Anonymous asked in Business & FinanceTaxesUnited States · 1 decade ago

How do tax cuts create jobs?

I am uneducated on this subject and would appreciate some answers.

A source would be nice as well, if you can provide one.

5 Answers

  • Anonymous
    1 decade ago
    Favorite Answer

    Why "Tax cuts = Jobs" is a lie: Exxon Mobil

    The common refrain from any right-winger is that the only way to create jobs is through tax cuts. Any common observer would agree that corporate tax rates have never been more favorable than during the Bush administration. Of course in addition to those tax cuts, a company would also need to profit to create jobs. What is the most profitable company in the world today? Exxon Mobil

    Top 10 corporate quaterly earnings of all time

    1. Exxon Mobil Corp: 2008, 2Q $11.68 billion

    2. Exxon Mobil Corp: 2007, 4Q $11.66 billion

    3. Exxon Mobil Corp: 2008, 1Q $10.89 billion

    4. Exxon Mobil Corp: 2005, 4Q $10.71 billion

    5. Exxon Mobil Corp: 2006, 3Q $10.49 billion

    6. Exxon Mobil Corp: 2006, 2Q $10.36 billion

    7. Exxon Mobil Corp: 2007, 2Q $10.26 billion

    8. Exxon Mobil Corp: 2006, 4Q $10.25 billion

    9. Exxon Mobil Corp: 2005, 3Q $9.92 billion

    10. Exxon Mobil Corp: 2007, 3Q $9.41 billion

    Not bad at all. Exxon Mobil must be creating jobs at a record pace. That is what you'd have to believe if you were a right-winger... or brain dead.

    I decide to research what Exxon Mobil recorded for regular employees since 1999. I was able to find this information through the SEC filings of Form 10-K for each year. Those can be viewed at this link here.

    Form 10-K filings to the FEC for Exxon Mobil

    I'll save you browsing through the documents and list the results below. Prepare to be shocked (or not).

    1999 106,900

    2000 99,600

    2001 97,900

    2002 92,500

    2003 88,300

    2004 85,900

    2005 83,700

    2006 82,100

    2007 80,800

    There is no information released for 2008 as yet. So despite the best possible corporate tax rates available and despite record profits compared to any company in existence, Exxon Mobil has cut regular jobs EVERY YEAR of the Bush administration. They've cut a total of 26,100 regular jobs during the entire two years Bush was president. almost 25,000 of those before the Democratic party took back control of the house and senate. So anytime some right wingnut says that tax cuts will create jobs, ask them how many jobs Exxon Mobil has created the last 8 years

  • Ivan G
    Lv 4
    1 decade ago

    Tax cuts in itself does not direcly create new jobs. The argument for tax cuts go like this:

    tax is an expense for a business; lower taxes means company has more money to spend on new employment. As an individual, if there is a tax cut, then you get more in your take home pay. You will then run out to your local eatery and buy more food. The restaurant will employ a new cook to cater to all the individuals that are eating more due to tax cuts. Considering that maybe 50 million people or more benefitsfrom the tax cut, the number adds up real fast. Lots of new jobs. Its a basic overview, but you get the point.

  • 1 decade ago

    They don't, pure and simple.

    Jobs are created when a business is no longer able to meet demand for goods and/or services at an acceptable quality level with their current workforce. Demand can occur naturally as economic conditions enable people to spend on goods and services beyond the level that is essential for survival or it can be created somewhat artificially through marketing. Demand is NOT created by cutting taxes!

    Tax cuts never create jobs. They typically result in greater dividend payouts for investors or are retained to build cash reserves. Businesses may use that cash to help fund capital investment without taking on additional debt so they may have some value to the business but tax cuts have never created a single job on their own.

    Even in strong economic times, tax cuts leads to little if any job growth. What little may exist is because consumers are more willing to spend during good times. However in a weak economy such as now, consumers (businesses and individuals alike) tend to salt away any extra cash as a hedge against an uncertain future. Having already done one stretch on unemployment in the past year, I'm hoarding as much cash as possible for now and many other consumers are doing exactly the same thing.

    Source(s): Economics 101. The so-called "supply side" theory of economics has been fully (and quite derisively) debunked by nearly all economists. The few who still support the theory are treated as a lunatic fringe within economics circles.
  • 4 years ago

    Tax cuts that concentrate on the prosperous do no longer create jobs. that's been tried some situations with a hundred% failure fee. extensive-based tax cuts for usual salary earners places greater funds as we communicate into the arms of customers which as we communicate creates greater spending, greater call for for products and hiring required for companies to offer the products. there is particularly a superb style of historic information meaning that decrease marginal tax expenses (decrease taxes on the wealthier human beings) easily leads to diminish activity advance. Tax expenses is very almost in no way a considerable element interior the determination on hiring new workers. what's significant is whether or no longer the recent workers will consequence in bigger earnings. It does not count whether the employer pays 20% or 40% tax on those earnings. If the recent worker potential greater beneficial earnings then that's a good option to hire in spite of the tax fee.

  • How do you think about the answers? You can sign in to vote the answer.
  • Anonymous
    1 decade ago

    Consumer-side tax cuts tend to create jobs because its a direct stimulus to the poor and middle class, who spend the money almost immediately and whatever is left they invest in small local banks and credit unions, which helps recapitalize the domestic markets. This is the method favored by liberal democrats, and it ALWAYS WORKS.

    Supply-side tax cuts eliminate jobs because they give stimulus to the wealthy, who tend to invest their capital overseas or put it in Wall Street where much of the money ends up somewhere else in the world. This is the method favored by conservative Republicans, and it NEVER WORKS.

Still have questions? Get your answers by asking now.