Thread: Do Tax cuts for the wealthy create jobs?

It seems too simple.

No. It is too simple.

Tax cuts for the wealthy only serve to widen the rich-poor divide, and at this ratem the United States is moving towards an economic civil war. It won't be North vs. South, but the Rich vs Poor. I have yet to see a rationale that explains how the tax cuts for the rich create more jobs. There are so few of them, and they spend their money on foreign items, so the money goes outside the USA's borders, not into the hands of locals. Just giving them more money to spend doesn't mean the local bakery will take on an extra hand to meet demand. The rich don't shop at their local bakery.

Tax breaks for the poor, now that is where it's at. Lots more of the smelly beggars with more money to buy more soap, or fix their ragged hand-me-downs. With more money, they can afford to buy another loaf of bread from their local baker, and he will then need to take on an extra hand to meet demand. He may need to employ a builder to extend his bakery so they can have more ovens or retail space.

Ok, so both are caricatures, but that is the general idea. Modern businesses need incentives to expand. The USA needs a better technology base, but it does not produce enough mathematicians, engineers, or scientists to create that kind of growth. Food production relies on an external work force, migrant workers, who pay no tax, but do the work that even the poor are too proud to do. All this, so they can send money back to their families to buy off the drug cartels or pay kidnapper's ransom. It's like a dystopian fantasy, except it's real life.

The poor aren't buying at the local bakery, either. They're at Wal-Mart and while the bakery items might be made here in the U.S.A. pretty much everything else is made in China.

I have yet to see a rationale that explains how the tax cuts for the rich create more jobs.

Man starts business.
Man makes good.
Man has many employees.
Man pays employees.
If Man's tax rates go up he lays off employees, plays it safe. If Man's tax rates go down he hires people and expands his business so that he can make more money and expand his business some more, thus hiring more people. Which creates jobs.

If it actually worked like that, why then, with the tax cuts in place, is the USA not a thriving economy instead of in the bowels of recession and jobless rates on the rise?

Well, Richard, it could have to do with the fact that employers try to plan for the future rather than just sit and let things happen to them. They do have a responsibility to their shareholders...which include their employees. The big news about the tax cuts is that they are possibly about to END and that isn't the only factor in the economy. There have been huge bills passed that will add to the tax burden (so, looking into the future you know someone will be writing hefty checks to finance these programs, right?) and rate caps on energy are being lifted.

If you, Richard, had a successful manufacturing plant and were thus 'wealthy' and you knew that the tax cuts were likely going away AND your energy costs were about to possibly double...what would you do? Employers are battening down the hatches...trying to stay in business. Don't forget that the EPA is also requiring more stringent (and expensive) measures that make it too expensive to stay in business at all. This produces layoffs not hiring.

When the tax cuts were put into place the economy did improve. Now, with the government writing ever-larger checks on the future it is a near certainty that the taxes will be shoved as high as possible to pay for them. Again, employers have to try to plan for the future.

Foxee said it well.

Right now the U.S. Government is very anti-business. They say they are for the small business man, where the most jobs are created, but they do all the wrong things to encourage that very same small business man from hiring or even staying in business.

It's kind of like in the Old Testament when the Pharoh took away the straw the Israelite slaves used to make bricks for him, then told them to produce even more bricks.

Ah, but if I am funding the manufacturing plant from my own pocket, at that scale it is stupidity. There is no separation of corporate tax and income tax in your analogy. The corporation pays the bills and wages, not the owner. The owner takes a dividend, and if he wishes to reduce his tax liability, he reduces his dividend. To lay off ten employees when you can reduce shareholder dividends, but keep the business running is sheer greed. If the owner has failed to plan ahead for himself and have a retirement or unemployment plan then let him squirm. The businesses of the wealthy are not run like a baker's shop. Limited liability corporations, shareholders, all these things mitigate the risk to the owner and to the business.

If creating jobs is really the end goal of the cuts, and not looking after the pork barrels, then ending the cuts is still a good idea. Raisingthe tax on the top 2-3% of earners will bring in about $35 billion, which can fund programs that are far more effective at creating jobs than letting the rich have some extra money for blow.

Okay, so you have established that people who run large companies should not profit from them. I don't agree and I'm not saying the a large-scale business is financed out of the owner's pocket (remember I mentioned 'shareholders' who the owner is responsible to?). But since you bring up the idea of a bakery let's try that instead. Maybe you'll have more pity on the baker.

The baker employs four people.
His energy costs go up.
His tax burden goes up (yes, he runs a business so he is in a 'wealthy' tax bracket)
Customers buy the same or get thrifty and bake their own birthday cakes.

Let's say the noble baker cuts to the bone. He makes next to nothing from his bakery...how long is this sustainable before he has to let someone go? Should he stay in business with fewer people or shutter the whole enterprise rather than letting one person go?

No matter how much you'd like to paint all wealthy people as greedy or stupid and deserving of a good governmental raping that really doesn't wash. The money that comes in has to cover the amount that has to go out or they go bust no matter what the size of the company. You have no idea what measures these guys are taking to try to save their businesses, you're assuming that they're nefarious and are willing to kill the golden goose so that they can live a lavish lifestyle. (Seems to be the subtext of calling someone 'wealthy') Some manage to be greedy, some aren't. That doesn't mean it's ethical to tax them out of existence either on a personal or a corporate level and then wonder where the jobs went.

Edit: Well said, Gumby, just saw your post.

Originally Posted by Foxee

Let's say the noble baker cuts to the bone.

Is that an example of a mixed metaphor?

Raisingthe tax on the top 2-3% of earners will bring in about $35 billion, which can fund programs that are far more effective at creating jobs than letting the rich have some extra money for blow.

Those people are already shouldering nearly half the tax burden. And that's quite an assumption to say you know how they are spending their money.

Regardless, money will go where it is treated well. Keep pressuring the wealthiest and they can afford to leave. Where's that going to leave this system?

Might be better to assume that if they have money it's because they are better at generating wealth than everyone else. Then untie their hands and let them do it.

They are good at generating wealth for themselves. Who should shoulder the tax burden then? Who will meet the budgetary defecit?

There you have put your finger squarely upon the problem! The wealthy did not cause the budgetary deficit, did they? The premise of this thread seems to be 'Any group of people who amass large amounts of money are immoral/untrustworthy.' So let's borrow that premise a moment and swivel around to look a the people who are taking the taxes. Do you trust the government who has robbed social security blind and created a deficit of frightening proportions?

I think rather than mugging employers yet again to fill the U.S.'s leaky coffers, perhaps we, the voters, should look to cutting the bloated spending. Stop trying to fill up the leaky bathtub and spend some time caulking up the holes.

On the contrary. The rich, influential in Washington and the billionare bankers are precisely the people who caused the defecit. The riders, the pork barrels, none of these have come about becuse the poor want to be poorer, it is because the rich want to be richer.

You're lumping 'the rich' all together in the same breath as 'evil capitalists'. Not so true. The movers and shakers in Washington aren't going to be touched by the taxes you want to level on them...they get free passes from their buddies. No, it'll be the quiet millionaires, the guys who you don't even know are rich and they ARE job creators who will be hurt. More jobs will go away and you'll wonder why raising taxes didn't work.

Raising taxes isn't the answer. It will only hurt people.

Have a look at what taxes are spent on, Richard. You've already gotten partway there. Feeding this irresponsibility is not the answer.