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Tax Cuts, "Trickle-Down"Economics, & Graph Refutation.

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Tax Cuts, "Trickle-Down"Economics, & Graph Refutation.

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Dustin Jussila posted on Thu, Jul 7 2011 11:26 PM

 - Many left-leaning people that argue that tax cuts aren't the best policy for the economy employ graphs, similar to the one's above, that highlights a negative correlation between tax rates and economic preformance (whether it be job creation or wages). If at all, how are these graphs, and ones like them, misleadleading and what is the best way to refute them?    

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Phaedros replied on Thu, Jul 7 2011 11:29 PM

Let's think about this. How would higher taxes lead to more jobs? Well, it might lead to more government jobs. But what logical connection is there between high taxes and higher employment?

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Neodoxy replied on Thu, Jul 7 2011 11:57 PM

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
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Phaedros replied on Fri, Jul 8 2011 12:37 AM

Also, this is a really sick mentality that leftists have. If we stop robbing someone and it doesn't benefit someone else, then we shouldn't stop robbing that person.

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Kaiser replied on Fri, Jul 8 2011 12:51 AM

If we're talking simply about employment, this is all you need:

Employment-Population Ratio

http://data.bls.gov/pdq/SurveyOutputServlet 

  

Nevertheless, there are so many problems with breaking up economic data into "top tax rate eras."

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John James replied on Fri, Jul 8 2011 1:02 AM

Kaiser:
Nevertheless, there are so many problems with breaking up economic data into "top tax rate eras."

On that note...

 

 

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Esuric replied on Fri, Jul 8 2011 1:09 AM

Low taxes don't "create jobs" and high taxes don't "destroy jobs." Involuntary unemployment is caused by either endogenous/exogenous wage rigidity, or structural imbalances. The idea that lower taxes will somehow lower the unemployment rate is a myth. At the same time, though, lowering taxes will indeed have stimulating effects as it allows individuals to keep and therefore invest/consume a higher portion of their income (rather than having it confiscated by the government), and reducing capital gains taxes, for example, will increase investment (and reducing consumption taxes will obviously increase consumption, etc, etc).

There may be a relationship between payroll taxes and employment though.

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