The Fallacy that cutting taxes creates job....Truth exposed
 

For a really good macro economics lesson on job creation, check this video.

Nick Hanauer does a great job exposing the truth behind all the political rhetoric.



No Fear, Just Knowledge.:pimp

This guy....
Consumers create "more" jobs. But the Rich guy is the one that is actually paying the salary not Joe Schmoe down at the trailer park.
It's common sense and he probably understands it but he already has the Liberal Tramp Stamp on his lower back so he just as well play the cards he has.

And where did he get the money to pay that salary? From the consumers that bought his products.

There is a reason this wasn't published on TED's site. Its all bullshit and bullshit politics making a retarded "chicken or the egg" argument that consumers create jobs by virtue of the fact that they buy products. Well... should be pretty fucking obvious that BEFORE consumers have a product to buy, someone has to invest/risk a lot of capital to make that product available. It's obviously not the consumers doing that.

I started a business a year ago. I risked my money. I lost piles of money to create a service. A year later, we're doing ok. We've hired people and the business is in the black. Consumers didn't create my business. Consumers didn't fund my business. Consumers didn't write me a check to risk for a year of stress and headaches and hair loss. I did that all on my own, at my expense because I wanted to create something I believed in and that I enjoyed doing. No consumer did it for me. The jobs we create are because I risked it all. Because I risked my money. Because I had the balls to make go for it and make it happen.

The fact that you think he is doing a "great job" is pretty telling. Just like any other biased idiot challenging obvious facts, he leads with stupid analogies like believing the earth is flat as if that gives merit to anything he's saying. When you open by heading down that path (as conspiracy theorists love to do), then your argument is obviously weak and has little merit on its own.

I saw that video on tv earlier tonight. A pile of propaganda bullshit.

I don't know if cutting taxes "creates" any jobs.

But I know for SURE that raising taxes doesn't create ANY jobs and only causes prices to rise on goods as the manufacturers pass the cost on to the consumer.

It's common sense.

Giving your money to the U.S. Govt. to WASTE and deficit spend over 13 BILLION dollars per DAY is not a good use of money and of no help to our economy in any way, shape, or form.

Though I'm sure that the greedy thieves in Washington D.C. would have us all believe that giving them the money we EARNED is what's best.
Meanwhile, they put their kids in private school, all become millionaires, and funnel money to their buddies.

We are all idiots to fall for it.

EDIT: I also have seen a lot of talk about EVIL corporations sending jobs out of the U.S.
Well, the BIGGEST exporter of jobs and MONEY from the U.S. to foreign countries is....The U.S. military. They DWARF in size any company in the United States in spending our money in foreign countries and supporting their economies by creating millions of service industry jobs and businesses around the world.
Think about that the next time you bitch about companies having to build a factory in another country because our govt. makes it so damn expensive to do business here.

I have this odd belief that taxes (raised or lowered) has very little to do with job creation.

People create buisnesses becasue they want to. It takes a certain type of person to one day decide they are going to take the risk to start a buisiness or take the risk to expand the business that they have. They do so for money, yes, but they also do so because they are driven to succeed.

Why does a guy like Bill Gates or Warren Buffett still work? They clearly don't need any more money. Making another 10 million dollars is not going to change their lives.

Why does Tom Cruise or Steven Spielberg still make movies? They are worth hundreds of millions and making a movie, especially for a director, is hard work with long hours.

They do it because they are driven to do it. For them the success and the work is the reward. The money is somewhat secondary. Now sure, it is easy to say that about those guys and not some guy who is struggling to keep his small store or restaurant open and while they ultimately might have gotten into owning their own store or restaurant so that they could make some money they also did it because they wanted to be their own boss and do things their way. The Squealer said it best above " I did that all on my own, at my expense because I wanted to create something I believed in and that I enjoyed doing."

From 1918 until around 1980 with the exception of a few years in and around the depression the marginal tax rate on the wealthy was above 70%. For 11 of those years it was 85% or higher (even reaching 94% for one year). Yet job growth and the growth of this country continued to rise and chugged right along.

I am sure there are some small businesses who might hold off on hiring someone new because of higher taxes, but for every one of those people there are clearly people who will continue to hire and continue to grow.

http://upload.wikimedia.org/wikipedi...6b/BLSJobs.gif

Raise taxes or lower taxes those who are going strike out on their own are going to do so anyway and marginal tax rate likely is not a big factor.

youtube videos do not equal truth exposed

Oh... and they guy in the video might be correct.

Here is an interesting Bloomberg article.

It points out that since JFK took office in 1961 there have been 42 million private sector jobs created under democrats and only 24 million private sector jobs created under republicans.

Democrats are known for raising taxes while Republicans are known for lowering.

There have been about 23 years of democrats in the white house during this time (including Obama) and about 28 years of republicans in the white house.

I think the numbers kind of speak for themselves.

You're leaving out the cheap overseas labor factor. Companies that are primarily motivated by that consideration are going to keep shipping jobs overseas no matter how much or how little Uncle Sam taxes them.

That is... unless the government actually got smart and used the tax codes to sufficiently reward companies that create (and bring back) jobs here and penalize those who do otherwise.

Properly implemented, such a plan would be a win win for everybody. The companies that play ball would still be looking at roughly the same bottom line as at present and the government would recoup the lost tax revenues from those company's newly employed workers. Moreover, by keeping that money in this country the ripple effect would benefit the local communities (and thereby Uncle Sam) as well

Of course, the problem with such an idea, is that it would need to be implemented by a government that is both competent and honest.

And therein lies the rub :(

Yes, they do.

As does his core argument, which is, we've had low tax collections for most of the last 30 years.

But, underemployment and unemployment have been steady or rising all that time.

If lower taxes caused jobs, why have the jobs not risen in number and quality during the past years of lowered tax collections?

The only times jobs increased in significant numbers were caused by (a) artificial bubble economies like the housing bubble and the tech bubble and the tech, and (b), military spending, which is all tax money.

Note that I call it lowered tax collections - as I have argued before, if you lower tax collectiosn and borrow the money to make up the difference, which we did, you have actually raised taxes, becaus ethe borrowed money has to be paid back with interest.

Your common sense is flawed. They waste it by creating jobs in the US. The amount of tax dollars that go overseas are minute. Except for Bush, he loved spending money overseas. And lives.

It depends who you tax. As he said a man on 100 times the average doesn't have 100 times more cars. Odds are he will be driving a foreign car as well. Middle Classes spending on US products created in the US create jobs.

The 1% exporting jobs because it's cheaper in China or Mexico don't. That's what the mega rich will always do, because it's more profitable for them as individuals.

As he says if lower taxes led to more jobs. The US would be drowning in jobs.

The biggest problem is that the idiot bottom actually believes this

you obviously thought there was a market for your services otherwise you would never of bothered right? no one creates a product or service without the intent of selling to consumers. the risk wouldn't of paid off without them.

You are obviously full of shit.

Your ignorance has no limits. I recommend you to shut the fuck up unless you want the whole forum to mock on your stupidity.

Period.

No VB stupidity has to be exposed.

Were the consumers consuming a similar product before?

Did you know there were consumers for this product before you invested?

Would you be doing better with less consumers?

Would you do better if these middle class consumers had their earnings eroded?

If the Government stopped spending money collected via taxes and borrowed, how would that effect your consumers?

How many of the people you employ are based in the US?

Would you outsorce if it was a cheaper work force and doable?

What's your product and can you prove it?

http://upload.wikimedia.org/wikipedi...%80%932015.jpg

http://www.usgovernmentspending.com/..._e_e_e&legend=

Yes the debt is is just shy of what the US produces and will become higher tan that in a few years. 20% of the US GDP is now spent by the Government, most if it in the US.

So cutting taxes means borrowing more or reducing the spending in the US by how much and what will be the knock on effect of that?

You idiots and your "wisdom" could make the same argument and argue that chickens create jobs, not entrepreneurs because people eat chicken. You could apply that sort of juvenile and idiotic backwards reasoning to anything.

That doesn't change the fact that nothing would have happened without the businessman that stepped in, spotted opportunity, understood the odds were against him of succeeding, risked his capital, his time, his energy and sweated blood into a startup to make it work.

When you reduce his incentive to do so, he will do it less. Pretty simple for any actual businessman and entrepreneur to understand. Probably not so easy for a child who cant understand why the world owes him a living but doesn't provide one for him.

TheSquealer nailed it.

That's the problem with the economy, I'm eating too many chickens. I even chose a super-inefficient method of eating a lot of chickens while not having to proportionally eat a lot of chicken: chicken wings at Hooters.

U Mad, Economy?

you would think this little tidbit of info would be obvious.. but around here?

I doubt that cutting taxes does anything. I've never said "gee, they are going to reduce my tax liability for the company, so I should hire more people".

Hiring a new person - after benefits - costs about $100k a year. No tax benefit is going to offset that.

yup, the problem is that we took 50% of the population off the tax rolls. Leave tax rates where they are but make those that pay nothing, pay the bottom rate instead and all of these tax shortfalls are cured.

oops, shit. common sense is poorly received when finding excuses to take the successful's money.

Great opinions,
Shows that I am never too old to learn.
Thanks,
:pimp

Yep thats true. But if he is paying out high taxes he has no incentive to hire more, as he wants whats left in his own pocket.

the fault of the unemployment is not wholly the fault of the rich.

Tooo many people go to a job every day and do fuckall expecting a paycheck at the end of the week. Lots of companies have wizened up to that and cut a huge % of the slackers.

Of course its simple but the whole scenario doesn't even exist unless there is someone out there to buy the products. putting the tax burden solely on the average shitbag also reduces incentive for the businessman as consumerism is reduced more and more. what would the entrepreneur do if no one could afford their products?

even if he had no taxes to pay, why would someone hire more people than they need? definitely too many people slack off at a job but what incentive is there really to do a good job? the average shitbag will make the same wage if he works hard or slacks off and at the end of the day the cost of living is so out of wack with wages that he barely scrapes by anyways.

lower taxes make new successful ventures more profitable, so an entrepreneur is more likely to invest in that venture and so create more jobs...

so lets say for example to simplify things there is either 0% tax or 50% tax and
when new venture is successful entrepreneur will double his money, and chance of success is 50%
(completely made up numbers just to illustrate a point)

so if he invests lets say $100k, when tax rate is 0%, he has 50% chance of losing $100k, and 50% chance of doubling his money, a perhaps reasonable investment so entrepreneur might proceed and so more jobs would be created...

when tax rate is 50%, he has 50% chance of losing it all, and 50% chance of making only 50k, which is a pretty shitty deal, he invests 100k, but can only make 50k when he is successful... so it's unlikely he will proceed and create jobs under the 50% tax rate plan...

Businesses hire more workers because they need them to produce and/or sell more product. Taxes on the profits of selling that additional product are of minimal consideration.

Opportunity to increase the amount of product sold is what creates jobs. Without consumer demand, there is no opportunity.

Personal tax cuts dont create jobs. If they did, we'd have a surplus of jobs since 2000. If we're talking common sense, lets talk about that.

Corp. tax cuts? Yes that would help incentivise a company to stay in the US perhaps. Create MORE jobs at the same time? Perhaps, perhaps not.

I don't understand why everyone treats this stuff as theory and argues about what could happen. For many years fifty different states tried fifty different things. Texas has long had zero income tax. California tried high taxes. California has 40% more people out work than Texas does.

There's no chicken and egg philosophical quandary here. We tried both, fifty times. Low tax states kicked the crap out of high tax states. Of the ten best cities to get a job, three are in Texas, the no-tax state. None are in California, the similarly sized high tax state. That's not theory, that's what actually happened.

It's like arguing who might win the 2010 Super Bowl. New Orleans won. Nothing to argue about.

Because the constitution was written in pencil and they decided to get paid.

Have a read: http://economistsview.typepad.com/ec...ays-taxes.html

Anyone that thinks that raising taxes and regulations on business is good isn't paying attention. In California, Los Angeles county, the porn industry is now regulated to use condoms. They're already looking at higher permit costs to pay for that regulation in forcement.

How long before porn shoots go somewhere else? Oh wait, they are already

Well to be fair, "taxes and regulations" are WAY different animals. I'm fine with zero corp tax, I'm not fine with zero regulations. Take each reg. one at a time. I dont want poison spewing even if it saves billions. Ok some things are not worth it.

Sometimes. The Obama administration can't decide if the mandate to buy government approved insurance is a regulation or a tax. They tell the court it's a tax while at the same time telling the public it's a regulation. Sometimes they are precisely the same animal.

In terms of regulations I'm not talking about something ambiguous like Obamas plan or whatever. I'm referring to, lets say, EPA regulations for clean air and water.

Some businesses would love to not have to comply with EPA regs at all. It costs a lot of money and from the business perspective, it only hurts their bottom line. I'm not at all for easing up on those regulations when they're already proven to help keep the water and air clean.

I've seen this clap trap before. what's your point?
That its actually MORE than half who pay zero income tax?

My point is that your point is only partially factual. it's a generalization based on one year and only based on "federal income tax" not on state taxes, payroll tax nor other federal and state taxes.

That doesn't mean the consumer creates the jobs. The consumer is not risking his money, his time, his energy etc.

Your view assumes there is zero risk to the entrepreneur and he should be nothing but grateful for the consumer giving him the opportunity to just open a business and be wildly successful from day one. That doesn't happen. Almost all businesses fail. It requires risk. It requires someone with the balls to risk capital. It requires someone willing to risk it all knowing there is little chance of success.

True. It takes both sides to make it work. The entrepreneur risks, the consumer buys. Ideally they both benefit. I just don't buy the idea that the consumer is inferior and inconsequential.

The guy in the video opens by attempting to make the point that consumers create jobs.

That's what he's saying.

Obviously the consumer is not inconsequential.

But the consumer is not "causing" anything. Someone has to wake up one day and risk everything believing they can offer the consumer something better and cheaper or to meet an unmet need of the consumer. That's where the job creation process begins. Not the other way around as the speaker is attempting to argue.

That's where the tax argument then comes into play. He is trying to negate the tax argument by saying "consumers create jobs" and trying to say that how you treat entrepreneurs or whether or not there is incentive for them to risk money to create businesses is inconsequential. I.e. If you tax everyone 100%, its irrelevant because consumers will still buy products, ignoring the obvious fact that i'm not going to risk my hard earned capital in something that won't benefit me at all, regardless of whether or not consumers are willing to purchase a product.

As I also said, anyone that has to open with "republicans...." and "we used to believe the world was flat, therefore,..." at a TED conference has no credible point... which is why they organizers scrapped that video to begin with. Its a biased political statement, not an objective and credible look at taxes and jobs.

I would argue that the largest share of all taxes we pay are a DIRECT consequence of having to repay ever growing amounts compounding interest on "debt based" money issued to us by the Federal Reserve (a PRIVATE entity).

Extremely high taxes are called "communism". It was tried. Repeatedly. It failed. Repeatedly.

no, sadly you're incorrect. in 08 you still had over 40% not paying income taxes. And considering I'm talking about who used to pay compared to who pays now, you link is meaningless.
doubly so since the one year data is now 3 year data.

The taxes are just part of the problem.

The govt. has created so MANY problems to start a business in the U.S. (on federal, state, and local levels) that it drives business away to other countries as well.

Yep, there is cheaper labor in some countries. And the cost of living there is cheap too. So it all works out.
I've always noticed that every time the govt. raisese the minimum wage here...the price of everything goes up MORE. It's a ridiculous circle that never ends and keeps driving the costs up.

But that isn't even the worst part. Back in 2006 we bought up a ton of commercial property and began renting space to businesses.
What the local govt. does to business in city limits is un-fucking-real.
The licensing, the "inspections" (and the payoffs), the fees, and the taxes will just beat a person down to the ground.

When I sold that property in 2008 (because I was moving to Vegas)...not ONE of the original businesses that we rented to in the beginning were still operating. They had all gone out of business and we had new tenants.

At the same time, we came very close to opening a used car lot.
First I had to get a dealer license. No big deal. Then we went looking to buy the property to put it on.
By the time the city & state govt. got done with us....we abandoned the idea.

Then we were going to open a "beer and wings" sports bar. We moved out of the city to avoid their bullshit. Then we said "hello" to the county and state and liquor licensing.
We walked away from that after 4 months and never opened the doors.

We would have "created" some jobs with the car lot and the sports bar and contributed to the local economy. But the local govt. just completely discouraged me from wanting to deal with their headaches. So as excited as I was...I walked away.

hmmmm, a consumer consumes, an entrepreneur creates. One of these functions can be done by pigs equally as well, one can't.

Tax rates, high or low, have little impact on creating jobs. A healthy middle class of consumers is what creates the demand that creates jobs.

The only thing the Reagan tax cuts have done over the last 30 years is reduce Federal revenue to the point where we'll soon be borrowing more money than the annual GDP, just to keep the gov't operating. Cutting spending isn't going to solve the problem. You can completely eliminate all Federal spending except entitlements and the interest on the debt and you still don't have enough revenue to cover it. If Federal revenue doesn't increase to exceed expenses, then it's only a matter of time before it all crashes. The only question is whether or not the politicians in Washington come to that realization in time to do something about it. Everyone is going to have to pay more taxes, or everyone is going to be in the poor house.

You do realize that Federal Revenue has gone steadily up and increased under Reagan?
Start here and work your way up through the years: http://www.usgovernmentrevenue.com/yearrev1980_0.html

The problem isn't taxes my friend...the problem is govt. SPENDING.
Here is how much the govt. spends (2009 numbers)
Per actual day $10,958,904,110 $11 billion!
Per actual hour $456,621,005 450 million
Per actual minute $7,610,350 7 million
Per actual second $126,839 more than US avg salary

Dude..that is $126,839 PER SECOND. No way we could ever tax enough to pay for that.

Here is the spending numbers for 2012 (you can use the "negative" sign to go back through the years): http://www.usgovernmentspending.com/...nding_2012USrn

The problem when you get into what spending should the gov. cut is the seemingly untouchable military budget. Then the zeroing in on social welfare as the root cause of all of societies problems.

Robbie, look at revenue in relation to expenses. Pay particular attention to entitlements and interest on the debt. Revenue has not kept pace. At this point cutting spending alone won't solve the problem. Cutting ALL Federal spending other than entitlements and interest on the debt still won't be enough. Revenue has to also increase to where it meets or exceed expenses.