Home > Uncategorized > How Do Lower Taxes Create Jobs? – Business Insider

How Do Lower Taxes Create Jobs? – Business Insider

September 19, 2012 Leave a comment Go to comments

There are two main problems in the U.S. economy:

There are too few jobs

Most of the jobs pay too little

This state of affairs has left the most important customers in the U.S. economy–the formerly financially healthy middle class–starved for spending money.

As any business executive will tell you, when your customers are hurting, your business is hurting. So most companies that do business in the United States are hurting.

Importantly, US companies have the highest profit margins in history. So the problem is not that “corporate taxes are too high.”

US companies also have gigantic piles of cash. So the problem is not that companies need cheaper capital or more cash with which to invest. (The problem is that the customers are hurting, so there’s no reason for companies to invest cash, because it won’t produce a return.)

So the challenge is how to fix this problem.

One of the popular proposed solutions is to “cut taxes” and “reduce regulation,” thus providing “job-creators” (generally used to mean “investors” and “entrepreneurs”) with an incentive to “create jobs.”

In reality, it is not investors and entrepreneurs who create jobs but a healthy economic ecosystem that creates jobs. But let’s leave that aside for a moment.

For now, let’s focus on one simple question.

How will cutting taxes fix the jobs problem?

via How Do Lower Taxes Create Jobs? – Business Insider.

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