Tax cuts for the rich do not create jobs

An untruth, if repeated often enough, tends to be believed. This is a major weapon in the armamentarium of the propagandist.

A case in point is Republican politicians constantly repeating the phrase “tax cuts for the wealthy create jobs” when, in fact, they do not. Whether they state this untruth through ignorance or political gain is unclear. But, nonetheless, it is untrue.

The appeal of such tax cuts is enhanced by the fact that most economic growth comes from small-sized businesses.

But consider the logic of the statement. Assume a business with 30 employees has an owner who draws an annual income of $300,000. His employees, plant and equipment are just sufficient to meet the demand for his products. But if a recession causes his sales to decline sharply, he will be forced to lay off employees in order to stay afloat. The number of employees he retains is probably just sufficient to produce enough to meet the reduced demand for his products.

Now, if this business owner is given a tax cut, will he hire more employees, more than he needs to meet the demand for his products? Of course not. He would be heading his company for financial ruin.

If the logic of this is not convincing, consider this: In 2004, in reference to the Bush administration’s federal income tax cuts aimed mainly at top earners, a large group of Nobel laureates issued a statement condemning the administration’s “reckless and extreme course that endangers the long-term economic health of our nation.”

Further, former President Bush’s claim that tax cuts to the owners of small businesses will stimulate them to hire more workers flies in the face of bedrock principles outlined in every introductory economics textbook.

Robert J. Smythe

Palatine