A Challenge To All Conservatives! Do You Accept?
By admin on Feb 28, 2010 with Comments 21
Is there any proof that rates of employment are directly affected by tax rates? ie beyond a subjective opinion that “gee I might be an entrepreneur if I had more disposable income” has a study even been conducted that demonstrated that rates of taxation and rates of employment are linked in say, an analysis of data over the past 60 years?
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The only proof is common phucking sense.
Clinton had a Republican majority in both the house and senate, the only entities that are constitutionally allowed to manipulate taxation. And he had the benefit of the artificial dot.com boom which collapsed near the end of his presidency.
The analysis uses data from all 381 U.S. metropolitan areas, consisting of 352 metropolitan statistical areas and 29 metropolitan divisions. In a nutshell, the report shows:
“metropolitan areas with lower taxes exhibit higher employment growth, faster population growth, and greater increases in real personal income than areas with a higher tax burden. These findings are particularly relevant at a time when many states and cities are proposing to raise taxes to address short and long-term budget problems. This research found areas with higher taxes had lower employment growth, smaller personal income gains and slower growth of population.”
Several of the study’s findings include:
•Employment growth between 2000-2006 was 54 percent higher in the 50 metropolitan areas with the lowest tax burden than in the 50 highest-tax metro areas (measuring the tax burden as state and local taxes as a percent of personal income in 1997 for all 381 metropolitan areas).
•Real personal income growth was 80 percent higher between 2000 and 2006 in the 50 areas with the lowest state and local tax burden (as a percent of personal income in 1997) than in the 50 highest-tax metro areas.
•In the 50 lowest-tax areas, population growth at 8.6 percent (between 2000 and 2007) was more than three times higher than in high-tax metro areas (2.6 percent).
•The results suggest a clear negative relationship between state and local tax burdens and local economic growth.
•The tax burden was nearly 50 percent higher in the 50 highest-tax areas than in the 50 lowest tax areas (13.1 percent of income vs. 8.8 percent of income).
What explains the higher employment growth or higher growth in personal income? According to Stansel:
“Taxes remove money from the hands of private individuals and place it in the hands of government agencies. Those private individuals have a stronger incentive to use that money productively because they directly bear the cost of not doing so. In contrast, government employees do not as directly (if at all) bear the cost of wasteful spending, nor can they legally reap the benefits of keeping those costs low. That’s not to suggest that government spending produces no benefit at all; however, it is likely to produce a smaller benefit than if that money were left in private hands. High taxes not only take excessive amounts of money out of private hands, they also make the jurisdictions levying those high taxes less attractive places to live and thereby put them at a competitive disadvantage. The mobility of taxpayers gives them an opportunity to “vote with their feet” by moving to more attractive places to live. Statistical evidence confirms that.”
In the conclusion, Stansel writes:
“ . . . These findings have clear policy implications for local politicians (and for those at all levels of government). Economic prosperity is more likely to occur if tax burdens are kept low, especially relative to neighboring areas. This requires a strong emphasis on spending taxpayer resources wisely. However, that’s no different than what private businesses must do. Just like businesses must keep costs low in order to successfully compete with other businesses for customers, governments must keep spending and taxes low in order to successfully compete with other governments for mobile residents and businesses. This is particularly true in periods of economic downturn when taxpayers are especially sensitive to the various costs of living . . . .”
EDIT: Local studies easily translate to federal studies. Statistics take controlled smaller samplings and use the findings to suggest global outcomes.
What the phuck are you talking about we are talking about taking a small sampling pool and extrapolating to a large entity. Less taxed areas produce more jobs, simple as that.
Private employment?? Absolutely there’s a link. Capital is fluid and flows where there’s the least resistance. If the government taxes, less capital is available for the private sector (basic Econ 101), and in turn, less available for expansion and employment. The exception to this rule is during wartime, when the government becomes a major consumer of goods and services for the wartime effort.
Clinton had a brief flirt with 3.9% unemployment for exactly one month, but his average was over 6% for his presidency. And he flirted with low-unemployment during the internet boom, when the economy was flush with venture capital and a much lower capital gains tax (thanks to the Republican majority in Congress).
I invite you to read any Milton Friedman book for all the footnotes you need.
For an idiot’s take on economics, I invite you to read Keith Olbermann’s views below. Dumb, dumb, dumb.
It’s simple logic. The government takes private money, and produces absolutely nothing with it. Nothing. Zero. No production. Yes, there is the token tunnel, or our local favorite, the Hoover dam, but these are less than 1% of governmental expenditures.
The private sector, by contrast, takes wealth and builds it. Expands it. Makes more of it with innovation and production.
You are obviously too young to remember the ’80′s, but Reagan (For all the rest of his faults, and there were many) brought the US back from the brink of the disaster of the Carter administration by SLASHING tax rates. Not ‘cutting a little’, but to an extreme & PAINFUL degree. This led to a boom of economic prosperity unparalleled since the 1950′s.
The Clinton years of prosperity were based upon the gold rush of the Internet & related technologies, and were in large part an unsupported bubble, leading to the first crash under Bush 2. Some of it was real, some wasn’t. The part that wasn’t exploded like it had to. It was also based upon sudden free & easy credit, which allowed the citizenry (Along with the government) to spend like there was no tomorrow. But tomorrow is today, and the bills are due, and Americans can’t pay. That’s why we are where we are.
You don’t need a study, you just need some history. Every time, EVERY time, a state has nationalized their industries & enslaved its people with punative taxation, it fails. It may have a period of prosperity, it may be stable for a time, but eventually, it WILL fail. It’s inevitable.
ADD; So, your question really is; so long as every business in the US gets screwed equally, so that it’s ‘FAIR’, and their productivity & growth are squashed all on the same linear curve, then it’s all right? Wow, you really ARE a communist!
The evidence & proof are right before your eyes. Believe them or don’t. The Easter bunny of Lenin awaits your reply.
They all love to tout the word taxes, but taxes aren’t the issue.
The issue always has been and always will be supply and demand. If there is no demand for your product or service, all the tax cuts (or bailouts) in the world will not help your business stay afloat.
And health care costs are a lot more costly for employers than taxes are. You can get tax breaks, you can use tax shelters and in some cases get a tax refund. But you can’t get any of those in health care costs.
I think steel’s answer/study could be applied to federal taxes as well as local. Take the lower local taxes the study refers to and then wipe them out with a federal tax rate that skyrockets thereby nullifying the local tax cuts when it comes to disposable income. It would kill the jobs, etc. Question answered.
I’m not looking it up for you: There’s a chart showing lower taxes and higher employment over the span of many years. I saw it on CNBC, the financial cable news channel.
You’ll find it if you google it.
PS:Unless you’re a “redistribute the wealth” Liberal, in which case you’ll only accept as genuine, financial opinion from Das Kapital.
PS: KO the con, I thought you were still in Cuba?..:-)
What exactly are you asking? Is there a link between high tax rates and high unemployment?
Well lets look to the universal law of Economics: Supply and Demand http://www.trumpuniversity.com/business-…http://upload.wikimedia.org/wikipedia/en…
When prices go up, demand goes down.
Ceteris Paribus
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Yes, if their are lower taxes (especially on the rich) than people are more likely to use their left over income to invest in the stock market, when more people invest in the stock market companies can afford to hire more people. Also Clinton had a Republican Congress when the unemplotment was at 3.9%.
The study and the PROOF is HISTORY. The fact is every time taxes are cut for the people that provide the jobs, revenues go up. Even President Kennedy understood that…
Nice. The past 60 years? Unfortunately we have to go back before FDR to get the real answer. Everything since has been in response.
I’m sorry you can’t figure that out.
Clinton also lowered capital gains taxes.
If you are looking for an anomoly to prove low taxes result in economic prosperity look at the Republic of Ireland as compared to the rest of Europe.
things were good under Clinton because of the internet technology boom that artificially boosted the economy and led to the 2000 bubble burst and the following “Clinton Recession”
200? Boy, Clinton is old! Then, by your reasoning, Clinton wasn’t responsible for the low employment rate.
Lower taxes imply more people investing, companies making more money and then more product, and therefor hiring more workers. simple as that.
I didn’t know Clinton was alive in 200
How many of you work for a poor person?
There are other factors, but taxes would help unemployment. For example, the tech boom in the 90′s would create new industries and companies, which would obviously create millions of jobs.
Let’s say I make 40k a year, and I have just enough money to pay for a car payment, rent, bills, and food. If I am given a tax cut which puts $400 in my pocket, I will spend $400 dollars more, or save it. That is basically taking $400 from the government and giving it to me. Let’s say I spend this $400 at the bar. This will help the beer company who employees millions, the bar owner who employees people, and the cab company who drives me home after I get drunk. This will also help the government bring in additional taxes because the bar owner, cab company, and beer company will all make more money they have to pay taxes on. Or, they will hire more people who have to pay taxes.
Tax cuts without question would help the economy and help create jobs. I haven’t seen a specific study, but I have taken several economics classes and read books about it. It is a pretty simple concept.
The theory is that if businesses paid less taxes they would use the money to expand their business, hire more people, and lower prices for their customers.
In practice this money just goes right into CEO’s pockets and very little, if any, trickles down to the common worker or affects prices passed on to consumers.
People that favor tax cuts do not factor greed into the equation, and thus their ideas always fail to do what they are intended to do.
tldr: What you seek does not exist
I agree with you. The are just greedy.
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