Tax Cuts = Jobs?

Chris Matthews & Robert Reich discuss whether tax cuts = jobs.



Ronald Brownstein of the National Review wrote a good article on the subject too:

Some highlights:

"House Speaker John Boehner this week insisted, “The American people understand that tax hikes destroy jobs.” In fact, there is simply no evidence that every tax cut creates jobs or that every tax increase destroys them."

"That’s a big lesson of the past three decades. In 1981, President Reagan massively cut taxes with his supply-side reductions in income-tax rates. Still sluggish at first, the economy eventually soared for the remainder of his presidency. By the fourth year after Reagan signed the tax cut, the economy had created 6.3 million new jobs (an increase of 6.8 percent); eight years on, the economy had created 16.5 million new jobs, up 18 percent.

Sounds like a pretty good case for tax cuts. But the economy produced even more jobs after President Clinton raised taxes on the wealthy in 1993. Four years after Clinton’s tax increase—which Republican opponents at the time denounced as a certain job-killer—the economy had produced 11.8 million new jobs, an increase of nearly 11 percent. Eight years after the tax increase, the economy had added 20.6 million jobs, up 18.6 percent. Measured in both absolute and percentage terms, the economy produced more jobs after Clinton raised taxes than after Reagan cut them."

"Then, after President George W. Bush’s massive 2001 tax cut, the economy recorded its most dismal decade for job creation since the Great Depression. Eight years after Bush signed his cut (and added another round of reductions in 2003), nearly 1.6 million fewer Americans were at work. And although the median income for average families rose by about 12 percent in the eight years after both the Reagan tax cuts and the Clinton tax increase, income for average families declined almost $1,400 (or 2.7 percent) in the equivalent period after Bush signed his reductions."

"If that experience doesn’t demolish the idea that tax cuts always produce prosperity, consider more recent history. The big deal that Obama and congressional Republicans reached in late 2010 was to extend the Bush tax cuts through 2012—and to turbocharge them with a new payroll-tax reduction. Despite those incentives, job growth has collapsed this year."

"In the past three decades, job growth has thrived after tax cuts and after tax increases, and it has stagnated after tax cuts. If there’s a pattern, it’s that tax policy typically isn’t the decisive factor in driving a machine as complex as the U.S. economy. "

The complete article can be found here.