY better off than those of lower classes in other countries. This is because of capitalism, entrepreneurship, and hard work. This is what makes our country great.

When people stop wanting to earn more to gain a better lifestyle or what have you, and people just aim for the middle somewhere, that's when it's easy for socialism, communism, etc. to take hold. With communism, everyone is the same. Everyone is usually pretty low on the wealth ladder. With capitalism, sure there will be classes. That is in the nature of capitalism. The end result, though, is a much better off populous than those of higher taxed, socialist countries. Why else do you think that communism failed?

So, lower the taxes for EVERYONE, reduce the size of the government, spend less on social welfare programs, etc. and watch how our country can grow ON ITS OWN. The role of our government is to protect our freedoms, not take them away.

There are several things that are simply wrong in your post:

Raising the top marginal tax rate by a modest amount is not going to make the wealthy throw up their hands and say, "I give up -- I'm going on welfare!"

We do not and never have had a purely capitalist economy. It has been a hybrid of capitalism and government control.

I agree that our lowest class is better off than the lowest class of most countries. But pure capitalism and lower taxes is not what did it. Before there was an income tax in this country, our lowest class lived in abject squalor. When we added an income tax and safety nets, such as unemployment benefits, welfare, etc., the abjectness abated and the gulf between the rich and poor abated. Ever since the Reagan and then the Bush tax cuts, the rich-poor gulf has widened.

Socialism and capitalism are not mutually exclusive. The U.S. economy has a capitalistic base with some socialist and government controlled or regulated aspects. We have learned through history that a hybrid works best for the economic strength of the country.

Lowering taxes does not reduce the size of the government -- it only reduces surpluses or increases deficits. The size of government is cut only when programs are cut.

Fair and Balanced wrote:

The size of government is cut only when programs are cut.

There's a novel approach that has yet to be attempted.

Make the rate 90% versus 35% and your argument makes sense. We are on the other side of the laffer curve though. The difference between 35% and 39% is pretty much nonexistent. If you had a job that payed a million a year, you would be willing to do it for 650k net but not 600k net? Hell high taxes keep me working. If I had the couple million I have paid, I might be retired.Obama's initial proposal (letting the cuts above 250k) would have cut taxes for everyone. The people making over 250k would have saved the same couple of thousand that everyone else did.Cutting spending enough to balance the budget is pretty much impossible. We have an major income problem. We collected about the same amount of income tax in 2009 as in 1999. Factoring in inflation and population growth, that is real drop in revenue. For comparison between 1989 and 1999 (or 79 to 89), income tax revenue almost doubled.If our tax revenue would have doubled, we would still have debts but they would be manageable.As far as cutting, Feel free to list out the trillion dollars or so that you want to cut. The tell us how many jobs that spending will eliminate and that will do to our economy.

the theory assumes that borrowing 700 billion from the chinese to give to the rich will convince those people to spend a shred of that money in america.

the pitfalls are that the rich are saving at record rates, they frequently buy things like mercedes (made abroad) instead of buicks, and even if they do spend the money, do we really want an economy where we deify the rich as philanthropists providing the measly middle class with fulfilling jobs like being seamstresses for leerjet curtains?

the great irony of this is that if you really buy keynesian economics, you get more bang for your buck through government spending than tax cuts...